LAXDESI
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Indian Aviation Thread: Part 98

Wed Jun 13, 2012 4:49 pm

As per AAI, for the fiscal year 2011-2012 ending in March, Indian aviation traffic recorded the following growth:
http://www.airportsindia.org.in/traffic_news/mar2k12annex3.pdf

Domestic 122 million (15% growth)
Intl............ 41 million ( 8% growth)
Total.........163 million ( 13% growth)

For reference, USA which is currently the largest aviation market is about 700 million passengers. One would expect the growth to decline in the future due to expected slowdown in both the Indian and global economy.

DEL at 36 million is about 5 million more passengers than BOM.
 
JOYA380B747
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RE: Indian Aviation Thread: Part 98

Wed Jun 13, 2012 5:03 pm

Quoting LAXDESI (Thread starter):
DEL at 36 million

Thats some growth over the last fiscal, where it was around 29 million pax.
If it wasn't for AI and those money mongers sitting in the parliament, 9W would have been as big as SQ...:(
 
LAXDESI
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RE: Indian Aviation Thread: Part 98

Wed Jun 13, 2012 5:15 pm

Quoting JOYA380B747 (Reply 1):
Thats some growth over the last fiscal, where it was around 29 million pax.

My understanding is that DEL has capability to handle nearly 60 million passengers and it has enough land to grow to about 100 million passengers.

Another thing to note about Indian aviation is that the top five airports in India(DEL,BOM,MAA,BLR,CCU) account for 62% of the total traffic. It use to be even higher in the past.

[Edited 2012-06-13 10:20:17]
 
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RE: Indian Aviation Thread: Part 98

Wed Jun 13, 2012 5:30 pm

Quoting LAXDESI (Thread starter):
One would expect the growth to decline in the future due to expected slowdown in both the Indian and global economy.

While the economy is slowing down, I expect to continue to see growth in the sector, as liberalization continues and demand grows.
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LAXDESI
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RE: Indian Aviation Thread: Part 98

Wed Jun 13, 2012 5:51 pm

Quoting aeroblogger (Reply 3):
While the economy is slowing down, I expect to continue to see growth in the sector, as liberalization continues and demand grows.

I meant to say growth rate will decline and not growth. The current growth rate is less than the average growth rate of recent past. Law of large numbers is coming into play.
 
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RE: Indian Aviation Thread: Part 98

Wed Jun 13, 2012 7:13 pm

Quoting aeroblogger (Reply 3):
While the economy is slowing down, I expect to continue to see growth in the sector, as liberalization continues and demand grows.

Rohit, there is a direct correlation between rate of GDP growth and air traffic growth. Normally 1.5x ~ 2x. So do not expect too much in 2012~13.
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RE: Indian Aviation Thread: Part 98

Wed Jun 13, 2012 11:58 pm

Quoting BLRAviation (Reply 5):

Rohit, there is a direct correlation between rate of GDP growth and air traffic growth. Normally 1.5x ~ 2x. So do not expect too much in 2012~13.


Which even at the Q1 GDP growth rate implies 7.5-10% traffic growth in 2012. The avg multiplier for India in the last year is somewhere in the range of 1.2-1.3 implying traffic growth rate of around 6% if GDP growth settles at 5%.
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 12:02 am

Air India pilots suspect ulterior motive in hard stance against them.
http://economictimes.indiatimes.com/...inst-them/articleshow/14108393.cms

Quote:
A no-compromise approach adopted by Civil Aviation Minister Ajit Singh and the Rs 30,000-crore bailout package have allegedly led to the hardening of stance by the government in its dealings with the agitating Air India pilots, which is in sharp contrast to the soft manner in which the government dealt with the striking pilots of erstwhile Indian Airlines a year ago.

Sources in the aviation ministry told ET that the IPG was told clearly that the environment has changed and that they can no longer be treated the same way as the ICPA. Also, much of what is transpiring currently at Air India comes from the fact that Ajit Singh does not share the same sympathy with the unions as former minster Vyalar Ravi.
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 4:07 am

Quoting BLRAviation (Reply 5):

Rohit, there is a direct correlation between rate of GDP growth and air traffic growth. Normally 1.5x ~ 2x. So do not expect too much in 2012~13.

