Japan’s first commercial jetliner, the Mitsubishi Regional Jet (MRJ) 90 took to the skies at 8:30 in the morning from Japan’s Nagoya airfield, for a flight that lasted nearly 85 minutes long. The flight was conducted by a MRJ 90 STD, registered JA21MJ, with construction (serial) number 10001. The aircraft flew with a constant flap setting, landing gear down and locked, and thrust reversers de-activated.
The first flight marks a major milestone for a program that is significantly delayed. The first flight was planned for 2012.
The 92 seat MRJ 90 has a seating capacity that directly competes with the 88 seat Embraer E175, and the 90 seat Bombardier CRJ 900. However, the aircraft is fitted with Pratt & Whitney’s high bypass Geared Turbofan Engines (GTF), which allow the aircraft superior fuel economics than any sub-100 seat regional jet, today. This is the MRJ 90’s USP.
Below is a comparison of key performance, weights and dimensions between the Bombardier CRJ900, Embraer E175, and the Mitsubishi MRJ 90:
Below is the comparison of ranges between all three aircraft and their sub variants:
The last Japanese commercial airliner program was the YS-11 turboprop airliner, in 1960. The MRJ program, which marks a comeback of the Japanese airliner market after a gap of nearly 60 years, adds an additional player in the regional jet market.
The regional jetliner market today is dominated largely by Embraer and Bombardier, with Embraer grabbing a larger share of the pie. Sukhoi’s Superjet International SSJ 100, a 100 seat regional jetliner, is so far an insignificant player. China’s regional jet, the ARJ 21, hasn’t yet entered service. Mitsubishi becomes the fifth player.
However, Mitsubishi will be the third aircraft program to penetrate the United States Market. 76% of the MRJ 90’s firm orders are from airlines in the United States. 170 aircraft are ordered by three US regional airlines: Trans States Holdings (a holding company for three regional airlines), Sky West, and Eastern Airlines.
A new aircraft brings with it two key questions that affect sales : How reliable will the aircraft be, and how good with the customer support be?
A new aircraft will almost always have issues with reliability before the aircraft ‘matures’ and corrections are made to the production aircraft. This has been seen with the Boeing 787, the Embraer E190 (when it entered service with JetBlue), the Airbus A380 – all new airplanes have their fair share of troubles till the product matures. The MRJ 90 will be no exception.
Customer support, which can sway market shares, has been carefully dealt with, by MRJ. Boeing Commercial Aviation Services, which today is one of the best, will provide Mitsubishi Aircraft with 24/7 customer support including spare parts provisioning, service operations and field services, until Mitsubishi takes service in-house.
Another important aspect for an airplane is the residual value of the aircraft – data that is yet unavailable. Lessors prefer to bet on airplanes that they know for certain will have a good enough market residual value to capitalise on.
Is the MRJ 90 in a good segment?
The MRJ 90 is an airplane with better market prospects than the MRJ 70. Since the beginning of 2009, Embraer has recorded 0 net orders for the 78 seat EMB170 regional jet, and Bombardier has recorded just 28 net orders for the 78 seat CRJ 700. On the other hand, since beginning 2009, Embraer has recorded a net 443 orders for the 88 seat E175 and E175E2 together, and Bombardier has recorded 139 net orders for the 90 seat CRJ 900. The 90 aircraft market has had better prospects over 27 quarters than any other size of regional jets. Below are the order graphs:
The MRJ 90 is in a very hot segment, which can get hotter if scope clauses in the United States are upward revised. The clause today limits US regional airlines to an aircraft weighing no more than 39 tonnes and limited to 76 seats. Unfortunately, the MRJ 90’s minimum maximum takeoff weight is 39.6 tonnes, while the lighter variants of the CRJ 900 and EMB 175 are within this specification.
The MRJ 90 is in a very unique position. Bombardier is not neither developing nor re-engining aircraft that are below 100 seats. The CRJ 700, 900 and 1000 aircraft will soon fade away as Embraer re-engines its aircraft and revises the wings to offer the market better versions (second generation) of the present E175, E190, and E195 regional jet models. Bombardier’s customer support history also works against the manufacturer. This effectively reduces notable competition to just Embraer and Mitsubishi in the sub-100 seat regional aircraft space.
The second generation of the Embraer E175, renamed the E175 E2, will be fitted with engines similar to the MRJ90, matching the MRJ 90’s fuel economics. However, the E175 E2 is expected to enter service only in 2020.
The MRJ 90 on the other hand is expected to enter service in 2017. However, uncertainty looms about the manufacturer sticking to its timeline, as it has not had any proven track record of dealing with jetliner programs in the recent past. Bombardier, an experienced manuafcturer, has slipped the CSeries’ timelines. It will not be surprising if Mitsubishi does the same. But even if the timelines slip by a year, to 2018, Mitsubishi will have atleast a 2 years head start over Embraer in the sub-100 seat regional jet space.
The Draft National Civil Aviation Policy (NCAP) 2015 proposes to boost regional connectivity in the country through the implementation of a Regional Connectivity Scheme (RCS). The RCS is aimed at making financially unviable, but economically important flights on certain regional routes a reality.
But for this to come true, many moves need to be made. The Ministry claims that there are 476 airstrips / aerodromes / airports in the country. Question is, how many of them are worthy of immediate operation? Today, airlines operate into and out of just 76 airports. What is the condition of the remainder airports?
