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.
AirAsia India announced today Delhi as its second hub, after Bangalore. Delhi will also serve as a base for the airline, while Bangalore will remain the home base.
Assuming that the airline will start flying between Bangalore and Delhi, the airline will for the first time begin flying on a Category I (Cat I) route, as defined by the prevalent route dispersal guidelines (RDG). Flying on a Cat I route will now oblige the airline to deploy a minimum percentage of the Cat I route capacity on Category II, IIA and III routes. Capacity is measured on an available seat kilometer (ASKM) basis. Every 180 seat flight between Bangalore and Delhi adds approximately 3,42,000 ASKM.
This makes the choice of Delhi as a base very important.
The importance of Delhi
Category II (Cat II) routes are routes which were traditionally looked upon as ‘loss making’ routes. These are routes that connect the mainland to the ‘neglected’ north-east, far north, and the islands that make up Lakshadweep and the Andaman and Nicobar Islands. (Please note that ‘neglected’ is a harsh word, but that’s how the ministry looks upon these regions as far as air connectivity is concerned). 10% of the Cat I capacity must be deployed on Cat II routes (To be soon revised to 20%). Had AirAsia India flown to Port Blair from Chennai or Bangalore, this requirement could have easily been met. AirAsia’s Airbus A320s cannot operate into and out of Agatti’s short strip.
Category IIA (Cat IIA) routes are routes which connect airports within a ‘neglected’ region. Examples are Jammu-Srinagar, and Guwahati-Bagdogra. Unfortunately, the southern portion of India – where AirAsia India is based- has no such Cat IIA routes. 1% of the Cat I capacity must be deployed on Cat II routes (to be soon revised to 1.5%)
To cater to a Cat I route and Cat II & IIA routes, the northern part of India is a wiser hub.
All the routes AirAsia India flies today are Cat III routes, as per prevalent RDGs.
Establish the route
By having a hub at Delhi, AirAsia India can fly early morning flights from Delhi to Bangalore, which can be mirrored by early morning Bangalore – Delhi flights. Similar flights from either destinations may be flown in the evening. This requires one A320 to be based at Delhi, to start with.
If such a strategy is followed, each aircraft will fly a minimum of 2 flights on the Bangalore – Delhi/vv route. Each flight is planned for 2:45 hrs, which will total upto 5:30 hours of utilisation per aircraft on this city-pair, leaving a maximum of around 7hrs of utilisation for other stations.
We feel that the airline may fly a 3x Bangalore-Delhi one way, per day, of which at least 2 shall be direct flights.
Flights to Delhi are not expected before May 2015, and perhaps not before mid-May 2015.
Deploy Cat II & IIA capacity.
Flights between Delhi-Jammu-Srinagar or Delhi-Guwahati-Bagdogra or Delhi-Guwahati-Agartala may be flown for Cat II and Cat IIA capacity. Delhi-Jammu-Srinagar seems to be the most likely set of cities to be flown first.
If the airline is innovative enough, it may make the most of its patterns to fly underserved routes. I am obliged to not exercise my creativity in suggesting routes.
Open Vishakhapatnam as a destination
AirAsia India presently flies three aircraft, and one of the three patterns flown everyday has a poor utilisation of just 7:50 hrs (see above). It is in this pattern – the third pattern, that two flights to Vishakhapatnam may easily fit in (as published in the DGCA’s Summer Schedule), with perhaps slight schedule changes.
The necessity – 5th aircraft
Opening the Delhi-Bangalore route will require two additional aircraft: one based at Bangalore, and the other at Delhi.
Further, as per CAR Sec 3 AT series C Part II, operators “will be given one year’s time from the date of securing operator’s permit, to have the fleet size of five aircraft”. AirAsia India secured its AOP on May 7th, 2015, and a 5th aircraft is necessary to meet regulatory requirements.
