Indian Airlines 2014 recap2014 was a very eventful year, with a mix of aviation and aerospace industry achievements, and tragedies.

Indian Airline Scene

On the Indian airline front, 2014 saw the birth of two new airlines – AirAsia India, and Vistara. TATA sons have a stake in both airlines, though they have a larger share in Vistara, registered as TATA-SIA airline private limited.

AirAsia India received their air operator permit (AOP) on May 07th, and started commercial operations on June 12th, 2014. The airline, which previously had identified Chennai as its base of operations, shifted to Bangalore in the light of better infrastructure and traffic. Out of Bangalore, the airline started with flights to Goa, followed by Chennai and Kochi, all with one aircraft, an Airbus A320-216SL. When the second aircraft arrived in September, the airline added Jaipur and Chandigarh, and doubled the Goa frequency. On December 18th, the airline received its third aircraft, and added Pune to its network, while doubling the Jaipur frequency. The airline also faced a severe shortage of senior flight attendants, which led to significant schedule disruptions – cancellations and delays – in the months of November and December. The airline has plans to de-focus solely from Tier II and III cities and connect Tier I cities to other Tier I cities as well. The airline reported a loss of INR 29Cr in its first full quarter of operations: Q2 FY2014-15. The airline’s growth has fallen short of its initial targets.

Vistara, which had targeted October for a launch, was faced with severe hurdles from the DGCA primarily due to the FAA downgrade. Court cases against Vistara and AirAsia India proceeded in parallel. The airline received its first aircraft on 27th September, 2014. The aircraft, leased from BOC Aviation, later flew to Singapore for its livery, and arrived back at Delhi after the airline launched its brand and livery – Vistara. The airline at present has two Airbus A320-232SL, with another three ready at Toulouse. The airline received its AOP on the 15th od December, 2014, and will launch its first flight on the 9th of January, 2015. The airline will be the first full service carrier launched in a decade, and the first airline to have a three class cabin on domestic operations – Economy, Premium Economy, and Business. The airline plans to focus on the business and corporate traveller.

Legacy carrier SpiceJet saw a significant management churn at the airline. Under the new Chief operating officer (COO), Sanjiv Kapoor, the airline brought on board airline industry experts with a proven track record. The airline, facing severe losses in the previous financial year, was forced to downsize its fleet to achieve both a low cost base as well as begin the process of turning around the airline. The Boeing fleet, which at the start of the year stood at 42 airplanes, reduced to about 33, and dwindled to just 17 in December. Although the airline had the industry’s best load factors and boosted its RASK – revenue per available seats kilometre, the lean season of Q2 FY’15 took a toll on the airline. With costs high, the airline’s financial situation worsened, forcing lessors to reposes their aircraft. With a reduced fleet, the airline cancelled an delayed numerous flights, forcing the DGCA to step in and impose restrictions on the airline’s bookings and credit facilities. After significant lobbying, the DGCA relaxed, and the airline hopes to re-emerge strong with Ajay Singh – the airline co-founder and later director – to invest in the airline with a controlling stake. The exit of the present promoters, the Marans, is a possibility.

Jet Airways, the first private airline in India, was bailed out of its troubles by Etihad, last year. The Abu-Dhabi based carrier ensured that Jet Airways – which was tangled in a financial mess, and a confused brand, aligned itself with Etihad. Cramer Ball stepped in as the CEO of Jet Airways, and under him, the airline boosted its cargo, its international connections, and moved to a single brand – the full service Jet Airways, ceasing Jet Konnect. Financial performance for Q2 FY’15 at Jet Airways as promising, proving the relevance of the full service model. The airline had a significant issue with its pilots from Jet Konnect, who were asked to join Jet Airways at the bottom of the seniority chain. This witnessed a mass exodus of pilots from the airlines, forcing the airline to at times resort to widebody operations on certain domestic sectors. The airline is now geared up to face stiff competition from Vistara.

Air India continued to sell off its Boeing 777-200LRs to Etihad, with just one left in the airline’s fleet. Financial stress at the airline continues, as the airline follows a full service model with low cost carrier pricing. The airline, until recently, was the only airline to unconditionally offer complimentary meals or snacks to all passengers on all its flights. This service, together with a flash sale in the latter half of 2014, ensured passengers flocked to the national carrier. The airline now faces competition from Jet Airways and Vistara. In a move to boost fuel economy and tap growing markets, the airline has decided to let go of its CRJ 700s and ATR 42-320 aircraft, The ATRs are being replaced by ATR 72-600s, the first of which was delivered to the airline on December 16th.