The Ministry, in its bid to promote regional connectivity, must be specific about what it will fund. We touch upon this, and also try to do the numbers about how much money the Ministry may be able to raise, and with that money, how many regional aircraft may be operated. And which aircraft types are the most likely ones for the near term and the long term.
The RCS will spell the boom of regional aviation in India, only if implemented right. But it will also tax regular airlines, and not offer any viability gap funding for these airlines. There are challenges, and there are opportunities. To learn more, please click here.
The Route Dispersal Guidelines (RDG) was introduced in 1994 to provide air connectivity to Jammu & Kashmir, North East, Island territories, and Tier-2 and Tier-3 cities, by way of internal cross-subsidy by airlines, using their profits on 12 trunk routes.
Nearly 20 years after its introduction, the ministry is revisiting the rules to keep the rule relevant in today’s domestic scenario.
The ministry, as you will learn, is forcing regular scheduled airlines to deploy more capacity on category (CAT) II and IIA and III routes, and as part of the regional connectivity scheme, airlines will have to contribute to the Ministry’s Viability Gap Fund (VGF) 2% of the fare of almost all tickets sold.
Under India’s Companies Act of 2013, companies that have a net worth of $80 million, a turnover of at least $160 million, or net profits of at least $800,000 must develop a Corporate Social Responsibility (CSR) policy and spend a minimum of at-least 2% of net profit.
In this case, the Ministry is imposing a 2% on ticket revenues, not profits, irrespective of the size or health of the airline. And is forcing airplanes to fly more onto ‘unprofitable’ routes, without any subsidy, which effectively increases the amount of CSR done in the Indian aviation industry, despite the thin margins and heavy losses.
The 5/20 rule – allowing airlines to fly international only after completing 5 years of operation and flying a fleet of a minimum of 20 airplanes, was introduced in the year 2005. The year 2005 was the second boom in Indian civil aviation.
Today, in the year 2015, we sit upon the next boom in Indian aviation. Since later 2013, many airlines have started: Air Costa, AirAsia India, Vistara, Air Pegasus and Trujet. The government, exactly 10 years after introducing the 5/20 rule, is going to either retain it, abolish it, or replace the rule. A rule that, on the outside, was intended to both develop domestic capacity and make sure airline operations stabilize before flying international. The true story revolves around the insecurity full service Kingfisher airlines created for one particular airline. Hence, the rule was introduced just before Kingfisher started operations in May 2005.
Since then, the industry has consolidated: Jet-Sahara, Air India-Indian, Kingfisher-Deccan, and the demise of the merged Kingfisher. What has the 5/20 achieved? It has created only 4 international airlines for the world’s largest democracy. Just 4 airlines.
We invite you to read what the 5/20 has done, what its proposed replacement, the 300/600 can do, and whether we must go in for the third option: No rule at all. Please click here.
Everyone today looks upto India as the next destination for growth. The Ministry of Civil Aviation, in its draft National Civil Aviation Policy, has captured the attention of everyone with the claim of a large middle class population, and the promise of certain reforms that should may better the ease of doing business.
We appreciate what the Ministry has done, is doing, and will do. But certain claims must be taken with a pinch of salt, must be questioned, and analysed, just to prevent over-optimism and to make room for realism. Like for example:
India is a 300 million strong population of middle class persons. The Ministry targets each of these 300 million to fly atleast once in their life. Pertinent questions: What is the definition of middle class? What subset can really afford air travel? These questions are important to prevent overcapacity in the Indian market based on optimism.
India targets 300 million domestic ticketing by 2022. That means, calendar year (CY) 2021 must end with 300 million domestic passengers in a single year. India will end CY 2015 with 80 million domestic passengers. What is the compound annual growth rate (CAGR) required to touch 300 million in CY 2021? Is this CAGR too high to achive? What do market leaders like Airbus say?
Today, we focus on these two issues, which form part of the Ministry’s vision, and we see if this is achievable. Our views on the Regional Connectivity Scheme and the 5/20 are ready, which we hope to release tomorrow. We will also be commenting on Scheduled Commuter Airlines (SCA) and Safety, and lightly touch upon Aeronautical ‘Make in India’, Aviation Education & Skill Development, and Air Navigation Services.
To read about the first two issues, please click here.
By qualification, profession(s) and practice, I am an engineer. My love for airplanes made me study everything technical about aviation, and hence the name, The Flying Engineer. I did get to practice a lot of it, and filed two US patents with a North American aerospace major before starting off on my own.
I never really liked studying airlines. Running an airline was something totally different from airplanes and technology. An airline with one aircraft could be profitable, and another airline with the same aircraft could be loss making. Unlike aircraft, an airline isn’t exact science. It’s a mix of forecasting science, luck, lots of funding, experimentation, government regulations, competition, glamour, God, and what not. It’s not exact, and can never be. I was, and largely still am allergic to things I cannot mathematically or logically explain.
Then came a transformation at SpiceJet. Suddenly, an ailing airline with tonnes of data had a new head. On November 1st, Sanjiv Kapoor boarded SpiceJet as COO. He pushed SpiceJet into an operation theatre and brought in surgeons like Kaneswaran Avili. It gave an opportunity to study an airline turnaround.
Sanjiv and his team spewed data. Now data is interesting, and more dependable than “we will do it”, “we can do it”, and “we did it”. Sanjiv talked of the “how” of things. That was a turning point in my interests.