Today, at around 11:00hrs IST, AirAsia India’s 5th aircraft flew into Hyderabad from Kuala Lumpur. The aircraft is a used Malaysia AirAsia A320-216 (9M-AHU) without winglets, and is around 5.5 years old. The aircraft is AirAsia India’s second, non-winglet A320, after the 7 year old A320 which was unveiled to the public on 21st March in the JRD Tata livery (see image on top). Both aircraft are yet to start flying commercially for the airline.
The first three aircraft have winglets. If the airline is prudent with its fuel burn, only the winglet equipped aircraft (VT-RED/ATF/ATB) will be deployed on the BLR-DEL vv route.
Thank you to @ATCBLR on Twitter for posting the 5th aircraft’s arrival.
Marked shift in strategy
Last year, Mittu Chandilya, CEO AirAsia India had announced Goa as the second hub, with the induction of the 4th aircraft. He had also mentioned that the airline will keep off Delhi and Mumbai.
The airline last operated flights on the Bangalore – Chennai route on 31st March 2015.
When the DGCA notified the public that TATA-SIA airlines, now operating under the brand name Vistara, had applied for an Air Operator Permit, the DGCA had made public the joint venture’s proposed route pattern, detailed below.
In the light of the temporary relaxation in meeting route dispersal guidelines handed to Vistara, The Flying Engineer analyses the proposed route pattern for year 1.
The proposed route pattern, as handed over to the DGCA during the application phase during April 2014, had listed Mumbai, Goa, Bangalore, Hyderabad, Ahmedabad, Srinagar, Jammu, Patna and Chandigarh as destinations – either non-stop or with one stop, from Delhi. Based on the weekly frequencies, we’ve computed the average daily frequency, and computed the capacity (in available seat kilometers – ASK) as per ICAO’s Air Transport Bureau (ATB) guidelines.
The proposed route pattern for one year generates enough capacity on CAT IIA, but generates a CAT II capacity that just meets or falls slightly short (0.18%) of meeting the capacity as stipulated by the existing (at the time of writing this piece) Route Dispersal Guidelines (RDG) as laid down by the Ministry of Civil Aviation (MoCA), India. However, the airline, in its original proposed route pattern, could notwhere have met the required capacity on CAT III routes, as shown in the table on top.
The airline’s present pattern, which includes DEL-BOM vv, and DEL-AMD-BOM vv, does not conform with the original proposed pattern. The frequency on DEL-BOM nonstop is already 21 a week, each way. The DEL-AMD-BOM pattern, which was to have kicked in during the second year of operations, started on the second day of the airline’s operations.
A very smart move that Vistara may have made is to push its requirement to meet the RDG three months later, which is April 2015 onwards. This benefits Vistara in two ways:
It allows the airline to make money in a lean season by flying on business routes which are not much affected by seasonal variations, while ramping up fleet and mainline network strength.
It will allow the airline to deploy disproportionally high capacity on CAT II/IIA and CAT III routes (to compensate for the first three months of operation, starting January 9th 2015) during the summer (Q1 FY15-16 / Q2 CY15), when demand for travel is high, due to a holiday season.
With this strategy, the airline may be able to minimise its losses in Q4 FY’15 and perhaps maximise its revenues in Q1 FY’16.
Statistically, Bangalore ranks the third among all cities in India as far as domestic passenger movements are concerned. In FY13-14, Bangalore witnessed 10.2 million passenger movements, which is after Delhi (24.2 million) and Mumbai (21.9 million). Besides Tier I cities, Ahmedabad had the highest traffic, of 3.6 million passenger movements. Going by Vistara’s priority in tapping lucrative, proven markets, Bangalore may be either the next Tier I destination or simply the next destination after Delhi, Mumbai and Ahmedabad. Goa witnesses the third highest passenger movements among non-Tier I cities, and may also become the airline’s next Tier II destination (CAT III route). It will not be surprising to see Vistara choose Pune as another Tier II destination, soon. Pune had the second highest non- Tier I traffic after Ahmedabad, at 3.5 million movements.