IndiGo- the only consistently profitable carrier in India, reported lower profits in FY13-14 compared to the year before that. The airline received its 100th Airbus A320, completing an order that was placed with Airbus in 2005 – a year before it started operations. All aircraft in the next order of 180 aircraft, which was placed in 2011, have reportedly been converted to NEOs. The A320 NEOs are expected to enter service only late next year. To bridge the gap between then and now, the airline has short term dry- leased nearly 13 Airbus A320-232s from TigerAir – the Singapore based ill-performing low cost carrier, which witnessed TigerAir Madala – the Indonesian arm. shutting operating this year, freeing up a large number of airplanes. IndiGo has been on an aggressive expansion, trying to launch services on routes that AirAsia India operates, thereby attempting to stifle the competition. The airline crossed 500 daily flights in 2014. The airline placed an order for 250 additional aircraft this year, and has reportedly placed an order for an additional 80 aircraft. IndiGo is leveraging scale to grow, and is attempting to capitalise on the void left behind by SpiceJet to gather a larger market share. The airline had a share of 33% of the market in November, and a fleet of 86 airplanes.

GoAir received two Airbus A320-214SL this year, but deferred delivery of what would have been its 20th aircraft. With a fleet of 19 aircraft, the airline cannot fly international due to the 5/20 rule which is expected to soon be relaxed. The airline’s growth has been slow, but managed to report modest profits for the last financial year.

Air Costa, the Vijayawada based startup airline, started the operations of Embraer E190 aircraft in April, becoming the first airline in India to do so. With a fleet of four aircraft – two 112 seat E190s and two 67 seat E170s, the airline flies to about 9 cities, with only Jaipur and Ahmadabad in the north. The airline completed one year of operations in October. Growth plans at the airline have been stunted relative to earlier projections, due to preparedness at the airline. In February, the airline placed a firm order for 50 Embraer E2 aircraft, comprising 25 E190-E2 and E195-E2. The airline is focused on connecting Tier I and Tier II cities to other Tier II and III cities.

Regional startup airlines- Air Pegasus and Turbo Megha (branded as Trujet) are working towards their AOP. Bangalore based Pegasus received its first aircraft – an ATR 72-500 that previously flew for Kingfisher airlines. Both are expected to be ATR 72-only operators for the short term atleast. Chennai based Premier Airways, which has sufficient funding and obtained its NOC in July 2014, plans to start operations with Airbus A320 aircraft, and has already formed a team.

Fly Easy – the brand name of the Bangalore based regional airline started by ABC Aviation and Training Services Private Limited, has started recruiting personnel across all departments in anticipation for a 2015 launch. The airline has Finn Thaulow as its CEO. Finn comes with over 25 years of aviation experience that will immensely help the airline.

TATA-SIA, Premier Airways, Zexus Air, and Air One Aviation were the airlines that were granted an initial NOC in 2014. Kingfisher Airline’s two year period to renew its AOP, which was cancelled by the DGCA on 31-December 2012, came to a close. If the airline wishes to restart, it now must go through the entire process including obtaining an NOC.

International airlines Emirates, Lufthansa and Singapore Airlines commenced Airbus A380 services to India, to Delhi and Mumbai.

Fuel prices started falling since August, with India witnessing the benefits much later. Falling prices have eased the pressure on airlines while raising hopes for survival amidst intense competition.

Aircraft

On the Indian front, the INR 5000 Cr HAL-NAL regional transport aircraft (RTA) program took a step forward with the initiation of a search for a suitable engine developer, despite industry experts being sceptical about the success of the program.

Mahindra Aerospace, the only private player in the field, which acquired aerostructures and aircraft manufacturing capability with its acquisition of Gippsland Aeronautics and Aerostaff Australia in 2009, rebranded the ‘GA’ series of aircraft as Airvans, to align with the Mahindra brand. On November 19th, Mahindra secured DGCA approval to sell the Australian produced, eight seat, single engine piston powered Airvan 8 aircraft in India, marking a major milestone for Indian general aviation.

On the global front, Airbus was in the limelight for two program’s key milestones. The Airbus A350-900 airliner, built by Airbus to compete with the Boeing 787 Dreamliner, received type certification on September 30th, after almost a year long certification campaign with five aircraft, making it one of the shortest campaigns in airliner history. The first A350-900 was delivered to launch customer Qatar Airways on 22nd December 2014.

The Airbus A320NEO took to the skies for the first time, on September 25th with the Pratt and Whitney PW1100G engines, with a target certification in November 2015. Flight tests of the GE LEAP 1A – optional power plants for the A320NEO, began flight testing in October. Firm orders for the A320NEO stand at 2,931.

Airbus launched the Airbus A330NEO during the 2014 Farnborough Air show, in association with Rolls Royce that launched the T7000 engines to power the aircraft.

Boeing began production of the first Boeing 737MAX airplanes in October. The Boeing 737 MAX 200 – a 200 seat 737MAX was launched with Ryanair. The first Boeing 787-9 was delivered to Air New Zealand in July. The MAX’s powerplant -the GE LEAP 1-B engines- began ground testing in June 2014. Firm orders for the 737MAX stand at 2,553.

Both the Boeing 747-8i and the Airbus A380 did not receive any new orders in 2014, questioning the relevance of the very large aircraft in the market.

ATR’s focus on its turboprops has paid off, with the sales of the ATR72 outstripping Bombardier’s Q400. However, the manufacturer shelved its 90-seat aircraft project. The manufacturer delivered its 200th ATR72-600 on 22nd December, ending the year with close to 70 airframes produced and delivered. In contrast, Bombardier produced and delivered about 25 Q400 airframes in 2014. Bombardeier delivered the first 86 seat dense cabin configuration of the Q400 to Nok Air in August.