10% growth is nothing to sneeze at...
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 5:07 am

Taxes make Indian airfares 200-300 per cent higher than China: Jet Airways chief Naresh Goyal said on Monday, asserting that the aviation industry could not grow with such taxation.
http://timesofindia.indiatimes.com/b...esh-Goyal/articleshow/14024264.cms

Jet Airways' promoter Naresh Goyal changes stand, open to FDI in aviation.
http://articles.economictimes.indiat...esh-goyal-sky-team-indian-carriers
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 5:20 am

Quoting LAXDESI (Reply 9):
Taxes make Indian airfares 200-300 per cent higher than China: Jet Airways chief Naresh Goyal said on Monday, asserting that the aviation industry could not grow with such taxation.

Common sense... If only the government possessed some.

Quoting LAXDESI (Reply 9):
Jet Airways' promoter Naresh Goyal changes stand, open to FDI in aviation.

Now that it's pretty clear that IT won't be able to benefit (nobody in their right mind would invest now), he has no problems with it...
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 5:28 am

Quoting aeroblogger (Reply 8):
10% growth is nothing to sneeze at...

Ehh no, see my post above, but growth isn't likely to be 10%
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 5:49 am

Quoting vin2basketball (Reply 6):
Which even at the Q1 GDP growth rate implies 7.5-10% traffic growth in 2012. The avg multiplier for India in the last year is somewhere in the range of 1.2-1.3 implying traffic growth rate of around 6% if GDP growth settles at 5%.
Quoting vin2basketball (Reply 11):
Ehh no, see my post above, but growth isn't likely to be 10%

The average GDP growth rate during the aviation fiscal year April 2011-March 2012 was 7.1%. From the OP, aviation sector had a growth rate of 13% which yields a growth factor of 1.83(13/7.1).

Assuming a GDP growth rate of 5-6% and growth factor of 1.8 for the current aviation fiscal year, aviation growth of 9-11% is likely. Time will tell.
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 6:18 am

Quoting aeroblogger (Reply 8):
10% growth is nothing to sneeze at...

Please read my interview with Dinesh Keskar. Last year Indian air traffic growth was in the upper teens, yet it was a profit-less growth. Massive growth with massive losses are an oxymoron driven by extreme over-capacity. Both 9W and 6E are guilty of contributing to this over-capacity by adding planes at a breakneck pace.

The fact that the Kingfisher fleet has reduced from 64 to 16 aircraft, with hardly a dent in airfares, shows how much more capacity needs to be removed from the system.

In case of 6E, they placed a massive order, and the world has very little demand for A320 classics now that the neo is 4 years away, so they have to take the aircraft, but I do not understand why Jet is expanding its fleet without a corresponding increase in market share.

Quoting LAXDESI (Reply 9):
Jet Airways' promoter Naresh Goyal changes stand, open to FDI in aviation.

Sorry to say this, but Mr. Goyal is a very big hypocrite in my humble opinion. He has been using his massive political clout and engineering India's civil aviation policy to suit his airline for over 20 years now. He has been blocking FDI since it would badly affect Jet Airways. Now with the writing on the wall he cannot be seen as blocking, plus he realises with the almost demise of IT, 9W valuation has increased dramatically, at least from a business importance view, not a financial view.

Despite all the indirect help Jet and he have received over the years from successive administrations, Jet Airways' performance has plateaued out. Just like Dr. Mallya, the operational control of Jet needs to be removed from the Goyal family and put in to the hands of serious professionals, and not figureheads.
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 5:17 pm

Quoting BLRAviation (Reply 13):

The fact that the Kingfisher fleet has reduced from 64 to 16 aircraft, with hardly a dent in airfares,

Reduction in capacity should cause an increase in fares - not dents. And an increase is what we are seeing, whatever the reason.

Quoting BLRAviation (Reply 13):
In case of 6E, they placed a massive order, and the world has very little demand for A320 classics now that the neo is 4 years away, so they have to take the aircraft,


IIRC, 6E also ordered 30 new OEOs alongwith the NEOs . There is no indication that they wish they hadn't. Since the productions slots for the NEOs are almost full, the OEOs will continue to be in operation around the world. The lower capital cost for used frames will offset the relatively higher fuel costs.
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 6:55 pm

Quoting aeroblogger (Reply 8):
10% growth is nothing to sneeze at...

That would be *excellent* growth for the US or Europe.