He released a good amount of data on the airline’s performance. The airline even released fairly detailed reports (with lots of graphs). His western thinking gave food for thought and ‘growth’ to all those who sat, saw, heard, and reflected. His addiction on Twitter had nothing to do with selfies, or what he did. It was never about him. It was all about the airline : what the airline did, and how the airline did. He even took customer issues into his hands and resolved matters through his team. He is a man of “we”, not “I”.
For once, there was an Indian airline head who was active on social media, and spoke numbers. Now numbers for some of us give us kicks. His maturity, experience, and his emphasis on data was sufficient for me to believe that there are some who don’t hip shoot in the industry. Yet, not always was I in agreement with everything that was done, nor everything that was tweeted.
Following the developments at SpiceJet was my education about the industry. I am far from perfect, but I was lucky to have been guided, by circumstances and people. And thankful to SpiceJet for having conducted classes on airline economics for many of us. Lectured by Prof. Sanjiv, ofcourse.
I have consulted, briefly, for a few airlines, and had a chance to interview many airline heads. You’ll be surprised how very few heads are data and research driven, and even fewer process driven. IndiGo is largely data and process driven. They made sure it was in their blood from day one. Sanjiv, to the best of my very limited knowledge, attempted such a culture at SpiceJet.
He also opened up channels of communication at the airline, bringing in more transparency and clarity. His largely full service airline experience made him focus significantly on customer service. Under him, SpiceJet transformed into an airline that was neither machine-cold nor ‘hot and spicy’ – SpiceJet became perhaps the warmest airline in the country.
Towards mid 2014, one of the airplanes was stickered with the faces of six of the airline’s crew, becoming the first airline in India to fly the faces of its employees. The aircraft had SpiceJet’s tagline, “With all our heart”. In the last week of August 2015, the aircraft was stripped off its livery. Spicejet, many months earlier, had been re-branded as ‘Hot and Spicy’.
During his period, scientifically planned flash sales driven by Kaneswaran and Fares Kilpady helped sell seats that would have otherwise flown empty. It is a concept yet to be understood by many. Today, such sales have become an Indian industry norm. I was definitely not the only one who learnt from SpiceJet. The sales served two purposes – driving up unit revenues, and boosting cash flows. SpiceJet survived longer than it otherwise would have, had it not been for those sales. Salaries never stopped.
Not everyone though could appreciate what Sanjiv and his team did. At the end of the day, performance is real, and evaluation subjective.
From April 26th, 2015, Sanjiv’s Twitter handle ceased being “@SKapoorSpiceJet”. That one Twitter handle was revolutionary, educative and proactive. Exactly six months later, today, news broke of him stepping down. Thank you Sanjiv, and thank you, SpiceJet, for the turnaround and the education. It fuelled my hunger for math, numbers, equations, and logical reasoning. Your troubles educated us.
The airline, which will end calendar year 2015 with a fleet of six airplanes, is expected to induct atleast one additional aircraft before end March 2016.
The additional aircraft, which will be the 7th airplane for the hitherto 17 month old airline, will be based out of Bengaluru. Presently, three are based at Bengaluru, and two at Delhi, with the 6th aircraft taking the count at Dehi to three. Basing the 7th out of Bengaluru is necessary to ensure that atleast 50% of the airline’s fleet is based out of Bengaluru, as per an agreement AirAsia India has with Kempegowda International Airport, Bengaluru. This agreement, a drive by the airport to increase traffic, gives AirAsia India certain benefits in terms of airport charges.
The 7th aircraft is expected to add a third frequency between Bengaluru and Delhi (both ways), and increase the frequency between Bengaluru and Goa to thrice daily, both ways. The aircraft will enable the opening of a new sector for the airline, a direct flight between Bengaluru and Guwahati.
With the 7th aircraft, the airline will fly 46 daily flights from its two hubs at Bengaluru and Delhi, deploying 8,280 seats a day. Capacity in ASK will increase by 47% over the 34 daily flights flown today, and 19% over the full utilisation of the fleet with 6 aircraft.
DGCA published data pertaining to an airline’s performance, commonly quoted by the media, such as Load Factors and OTP, is unreliable and misleading.
The data errors can only be recognized in single fleet airlines and/or airlines that have only recently started operations. In both cases, simplicity allows for cross verification of data.
Investigation into the data errors was suggested by a senior officer of a full service Indian airline.
The most interesting of all airline performance indicators is load factors. Load factors are often looked upon as indicators of successful commercial operations at an airline.
DGCA publishes certain airline related data based on an ICAO (International Civil Aviation Organisation, a UN body) ATR (Air Transport) ‘FORM A’. This form is filled and submitted by airlines to the DGCA, which the DGCA then uses to report load factors airline wise.
The manner in which the DGCA computes load factors is by dividing Passenger-Kilometers (PK) by Available seat Kilometers (ASK). PK is a product of total passengers flown and the total kilometres flown by the airline in a particular month. ASK is the number of seats on all flights multiplied by the total kilometres flown by the airline in that particular month. Dividing PK by ASK simplifies to the ratio of Passengers Flown by Available Seats, which is the definition of load factor.
Another way of computing load factors is to determine the available seats using data not reported in ICAO ATR FORM A. This is the number of seats on every flight. FORM A mentions the number of departures in a month. In single fleet airlines such as IndiGo, Go Air, AirAsia and Vistara, the number of seats on every aircraft is uniform fleet-wide. This means that every flight on each of the above mentioned airlines flies 180, 180, 180 and 148 seats, respectively.