The original pattern would have required an average of 51:40hrs of block time to be clocked, per day (which will vary on a daily basis based on non-daily flights). The actual daily block time would have been between 50:30hrs to 53:20hrs. Assuming a conservative 10hr aircraft utilisation – per day per aircraft, the airline will require 6 aircraft to fly the original proposed pattern. The airline already has two aircraft flying, and a third in Delhi. Two others are ready at Toulouse and will be delivered by March end (2015), taking the total to five. With one aircraft per 1.5 months expected post March 2015, Vistara may be able to fly its original planned network in May 2015, should it still hold. But considering that the airline may end 2016 with 13 Airbus A320-232SL aircraft, it is likely that Vistara will far outgrow its original proposed network, even with the backlog of RDG – mandated capacity that will have to be flown.
With this in mind, it may not be surprising to see Vistara expand its network to Guwahati, Kolkata, along with few other stations. The projected growth seems both achievable yet aggressive.
Network service and on time performance are important yet just two of many factors that influence people to choose an airline. Vistara is just one of three full service carriers in India, bringing with it a strong brand formed by established and well known players – Singapore Airlines and Tata Sons. This will attract the discerning traveller. Full service carriers play the yield game, generated largely by the first class in their aircraft – the business class. The airline has 16 business class seats on each of its aircraft.
However, the only product differences between a low cost carrier and the premium economy (36 seats) and economy sections (96 seats) of Vistara are the food, the renowned oriental style emphasis on service and higher pitch comfortable seats, as the airline offers no in flight entertainment options or support. How these two cabin sections of Vistara will compete with other airlines is to be seen. For example, for travel on February 15th between Mumbai and Delhi (based on a search at the time of writing this piece), airlines including Jet Airways charge as little as INR 3,000 one way, while Vistara holds its ground at 6,520 one way. Whether brand name will prevail in a generally cost sensitive market is to be seen. However, there is also an emerging trend amongst people with disposable income who look forward to enjoying their money.
AirAsia India’s first and only Airbus A320 (-216SL), registered VT-ATF, took to the skies on its maiden proving flight at 0708hrs GMT (1238hrs IST) [32 minute pushback delay]. The routes flown today will be Chennai-Cochin, Cochin-Bangalore, and Bangalore-Chennai: all planned with a 25 minute turn around time. Another proving flight is scheduled tomorrow (May 2nd, 2014), but in the interest of the airline, the route will not be revealed by The Flying Engineer at this point in time.
A proving flight includes a representative selection of the destinations intended to be serviced. Proving flights can be flown on any sector, even if those sectors do not make it to the airline’s schedules. Further, actual flight schedules and routes are subject to DGCA’s approval.
The proving flights of AirAsia India make use of the ground support available at those destinations where AirAsia Berhad (Malaysia) flies. AirAsia Bhd presently flies into and out of Bangalore, Chennai, Kochi (Cochin), Kolkatta, and Tiruchirappalli (Tirchi).
The proving flight follows the successful conclusion of the Main Base Inspection (MBI) on the 19th of April, 2014, and the “Table-Top” exercise (Proving flight readiness check) on the 29th of April, 2014. The MBI was conducted at Chennai, and the “table-top” at Delhi.
The proving flight will have non-revenue passengers and cargo on board, including DGCA personnel and airline staff. Of the airline staff on board, one set of flight crew (2 pilots and 4 cabin crew (two male two female)) will conduct the flight, while the rest will act as passengers. During the course of the flight, DGCA officials will check for the airline’s demonstration of handling of normal and non-normal events (such as dealing with disabled passengers, passenger incapacitation, cabin fire, encountering unexpected turbulence), in accordance with airline’s approved Operations Manual. The airline’s manual was approved, earlier, by the DGCA.
At the end of the proving flights, if the DGCA team finds deficiencies in the airline’s compliance with the approved Operations Manual processes, and procedures or regulatory requirements, then another set of proving flights will have to be taken up to prove that the deficiencies have been addressed.