Quoting BLRAviation (Reply 13):
Both 9W and 6E are guilty of contributing to this over-capacity by adding planes at a breakneck pace.

We can debate on the sources of 6E's profit, but as long as they are profitable, why not expand quickly?

Quoting BLRAviation (Reply 13):
The fact that the Kingfisher fleet has reduced from 64 to 16 aircraft, with hardly a dent in airfares, shows how much more capacity needs to be removed from the system.

Air fares went up with the downsizing.

AI's strike helped even more:
http://www.moneycontrol.com/news/cnb...india-strike-continues_716939.html

What is up with searching Google today? I searched for Kingfisher, Indigo, and others airline terms and it found no news documents (limited search to news). Normally I would provide more links... I've done search for work and also no documents were showing up... (very strange...).

Quoting LAXDESI (Reply 12):
Assuming a GDP growth rate of 5-6% and growth factor of 1.8 for the current aviation fiscal year, aviation growth of 9-11% is likely. Time will tell.

Thank you for the numbers.

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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 8:21 pm

Mallya "too smart to fail"?

See http://www.ft.com/cms/s/0/4b43db0c-b...a6-00144feabdc0.html#axzz1xngQtWHl .

Excerpt:

"Kingfisher has never turned a profit since it was founded in 2005 and its market share has shrunk, from the second largest to the smallest among India’s six carriers.

Mr Mallya’s friends say he has performed a miracle keeping the airline aloft, considering its net debt of about $1.5bn, by scaling down its fleet and pruning routes to a handful of profitable links between major cities.

Suhel Seth, managing partner of Counselage, a New Delhi-based marketing consultancy, says Mr Mallya “is too smart to fail”.

He “knows how to work the system and to my mind he was worked it to the advantage not only of himself but even to his customers,” Mr Seth says."

End of excerpt.

I do not place too much faith personally in Suhel Seth's airline business acumen, but it is telling that he can freely make such a claim. And he is a good personal friend of Mallya, judging from how he has hung around with him in the IPL VIP box over the years, so he is hardly unbiased.

Your thoughts?
 
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RE: Indian Aviation Thread: Part 98

Thu Jun 14, 2012 9:39 pm

Quoting sankaps (Reply 16):
Mr Mallya’s friends say he has performed a miracle keeping the airline aloft, considering its net debt of about $1.5bn, by scaling down its fleet and pruning routes to a handful of profitable links between major cities.

Suhel Seth, managing partner of Counselage, a New Delhi-based marketing consultancy, says Mr Mallya “is too smart to fail”.

Are they profitable? I seriously question that. Even if the $1.5 billion of debt is ignored.

But that debt cannot be ignored. Over $100 million per operating aircraft in a high cost structured company. Mr. Mallay is obviously smart, but no one can manage a company from that level of debt per narrowbody aircraft to profitability and:
1. In an extreamely competitive environment.
2. Kingfisher airlines currently has a tarnished brand image (results in lower RASM)
3. Kingfisher is cut off from the travel agencies (results in a lower RASM)
4. A reputation for irregular flight schedules (is IT flying with decent ontime and dispatch performance now?).
5. Lack of international transfer customers (should boost RASM, at least for 9W).

At this point, any IT route in the black is just a route waiting for 6E to step in.

I'm impressed IT is still flying. I do not believe in 18 months they still will be flying. If anyone has an aircraft delivery schedule for 9W and 6E, I could fine tune that prediction further.   

Quoting aeroblogger (Reply 10):
Now that it's pretty clear that IT won't be able to benefit

I share that sentiment.


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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 7:11 am

Quoting sankaps (Reply 16):
Suhel Seth, managing partner of Counselage, a New Delhi-based marketing consultancy, says Mr Mallya “is too smart to fail”.

Friends will support friends till the end  

Heard that AI might be headed for a temp lockout if the strike continues.
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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 1:02 pm

Quoting lightsaber (Reply 15):

Traffic growth was 5% in May after 6% in April and 2-3% in March.
 
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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 1:23 pm

Quoting vin2basketball (Reply 19):
Traffic growth was 5% in May after 6% in April and 2-3% in March.