Multiplying the number of flights by the number of seats per aircraft will result in the number of seats flown in that month. Dividing the number of passengers flown by the number of seats gives us load factors for the month.
The first and second method should result in the same numbers. However, this is not the case. Below is the reported load factors versus the computed load factors for IndiGo since it started operations. The two methods agree with each other till December 2008. From January 2009, when the DGCA changed its format of reporting data, the errors have been present, and have been unacceptably large and inconsistent.
The data shows that, according to computations, domestic load factors at IndiGo never crossed 90%, and that load factors crossed 80% only on 7 occasions in 9 years. Average domestic load factors at the airline, across 9 years, is recomputed as just 71.5%, with the highest at 83.3% in the month of May 2015. Of course, this arguably assumes that the number of departures and the number of passengers reported by the DGCA are correct.
Similarly, AirAsia India’s and Vistara’s load factors are not always representative of the actual load factors. In the case of these two airlines, the error is small. However, every 1% error in load factor corresponds to a monthly revenue of INR 56 lakhs for an airline the size of AirAsia India, and INR 16 crore for an airline the size of IndiGo.
Vistara’s load factors have never crossed 70%.
Below is that of Go air, for 9 months only:
Considering that the data is derived from what airlines have published, it may be that part of the onus for the error rests on airlines. It is difficult to compute the error in load factors of airlines such as SpiceJet, Jet Airways, Air India, and Air Costa.
Faith in our method of computation is based on cross checking certain computed load factors with the information revealed by a senior airline official.
On Time Performance
Airline on time performance is another parameter met with much enthusiasm. For example, for the month of April of 2015, DGCA reported that AirAsia India had an on time performance (OTP) of 100.0%. DGCA mentions the OTP as observed at only four airports: Bengaluru, Hyderabad, Mumbai and Delhi. Back then, AirAsia India was based only out of Bengaluru.
However, Bengaluru International airport, in its On Time Performance (OPT) report for April, clearly mentions AirAsia India’s arrival OTP as 89% and departure OTP as 98%. This averages to 93.5% OTP, which made headlines as 100%. (Click here for an NDTV piece on this)
Similarly, Go Air’s OTP for Bengaluru was reported by the DGCA as 88.9%, while the airport stated that the airline had an arrival OTP of 73% and a departure OTP of 86%. The DGCA’s OTP for Go Air at Bengaluru was impossibly higher than the higher of the two OTP for the airline for that month.
IndiGo’s OTP at Bengaluru was reported as 77.2%, while the airport stated that the airline had an arrival OTP of 73% and a departure OTP of 81%. In this case, the average of the departure and arrival worked out to 77%, which is acceptable.
In the case of SpiceJet, OTP at Bengaluru was reported as 68.2%, while the airport stated that the airline had an arrival OTP of 78% and a departure OTP of 78%. In this case, the reported OTP is lower than the actual OTP of 78%.
Data reported by the DGCA is very informative. The data is used by analysts and major industry bodies for studies, reports, and analysis. However, no matter how good the analysis, junk data in results in junk data out, with misleading facts and figures about the industry and the performance of airlines.
Poor data standards may give airlines a way to falsely drive up their performance figures, which may be for many reasons, such as driving up investor sentiment.
Alliance Air, which is branded as Air India Regional, received its 5th brand new ATR 72-600 from Toulouse. The aircraft, registered VT-AIW, joins the fleet of four other ATR 72-600s, registered VT-AII, VT-AIT, VT-AIU and VT-AIV. Al five aircraft are leased from Singapore based leasing company Avation.
The ATR 72-600s, which employ an all new cockpit avionics based on technology used on the Airbus A380, is to replace the aging fleet of four ATR 42-320s. The ATR 42-320s in Alliance air are fitted with 48 seats, while the ATR 72-600s are fitted with 70 seats. The older ATRs sport a four bladed propeller, which made the aircraft noisier than the present six-bladed propellers. Passive noise reduction techniques make the present -600’s cabin a lot more pleasant than the older ATRs’.
With the arrival of VT-AIW, which was ferried Toulouse (TLS) – Heraklion (HER) – Ankara (ESB) – Abu Dhabi (AUH) – Delhi (DEL), the total count of active ATR 72s in India (-500 & -600) has gone upto 27, split as 15 ATR 72-500 (Jet AIrways) + 3 ATR 72-600 (Jet AIrways) + 5 ATR 72-600 (Air India Regional / Alliance Air) + 2 ATR 72-500 (Air Pegasus) + 2 ATR 72-500 (TruJet). One ATR 72-500 is undergoing painting at Hosur, destined for Air Pegaus.
India totally has 51 70-80 seat turboprops in service, including 14 Bombardier Q400s of SpiceJet. The smaller ATR 42s, aged on average 21+ years, will soon be phased out.
Air India Regional / Alliance Air flies the longest turboprop route in the country, between Delhi and Rajkot, over 505 nautical miles, a flight that takes 2:30 hours block time, almost the same block time an Airbus or Boeing mainline narrowbody jet (A320 & 737 family) takes to fly double the distance. Due to insufficient crew, and to align with the schedules of the network of its parent Air India, the ATRs at Alliance Air are not utilised as much as the aircraft can be. Average present utilisation of the aircraft at the airline is close to 6 hours per aircraft per day. The aircraft operate only four flights a day, while Jet Airways operates upto 13 hours per aircraft per day and 9 flights per aircraft per day. (maximum figures).