Bombardier’s CSeries program announced a delay, pegging the entry into service of the CS100 in the second half of 2015, followed six months later by the CS300. However, on May 29th, an uncontained engine failure on one of its CS100 test aircraft further impacted the program through delays due to investigation. The aircraft resumed test flights in September, three months after the test flight fleet was grounded. Uncertainties forced the launch customer, Lufthansa’s Swiss, to back out as the launch customer. The first CS300 airframe was fully assembled in November. Total firm orders stand at a total of 243 for the CS100 and the more popular CS300.

Bombardier’s business jet Learjet 85 took to the skies for the first time on April 9th, 2014, while the Challenger 350 was awarded a type certificate.

Embraer, the only major competing regional jet manufacturer for Bombardier, began producing parts for the second generation of Ejets- E2, in October. The manufacturer ends the year with 270 firm orders for its E2 jets. Embraer also rolled out the first E175 with fuel burn improvements.

Embraer’s business jet Legacy 500 received its type certification.

Mitsubishi , which forays into the civil aviations sector after almost 50 years, rolled out the first 90 seat MRJ-90 in October, becoming the newest entrant in the regional jet space.

China’s Commercial Aircraft Corporation of China (COMAC)’s ARJ21-700, became the country’s first homemade regional jet to earn a type certificate from the Civil Aviation Administration of China on 30th December 2014. The aircraft, which can seat up to 90 passengers in a single class, first flew on the 28th of November, 2008 – six years ago. ARJ21 is short for ‘Advanced Regional Jet for the 21st Century’. The aircraft bears a striking resemblance to the out of production Boeing 717, which in turn is a derivative of the McDonnell Douglas MD80.

On the general aviation front, the most significant business development was the acquisition of Beech Holdings, LLC by Textron Inc, bringing major names like Cessna, Beechcraft and Hawker under Textron Aviation.

Dassault rolled out its newest aircraft, Dassault 8X on 17th December, 2014.

On 19th May 2014, Gulfstream introduced the G650ER-as a G650 variant- as the world’s longest range business jet with a range of 7,500 nautical miles. The aircraft achieved FAA certification on 8th October 2014. On 14th October, 2014, Gulfstream announced the launch of a new aircraft family – the G500 and G600, both clean sheet designs, targeting high cruise speeds.

Technology

On the Indian civil aviation technology front, Airports Authority of India and ISRO’s project, GPS-aided geo-augmented navigation (GAGAN) was commissioned on 14th February 2014, allowing GPS to be used as a primary source of navigation information, allowing for more direct and fuel efficient GPS routes.

In February, United Airlines became the first airline to retrofit its Boeing 737NG aircraft with Split Scimitar Winglets from Aviation Partners Boeing, leading to up to 1.5% of fuel savings. Many airlines followed suit, and the winglet modification is soon set to become a common sight.

Disasters

The year 2014 lost more than 1202 people – civilians and military personnel- to aviation-related accidents. Of over 151 untoward occurrences in the year, 61 were accidents involving a hull loss claiming 857 lives, 57 that suffered repairable aircraft damage with no fatalities, 20 cases of sabotage that claimed 354 lives, and 3 cases of hijacking.

Of these, airline accidents claimed 916 lives, with the most disturbing accidents involving two South-East Asian airlines across three accidents – the 8th March disappearance of Malaysian Airlines MH370 operated by a Boeing 777-200ER when flying between Kuala Lumpur and Beijing, the 17th July shooting down of Malaysian Airlines MH17 operated by a Boeing 777-200ER when flying between Amsterdam and Kuala Lumpur, with the wreckage landing in Ukraine, and the 28th December crash of Indonesia AirAsia QZ8501 operated by an A320 when flying between Surabaya and Singapore. Together, these three accidents have claimed 699 lives, which is about 60% of all fatalities in 2014.

A Spanish registered Swiftair McDonnell Douglas MD-83 operating for Air Algérie as AH-5017 from Ouagadougou to Algiers lost control and crashed in Mali on 24th July, claiming 116 lives. An ATR 72-500 flying for Taiwanese airline TransAsia Airways crashed into trees when executing a go-around at Magong Airport, on 23rd July, claiming 48 lives. A DHC-6 Twin Otter 300 flying for Nepal Airlines from Kathmandu to Jumla crashed into a mountainside on 16th February, claiming 18 lives.

In India, an Airbus A320 operating as AI-890 from Guwahati to Delhi suffered damage on 5th January 2014 when it landed at Jaipur in poor visibility. No lives were lost.

Conclusion

2014 was a very eventful year in the history of aviation, with Indian aviation witnessing the largest swings – the birth of two airlines and the near collapse of one. The year unfortunately also witnessed some of the worst airline disasters that claimed the lives of hundreds.

2015 is set to be an interesting year of survival and opportunities – for both airlines and aircraft manufacturers, as the dynamics of the market change in response to new developments, including falling crude oil prices.

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