That's it? I would have expected it to be higher for May... I understand the low March figure because of the massive decrease in ASKs with IT cutting flights.
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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 4:46 pm

Jet Airways to withdraw JFK flights from September. If they can't make JFK work, why are they planning to add 9 A333?
http://timesofindia.indiatimes.com/b...tember-10/articleshow/14151133.cms

Quote:
Jet Airways recently decided to cut money-losing international routes, including long-haul flights to Johannesburg and some short-haul flights to the Gulf as part of a consolidation plan. Jet Airways today said it would withdraw its services to New York (JFK) from September 10, though it would continue to operate to Newark International Airport.

The premier airline, which posted a loss of over Rs 294 crore($53 million) in the quarter ended March 31, said that as part of its "ongoing network evaluation with clear focus on profitability, (the airline) will be redeploying its assets on its existing route network.

"This has hence necessitated the temporary suspension of the airline's Brussels-New York (JFK) flight effective 10th September 2012." An airline spokesperson said regular daily services would "continue uninterrupted to two major gateways in North America, Newark and Toronto, with its Mumbai-Brussels-Newark and Delhi-Brussels-Toronto routes." Jet would also continue to operate its daily service on the Chennai-Brussels-Chennai route, the spokesperson said.

[Edited 2012-06-15 09:47:08]
 
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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 5:31 pm

IndiGO launches five daily flights to Dubai, Bangkok. Perfect opportunity to take over bilateral slots as others are struggling.
http://economictimes.indiatimes.com/...i-bangkok/articleshow/14151895.cms

Quote:
Expanding its international operations, low cost carrier - IndiGo today announced the launch of five new daily direct flights connecting Dubai and Bangkok with Chennai, Hyderabad, Kochi and Delhi from August.

The airline will launch three new flights to Dubai from Hyderabad, Chennai and Kochi while one additional daily direct from Delhi. It will also begin a new flight on Delhi-Bangkok sector.
 
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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 5:47 pm

Quoting LAXDESI (Reply 21):
Jet Airways to withdraw JFK flights from September. If they can't make JFK work, why are they planning to add 9 A333?

I totally agree, and I don't understand Jet's marketing strategy here by citing JFK as a loss making route. If they are indeed inducting those 333s and deciding to add more flight in North America, why not just say so?
I don't understand but 9W is by now infamous for its conflicting press releases.
If it wasn't for AI and those money mongers sitting in the parliament, 9W would have been as big as SQ...:(
 
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RE: Indian Aviation Thread: Part 98

Fri Jun 15, 2012 7:29 pm

MAS cargo have launched once weekly A332F service to MAA as KUL-MAA-CMB-KUL since May.
 
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RE: Indian Aviation Thread: Part 98

Sat Jun 16, 2012 7:30 am

6E to go double daily DEL - BKK eff 10AUG

6E 43 DEL - BKK 1825 0010+1
6E 44 BKK - DEL 0110 0410


Daily A320 operation
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RE: Indian Aviation Thread: Part 98

Sat Jun 16, 2012 6:11 pm

Quoting LAXDESI (Reply 22):
The airline will launch three new flights to Dubai from Hyderabad, Chennai and Kochi while one additional daily direct from Delhi.

Thank you. It there a list of bilateral rights 6E has requested?

Also, of India's weekly rights to Dubai, how many are unused? I would expect 6E to have the potential to open up new routes with zero competition to Dubai (assuming customs and such is set up).

Quoting vin2basketball (Reply 19):
Traffic growth was 5% in May after 6% in April and 2-3% in March.

Is that 6E's growth?

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aeroblogger
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RE: Indian Aviation Thread: Part 98

Sat Jun 16, 2012 6:15 pm

Quoting lightsaber (Reply 26):
Is that 6E's growth?

No, overall growth in the Indian sector. It is affected by IT's rapid drawdown, but it also mirrors the slow GDP growth India has had so far this year.
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LAXDESI
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RE: Indian Aviation Thread: Part 98

Sun Jun 17, 2012 4:16 pm

Government not waiting for striking AI pilots to return. I hope this tough stance is for real, and will survive political pressure.
http://economictimes.indiatimes.com/...jit-singh/articleshow/14210890.cms

Quote:
Virtually sounding a warning to the striking Air India pilots, Civil Aviation Minister Ajit Singh today said the government is not waiting for the pilots to return to work but making plans to move ahead.

Reminding the pilots and other employees that their survival was linked to Air India, he said that nobody is going to give anymore public money to the airline and "they will not survive for too long" if the company does not become competitive.