Of the presently four operational ATR 72-600s with Alliance Air, three are based at Delhi, and operate flights to Kullu, Dharamshala, Allahabad, Dehradun, Rajkot and Pantnagar. One is based at Hyderabad, and operates flights to Vijayawada and Tirupati, offering competition to TruJet and Air Costa.
An ATR 72 is best suited for short (distance) and thin (low demand) routes of upto 350 nautical miles. Beyond this, a regional jet generally becomes a more viable and economical option. The shortest ATR 72 sector in India is operated by Jet Airways between Porbandar and Diu, a flight that lasts just 45 minutes block time over a distance of 90 nautical miles (166km). The average ATR 72 city pair distance in India is 223 nautical miles (413 km), while the average domestic flight distance across all domestic flights of all carriers on all aircraft in India is 455NM (843 km).
70-80 seat turboprops serve as good feeder aircraft to mainline aircraft, enabling deeper and true regional penetration in India, especially since many airfields and city pairs in India, today, are operationally and commercially unviable for regional and mainline jets. Many runways are too short for regional and mainline jets, and many cities are too underdeveloped to viably support larger aircraft.
The maps below show the pan-India coverage that turboprops can achieve by being based out of five metros of Delhi, Mumbai, Kolkata, Bengaluru and Hyderabad, and by flying a maximum distance of 400NM. Range circles are 300NM and 400NM radius, as mentioned.
Over the next 20 years, a demand for 2,500 turboprops is anticipated, of which close to 50% may be based at Asia.
Header image does not represent VT-AIW, but VT-AII.
SpiceJet, which is the only low cost/fare airline in India to operate with more than one type of fleet, including Boeing 737-800s, Boeing 737-900s, Bombardier Q400 turboprops, today brought in more fleet diversity through the induction of a wet-leased Airbus A320.
The airline had wet-leased two Airbus A319s in the recent past, one of which (LZ-AOA) is still flying with SpiceJet. The A319 that is still flying for SpiceJet is from BHair (Balkan Holidays), and the Airbus A320 inducted today is also from the same operator. This is perhaps a symbol of confidence in operators in wet-leasing airplanes to SpiceJet, perhaps indicative of a more stable financial situation that allows for on-time payments. Boeing 737 wet leased aircraft that earlier flew for SpiceJet in the summer peak season have also returned for another peak-season term.
The Airbus A320 MSN 2863, registered LZ-BHH, previously flew for IndiGo as VT-INB. VT-INB was the second Airbus A320 to be inducted into IndiGo, and exited the fleet in 2012. Sale-Leaseback contracts at IndiGo were earlier for a period of 6 years, which has since been extended after 16 airplanes, following a sooner-than-needed capacity expansion after the collapse of Kingfisher in 2012.
With two Boeing 737-800s dry leased by SpiceJet in scheduled maintenance, the airline today has an active fleet of 23 mainline jets (Boeing 737-800s, Boeing 737-900s, Airbus A319, Airbus A320) and 13 Bombardier Q400s.
The Delhi <> Goa sectors, and the Delhi <> Guwahati sectors will get an additional frequency. The new sector that the airline is expected to operate is Delhi- Vishakhapatnam. Delhi to Vishakhapatnam will depart at 6:05 am as I52551, and will depart Vishakhapatnam at 8:35.
The total number of flights on the Delhi<>Goa sector goes upto thrice daily, and the number on Delhi<>Guwahati goes upto twice daily, from November 17th.
However, the airline now has two flights to Goa from Delhi (and back) spaced just 45 minutes apart, which may lead to cannibalization, pronounced during the off-peak seasons.
The new Delhi – Guwahati flight gives a Delhi passenger the option of a meaningful day return on the same airline.
One of the three aircraft patterns is expected to be dedicated to these new route and frequencies. Aircraft operating the pattern will fly DEL-VTZ-DEL-GOI-DEL-GAU-DEL, accumulating a block time of 14:45 hrs.
With the addition of the new aircraft and the related routes, the airline will increase capacity (measured in available seat kilometres) by 24% over the existing network, and will increase seat capacity by 17% to 7,200 daily seats. Daily flights will increase to 40 from the present 34.
Unlike in the summer peak season when the airline had two airplanes on ground for nearly two months, and incurred setup costs associated with the opening of four new stations (Delhi, Guwahati, Vishakhapatnam, Imphal) the airline in the winter peak season is not opening any new stations, thereby incurring no one time costs related to the network.
Presently, the airline is only selling the new DEL-GOI-DEL and DEL-GAU-DEL flights. The DEL-VTZ-DEL flights are yet to be announced and opened for sale.
AirAsia India, which has been slow in its growth owing to a primarily domestic-international network strategy that was thwarted by the unreasonable delay in lifting the 5/20 rule (a rule requiring an airline to fly international only after flying domestic for 5 years, and a minimum fleet size of 20 airplanes), received its 6th aircraft at Hyderabad’s Shamshabad airport at the MAS-GMR MRO facility.
The aircraft, bearing MSN 4346, previously flew for Indonesia AirAsia as PK-AXL. It is a non-winglet airplane, and is 5 years 4 months old.
It has now been re-registered to VT-APJ, as a tribute to late Dr. A.P.J Abdul Kalam.
This is AirAsia India’s third non-winglet airplane. This is also the fourth airplane to be dedicated to a person (living and dead) or a place. The other three are VT-ATF (Tony Fernandes), VT-JRT (JRD Tata) and VT-BLR (Bengaluru).
This is perhaps the last airplane the airline will induct in this calendar year – something we had mentioned earlier.