If the proving flights are successful in the first attempt, then the AOP is expected by the second week of May, 2014. Once the AOP is awarded, the airline must get its flight schedules approved by the DGCA. That is expected in the second half of May. Following the approved schedules, fares are decided upon, and the airline is formally launched, with the start of the sale of tickets. This is expected in the first week of June. The airline will need to sell sufficient tickets and undertake various marketing and promotional campaigns, which is expected to last for a month or two.
With these timelines, AirAsia India is expected to commence scheduled air transport flight operations only in July or August 2014.
Interestingly, AirAsia India has applied for a scheduled passenger air transport operator’s permit, and not a scheduled regional air transport permit, but may keep off the Tier I routes, and fly only those routes that are recognized by the DGCA as regional.
This May Day will be viewed as a “mayday” for some airlines in India, which have openly shown their discomfort with the arrival of AirAsia India.
Edit: Changed “Route Proving Flights” to “Proving Flights” based on a clarification to The Flying Engineer by Mittu Chandilya, CEO AirAsia India.
The ferry flight started at Airbus’ delivery centre, Toulouse, on the southern part of the airfield which is reserved only for Airbus’ operations. VT-ATF, taxied out, and took off from runway 14R at Toulouse–Blagnac Airport (LFBO, TLS), at 1626hrsUTC (2156hrs IST) on 21st march, 2014, 9 days after the expected date of ferry. Faced with issues with the DGCA, the ferry flight kept getting delayed: something that went against the spirit of aviation growth in the country, and demonstrated unarguably that even an established player like Air Asia, with the clout of the TATAs, is unable to sail smooth with the India’s DGCA, which was downgraded to category 2 by the FAA recently.
With this delay, commercial scheduled flights at Air Asia India are expected to commence only late May or early June, 2014, as foreseen, today. The airline is yet to obtain its Air Operator Permit (AOP), only after which a schedule will be approved and the sale of tickets may begin.
But the ferry flight was smooth, and without any glitches. The initial leg of the journey was for 03:32hrs, over some 1,500NM (Nautical Miles) from TLS to Ankara’s (Turkey) Esenboğa International Airport (LTAC, ESB), via southern France, northern Italy, Croatia, Bosnia and Herzegovina, Serbia, and finally Bulgaria, arriving at the Turkish city at 1958hrs UTC (0128hrs IST). The one-hour stop at Ankara was only a refueling stop, for the next leg: the 3000-odd NM flight from ESB to Chennai (VOMM, MAA).
At 2117hrs UTC (0247hrs IST), the brand new A320 departed ESB, flying over the north-eastern tip of Syria, through Iraq, avoiding Baghdad, brushing past Kuwait, over the Persian Gulf, overhead Dubai, over the Gulf of Oman, and entering Indian mainland over Maharashtra’s coast, 200km south of Mumbai, and through Bellary in Karnataka, before starting descent from 39,000ft (FL390) to approach and land at Chennai, at 0400hrs UTC (0930hrs IST), with a 0 minute delay. In reality, the actual delay is 9days, 0 minutes. This leg lasted almost 06:30hrs.
In total, the aircraft was in the air for 10 hours from Toulouse to Chennai, and the entire exercise lasted around 11 hours.
The Ferry crew, at Toulouse, before embarking on the 11 hour mission.
The flight had 10 persons on board, in total, all Air Asia employees: 5 pilots, and 5 engineers. Of the 5 pilots, 3 were captains, one from Air Asia Malaysia.
The aircraft was welcomed with a water cannon salute, parked, cleared by customs, and one of the crew members stepped out waving the Indian flag.
A milestone in Indian aviation has been reached. The first airline started with an FDI component has brought its first airplane to the country.
For the complete tracking of the flight, and details, please visit the previous post, by clicking here.
Spicejet launched its Bangalore-Bangkok and Pune-Bangkok services on the 27th of October, 2013. The Flying Engineer was invited, along with 12 others from the media.
Here is a detailed trip report that you will not want to miss. Get to know a bit about operations, the seat comfort,about the men and women making the airline fly, and a bit about the airline’s plans and history. Everything that you’d want to know, with just the right amount of depth.