"We are not waiting. We are making plans. If you take the pilots trained in V-737 or Airbus 320, (in) three to six months they can be trained to fly these planes.
 
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RE: Indian Aviation Thread: Part 98

Mon Jun 18, 2012 4:42 pm

IndiGo, SpiceJet's market share up; Air India, Kingfisher lose ground. Could 2013 be the year Indigo ends up with highest market share? Given the current trend, it won't be long before AI's market share is in single digit.

Indigo has the highest load factor at 86.3%, with AI lowest at 70.6%
http://economictimes.indiatimes.com/...se-ground/articleshow/14246282.cms

Quote:
While Air India saw the largest fall in market share in the reporting month to 16.2 per cent from 17.6 per cent in April, the second largest no-frills carrier SpiceJet saw its market share rising to 18.5 per cent from 17.7 per cent in April, according to the latest data released by civil aviation regulator DGCA.

The largest low-cost airline IndiGo saw its market share rising to 24.9 per cent in May from 23.8 per cent in April, while the Jet Group saw its share more or less stagnating at 27.9 per cent, it said.
 
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RE: Indian Aviation Thread: Part 98

Mon Jun 18, 2012 4:51 pm

Quoting LAXDESI (Reply 29):

While Air India saw the largest fall in market share in the reporting month to 16.2 per cent from 17.6 per cent in April

A significant amount of the marketshare drop can be attributed to the strike...
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RE: Indian Aviation Thread: Part 98

Mon Jun 18, 2012 7:02 pm

AI Cargo have ended freighter operations, any idea where the six 737F went?
 
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 3:20 am

Quoting 777way (Reply 31):
AI Cargo have ended freighter operations, any idea where the six 737F went?

Probably retired? They were old...

But I'm not sure. Let me see if I can find out...
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 3:24 am

Quoting aeroblogger (Reply 30):
A significant amount of the marketshare drop can be attributed to the strike...

Was is more striking is the unaccounted part of the market is 5.3%. The only missing airline's market share is IT...

Amazes me seeing IT going from #1 (briefly) to #6. At this point, once the others gain a few more aircraft, it won't matter if IT exits the market.

As far as AI, I expected a larger drop due to the strike. So for myself, the minor market share drop for AI is actually encouraging for their chances.

Lightsaber
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 9:17 am

Quoting 777way (Reply 31):
AI Cargo have ended freighter operations, any idea where the six 737F went?

Heard 5 B732F +1 B732C are still stored,But I guess they'll be scrapped for spares.....Only countries Interested would be in Africa & South America.

[Edited 2012-06-19 02:20:18]
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 5:18 pm

When does LH start service to DEL with the 748?
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 7:15 pm

Quoting 777way (Reply 31):
any idea where the six 737F went?

What happened to all the old pax A310s that were converted to freighters? Didn't Deccan 360 take one or two? Any idea where these aicraft are now? My first commercial flight was in one of these, so I was a bit curious..

Quoting mk777 (Reply 35):

When does LH start service to DEL with the 748?

Does BLR get the 748 too?
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 10:31 pm

Air India's contingency plan in peril as 30 executive pilots report sick.
http://economictimes.indiatimes.com/...port-sick/articleshow/14282600.cms

Quote:
The situation at Air India, which has witnessed 42 days of pilots strike, might snowball in the coming days as nearly 30 executive pilots reported sick on Tuesday citing excessive work pressure. This could result in more flight cancellations making it difficult for the national carrier to stick even to the contingency plan.
 
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RE: Indian Aviation Thread: Part 98

Tue Jun 19, 2012 11:03 pm

Quoting sturmovik (Reply 36):
Does BLR get the 748 too?

Yes, in winter '12 schedule i think.
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 3:48 am

14 international flights abroad cause 80% of AI loss. If true, this explains why the management is being tough with the striking pilots.

I wonder if AI is losing less money during the strike on. It is entirely possible that operating revenues from these flights do not cover the direct operating cost.
http://www.asianage.com/india/14-flights-abroad-cause-80-loss-559

Quote:
A report submitted by a government—appointed committee has concluded that 14 international flights, including long-haul ones, are accounting for 80 per cent of the financial losses in flight operation of national carrier Air India. These include flights such as the Amritsar-Delhi-Toronto flight.
 