With this, AirAsia India will be adding capacity during the winter peak season. The airline may start operating new sectors or additional frequencies only towards mid-late November 2015.
Due to the late announcement of routes, some of the lowest airfares may be found on AirAsia’s network. While this is good for passengers, it may adversely impact the airline’s unit revenues.
The airline has however started offering via flights – Passengers from Delhi can fly to Imphal via Guwahati, something which the airline did not offer earlier. Via flights will help improve revenues at the airline – something we had mentioned earlier.
While total costs in the airline will rise with the induction of the 6th aircraft, unit costs are expected to slightly fall, which is good for the airline.
The 6th aircraft may be based at Delhi, and may connect the national capital to Visakhapatnam, among other frequency/route additions.
Air Costa, India’s first regional jet airline, turns 2 tomorrow (15th October 2015). The airline, which is the second airline in India after the now defunct Paramount Airways to operate the Embraer E170s, is terminating lease on the aircraft, making Air Costa perhaps the last Indian operator to employ the 70-80 seat regional jet.
The airline’s two Embraer E170s, registered VT-LSR & VT-LNR, were the first two airplanes for the airline, leased from Embraer’s ECC leasing. The aircraft earlier flew for Gulf Air, which had fitted the cabin with 67 seats : 7 business and 60 economy. The aircraft can pack in a maximum of 78 seats in a single class configuration.
The airline has cancelled up to 4 flights owing to one of the two E170s (VT-LSR) being returned in November. As of today, out of the 32 daily flights the airline used to operate to 9 destinations, it presently operates 25-26 flights. This is further expected to go down to around 15 – 16 flights per day in the next 10 days. When two new Embraer E190s are inducted, the airline will resume the flights previously operated by the E170s starting 1st Dec 2015.
Due to this, Air Costa does not seem to sell for, and operate certain E170 sectors between 25th Oct and 30th Nov (as per the website), till these are operated by the replacement aircraft, an Embraer E190, 1st Dec onwards. These sectors are captured in the table on the left. The airline has opened sales for these sectors for travel December 1st onward.
The airline does not seem to sell (indefinitely, as per the website) the E170 sectors operated by the other aircraft. These include:
Vijayawada <> Hyderabad
Vijayawada <> Chennai
Vijayawada <> Vishakapatnam
Chennai <> Hyderabad (Daily)
Frequencies on routes such as Bengaluru<>Vijayawada has halved.
Air Costa’s two other aircraft – Embraer E190s registered VT-LBR & VT-LVR, leased from GECAS, shall remain in the fleet, one of which would be going for a scheduled maintenance in mid-November. The Embraer E190 is a money maker for the airline, and Air Costa is using the asset to its strength. The 2 E170s will be replaced with 2 E190s in the next 3 months.
Based on studies by The Flying Engineer, small capacity regional jets of less than 100 seats have limited relevance in the Indian market, today. A great way to capture the market is to complement the Airbus A320 / Boeing 737s (180 seat airplanes) with an aircraft of nearly 50% – 60% capacity, making the Embraer E190 with 114 seats (maximum) an ideal airplane for routes with insufficient demand for a 180 seat airplane.
Air Costa will be able to connect Tier II and Tier III cities across the country with any Tier I city once its air operator permit (AOP) is converted from a scheduled southern regional airline to a scheduled (pan-India) airline operator permit. This change of AOP is expected to happen soon. However, the airline’s network will continue to be focused on the regional segment, but at a pan-India level.
With the airline demerging from other projects of the parent company, Air Costa is ready to attract external investments into the airline. It plans to induct 4 aircraft every year, from 2016. By 2018, the airline plans to have a minimum fleet of 12 aircraft and fly to 18 stations.
Air Costa presently operates to 9 destinations. A major network change is expected in light of the change in fleet. Bhubaneswar, Pune, Guwahati, Indore, Patna and Bhopal are expected to be added to the network when the fleet size touches 8.
Besides all the visible innovations that SpiceJet is grabbing the headlines for, the airline is doing certain other things quite differently.
Any airline will like to make the most of a peak season by increasing flights, and providing increased connectivity and flight options. There are two ways to do this : by growing the fleet or by flying the airplanes harder. SpiceJet is doing both.
The airline does not yet seem to be ready to lease more airplanes the conventional way. It instead is wet leasing airplanes from eastern European airlines, which have capacity to spare. In the month of October, the airline will be inducting 6 Boeing 737s on a wet lease (ACMI lease) basis – which means the airline will not have to bother about flight crew, cabin crew, maintenance and insurance. Wet leases can turn out to be more expensive than a dry lease with in house crew, maintenance and insurance, but it offers SpiceJet one big advantage – to modulate its capacity to suit seasonal demand.
SpiceJet today is the only airline in India to be actively wet-leasing airplanes to bridge capacity shortfalls.
The airline presently has one Airbus A319 wet leased, and 2 of the 6 wet leased Boeing 737 NGs to be inducted this month have arrived – OK-TVX and OK-TSF. OK-TVX flew for SpiceJet during the summer peak season, along with two other Boeing 737-800s. The two 737s arrived on 8th October, 2015.
The airline’s remaining Boeing fleet is all dry leased, and the Q400s are owned. Of the 20 Boeing 737s, 16 are Boeing 737-800s and 4 are Boeing 737-900s. Before the 2 wet leased airplanes arrived, one Boeing 737-900 was undergoing heavy scheduled maintenance, ‘C’ checks. After the two leased airplanes arrived, a Boeing 737-800 went into scheduled maintenance. In total, the active narrow body mainline jet fleet as of today is comprised of 15 dry-leased Boeing 737-800s, 3 dry-leased Boeing 737-900s, 2 wet leased Boeing 737-800s and 1 wet leased Airbus A319, in addition to 14 Bombardier Q400 turboprops of which 13 are active. The total active fleet is 34 airplanes strong, which is expected to rise to around 40 during November-December. The peak season starts in a week’s time.
To aggressively take on the domestic and international markets despite a small fleet of airplanes, SpiceJet has been pushing its Boeing 737s to fly much harder than usual. Some of the Boeing 737s operate 19:30hrs, 17:50 and 16:35 hrs. These patterns flown by the 737s witness the airplanes flying hard during the day, and operate long international sectors at night/early morning.
Of the LCCs in India, only two fly international – SpiceJet and IndiGo. IndiGo, which also operates late night / early morning international flights, operates its airplanes only upto 17:45hrs of utilisation, on a pattern that involves a late night Chennai-Singapore return flight. One of the airline’s patterns is all-international with just 4 flights, MAA-DXB-TRV-DXB-MAA, which uses the airplane for 17:35hrs. Both these patterns, however, are not as heavy in utilisation as SpiceJet’s.
While SpiceJet pushing its airplanes to fly harder increases revenue potential and dilutes costs, it also results in a higher chance of cascading network delays in case one flight gets significantly delayed. Having significant gaps between patterns reduces the chances of the delays of one day from cascading into the second day.
On the Q400 front, the airline pushes certain Q400s to operate upto 13:15hrs per day, with an average, network-wide utilisation of around 11:30hrs. This is good for a turboprop that operates mostly domestic. SpiceJet’s Q400 turboprops are the only turboprops in India that fly scheduled international services.
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, India’s newest pan-India airline, took the trouble to prepare a report on the aviation sector in India, highlighting the numerous areas in which India can and must improve. The report also concluded that Indian aviation is blessed with undeniably strong fundamentals such as:
A large and fast growing domestic market with potential for sustainability.
A strategic location (geographic) enabling hubs / transit points for key international routes.
An abundance of tourism potential.
A strong technical and skilled workforce that can support aviation in various functions.
A traditionally service-driven culture, which augurs well for the hospitality industry.
The report went on to state that India is not a global aviation power today despite many such favourable characteristics because of poor decisions that have actively hindered the country’s aviation sector’s growth and competitiveness.
Key Take-aways, as summarized by the Vistara communications team:
1. Criticality of Aviation Sector
Aviation contributes to around 5% of GDP in leading global markets
3 billion people or 40% of the global population fly vs. low 1-2% penetration in India
Annual per capita seats in India are a quarter of China, Indonesia, Thailand
Aviation drives 27% of UAE GDP; 5.4% of US GDP
Aviation is growing rapidly in India; incremental passengers this decade was 3 times in previous 50 years
2. Potential of Indian civil aviation sector
Annual contribution of USD 250 billion to Indian economy by 2025
Employment creation to multiply 10 times to 2.3 million by 2050
Number of domestic passengers to grow 17 times to 1.1 billion by 2050
Number of international passengers to grow 10 times to 500 million by 2050
Domestic freight to increase eighteen times , and International freight more than eight times by 2050
Number of aircraft to multiply by 14 times to about 5600 by 2050
3. Policy Measures Required
1. Cost of doing business
Duties make ATF, which can constitute 30-35% of operating costs, 45% more expensive in India
Removal of sales tax will reduce ATF costs by 20% thus reducing operating costs by 7%, and stimulating air travel by around 8-9%
High taxation on MROs makes it cheaper to send aircraft abroad for maintenance, going against “Make in India" vision
Aeronautical charges are amongst the highest in the world
2. Ease of doing business
4 months in US vs. 90 days in UAE vs. more than a year and 10 agencies in India for getting an AOP
Simplification of RDG
3. Liberal Aviation regime
5/20: discriminatory to Indian airlines; impacts airlines’ risk mitigation and operational efficiencies
Indian airlines only use 26% of their bilateral rights
4. Invest in airport infrastructure, airspace management and skill development
Airport capacity shortage looms in 5 years
Additional airport capacity of 90 million passengers will be required each year from 2030 i.e. equivalent of Delhi and Mumbai airports combined
5. Focus on Safety
Access to expert and trained, fit-for-purpose resources are critical for DGCA
Air Pegasus, which started operations mid April and now has a fleet of 2 ATR 72-500s, is impacted by shortage of crew to fly its aircraft.
The Bangalore based airline, which in August announced a second frequency to Hubli, to allow for a day return for passengers from either city, has not yet operated the morning 7:05 Hubli flight since 20th August 2015, effectively serving just one flight either way, each day. The airline isn’t yet accepting bookings for the morning Hubli flight.
The airline has reportedly stopped operating flights to Cuddapah since a significantly long time. The airline is next open for bookings to Cuddapah only on the 11th of October. Air Pegasus inaugurated the Cuddapah airport, and was the only operator flying to the city. It operated the first flight to the city on 7th June, 2015.
Crew shortage is preventing the airline from both operating scheduled flights as well as expanding or strengthening the route network. Cancellation rates at the airline, which started at 0%, started increasing month on month to touch the airline’s high of 5.81% in the month of August.
Air Pegasus presently operates two ATR 72-500 registered VT-APA and VT-APB, both ex-Kingfisher ATR 72s leased from Elix Aero. The airline is presently scheduled to operate 16 flights a day (except Tuesdays), of which it currently operates only 12 – 14 flights a day. The maximum present daily aircraft utilisation is 10:50 hrs, and an average of 8:10 – 9:15 hrs per aircraft per day. Till the 31st of August 2015, the airline had flown 40,930 passengers with an average load factor of 75%. The average distance flown per flight is 435km, and the average block hour duration is 1:20 hrs per flight.
Air Pegasus is one of 5, 70-seat turboprop operators, and one of 4 ATR 72 operators in India. Trujet and Air Pegasus are the only two scheduled airlines in India to operate an all ATR 72 fleet.
Operational exigencies are common and happen to every airline. Last evening, one of AirAsia India’s five aircraft, registered VT-BLR, Airbus A320-216 (bearing serial number 4070 manufactured 6 years ago), while operating I5 1321 – the Goa to Bengaluru flight – returned to Goa immediately after departure, as it reportedly suffered an engine bird strike on departure. The aircraft returned safely to Goa, where it remains grounded at the time of writing.
A second aircraft, VT-ATB presently based out of Delhi, operated I5 2327, the scheduled Delhi-Goa afternoon flight. On landing at Goa, it operated 1321 – the Goa – Bengaluru flight. The aircraft later performed a late night ferry (non-commercial flight) from Bengaluru to Goa, and then carried the Goa-Delhi passengers, landing at Delhi at nearly 3:30am.
VT-BLR’s temporary grounding had affected the airline’s network. The previous night’s Bengaluru-Vishakapatnam-Bengaluru and Bengaluru-Cochin-Bengaluru flights, which were to have been operated by VT-BLR, were delayed by around 3 hours and 1 hour, respectively, as other aircraft (VT-ATF, VT-JRT) had to operate these flights after finishing their usual patterns. The pattern of only one of five aircraft: VT-RED based at Delhi, was not affected.
As a result of VT-BLR’s grounding at Goa, today morning’s Bengaluru-Jaipur-Bengaluru (I5 1720/1721), and the afternoon Bengaluru-Goa-Bengaluru (I5 1320/1321) have been cancelled, while the evening Bengaluru-Jaipur-Bengaluru (I5 1722/1723) flights have been delayed by at least 2 hours.
Training flights on VT-JRT at Bengaluru’s HAL airport, conducted last night, were not affected.
The aim of this entry is to study how the airline handled an incident, and the effects of such an incident on the network, and not to comment on or judge its ability or methodology.
Edit (30th Sept): Edited to include the first flight of the first production A320NEO, which is destined for IndiGo. Edit includes a confirmation of a Space Flex cabin.
Indian domestic market leader IndiGo’s first Airbus A320 NEO (New Engine Option) – part of the July 2011 order for 180 aircraft, has rolled out of the Hamburg (Germany) final assembly line fully painted in the airline colors, but without the Pratt & Whitney Geared Turbo Fan (GTF) Engines. This is the third such airframe of the airline. Two have no engines fitted. The cabin has not been fitted yet.
MSN 6720, destined for IndiGo, first flew on September 25th at Toulouse, France. The aircraft fuselage has however not been painted in the airline’s colors, but the wings are in the airline’s markings. MSN6720 is the 6th NEO to be produced, and the first ‘production’ NEO. The to-be Indian Registration of MSN 6720 is yet unknown, but will likely be the first A320 NEO for IndiGo.
A320-271N MSN 6744, which is expected to be registered VT-ITA, is the 7th NEO produced, and likely the second for IndiGo. A320-271N MSN 6799, to be registred VT-ITC, is likely IndiGo’s third A320 being assembled at the Toulouse (France) final assembly line, and is the 9th NEO to be produced. All Airbus A320 NEOs that IndiGo will accept will be powered by the Pratt & Whitney PW1127G engines.
The same engines had a problem with a clip holding seals inside the engine. This had caused concerns on the NEO program schedule, which has invariably slipped a bit. However, launch customer Qatar Airways expects to receive the first aircraft by the end of the calendar year. Interestingly, Qatar’s A320 NEO is MSN 6772 – the 8th NEO – which means it is later down the assembly line sequence when compared to IndiGo’s 6744 and 6720.
The NEOs rely on the sharklets and new, ultra-high bypass geared turbofan engine technology to together deliver fuel savings of upto around 15% (over and above today’s CEO A320’s without sharklets) . Such high fuel savings will however be realized only on very long flights that approach the maximum range of the airplane.
Airbus’s “Space Flex” concept allows airlines to increase the seating capacity of the Airbus A320 (both current engine options (CEO) and NEO) to 189 seats, without compromising on seat pitch and comfort. This is achieved by moving the two rear lavatories closer to the bulkhead, eating into the galley space. This makes more sense to no frills carriers which do not carry much meals on board. The space for service trolleys in the aft galley of the aircraft reduces from 7 to 3. The space where the aft lavatories were fitted are replaced with 1.5 rows of seats.
This increase in number of seats reduces unit costs by 5% to 6%. It is not known if IndiGo will adopt the space flex concept yet. No physical changes to the emergency exits are required. However, opting for a mix of 189 seat and 180 seat A320s may reduce operational flexibility for the airline. Opting for a higher capacity however seems inevitable.
IndiGo is believed to have opted for the Space Flex cabin, but details on when it will appear are not known.