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 4:17 am

Quoting LAXDESI (Reply 39):
14 international flights abroad cause 80% of AI loss. If true, this explains why the management is being tough with the striking pilots.

While I think that coming to this conclusion probably required some creatinve accounting, it certainly wouldn't surprise me. Those ULH flights to the US have poor yields and sky-high operation costs, and the government is refusing to let AI drop any of them for prestige reasons. Most of them don't even pay for the fuel used to operate... In comparison, the domestic and regional international operations are in far better shape...
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 5:51 pm

Air India loses around Rs 500 crore, extends contingency plan till July.
http://economictimes.indiatimes.com/...till-july/articleshow/14303081.cms

Quote:
Cash-strapped Air India has suffered a loss of around Rs 500 crore due to the 45-day-old pilots' strike, forcing the airline management to extend its curtailed international flight plan till July 31.

Air India has lost around Rs 500 crore in terms of revenue in the ongoing strike, as the airline has been incurring losses to the tune of about Rs 10 crore per day, sources told PTI today, a day after Air India CMD Rohit Nandan said the national carrier was also "making some substantial savings".

"It was not possible to calculate the savings now, as we have to fulfil our commitments to our vendors on quarterly or half-yearly basis. At least we are making savings on some of the flights like Delhi-Toronto, on which we were losing Rs 300 crore annually," he had said.
 
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 6:27 pm

Quoting LAXDESI (Reply 41):
At least we are making savings on some of the flights like Delhi-Toronto, on which we were losing Rs 300 crore annually," he had said.

Obviously a rationalization must occur. DEL-YYZ is losing ~65 million dollars per year? The purchase price of the airframe quickly drops into the noise.

From your link:"Domestic operations of Air India are also being run normally and there have been no disruptions due to the present agitation, he said."

That tells me that, for the last six weeks, it is easy to believe the majority of the losses were international for AI.

Quoting aeroblogger (Reply 40):
Those ULH flights to the US have poor yields and sky-high operation costs, and the government is refusing to let AI drop any of them for prestige reasons.

I think the above shows the ULH to Canada are possibly worse. Either way, they must be dropped as the GOI cannot afford to subsidize AI 10 crore per day due to the various bond rating warnings for India's debt.

I hope AI resolves the strike soon as they will not survive this for long. The cash drain is greater than the GOI can afford to make up at this time on top of their 'regular losses.' AI must also resolve their IT issues so that they can enter an alliance ASAP with that nice revenue boost. (IIRC 8% was predicted)

We're almost at the point of no-return for AI.

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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 6:41 pm

Quoting lightsaber (Reply 42):
Obviously a rationalization must occur. DEL-YYZ is losing ~65 million dollars per year? The purchase price of the airframe quickly drops into the noise.

Yeah, $60 million a year is ridiculously high. These ULH routes must be rationalized. And it needs to happen soon - the current situation w/r/t ULH routes is unsustainable.

Without the ULH routes, AI would be in far, far better shape.

Unfortunately, the government has come up with brilliant plans for route "rationalization" like routing through LJU so the flight can be subsidized by the Slovenian government and so that the flight can be fed by Adria   

I kid you not - the Indian government has instructed AI to consider this instead of axing routes.

Quoting lightsaber (Reply 42):
various bond rating warnings for India's debt.

The Indian media has criticized this like crazy. Spain, which just recieved a massive bailout, has an investment grade rating higher than India. Personally, I'm hoping for a downgrade - it'll be a nice slap in the face of the politicians who have landed us in this mess. Maybe it'll wake them enough to implement at least some of the market reforms which are desperately needed.

Quoting lightsaber (Reply 42):
AI must also resolve their IT issues so that they can enter an alliance ASAP with that nice revenue boost. (IIRC 8% was predicted)

AI's IT issues have been resolved for almost a year now. I agree that joining an alliance ASAP would be ideal, but there are a variety of other issues which need to be sorted out first. The most ideal solution to the alliance issues AI is facing would be for 9W to announce that it is joining SkyTeam. Then AI can join *A almost immediately. However, that's rather unlikely to happen with any type of haste.
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 8:00 pm

Quoting aeroblogger (Reply 43):
I kid you not - the Indian government has instructed AI to consider this instead of axing routes.

   Poor AI, the logic escapes me... AI needs to be run like a business. Rationalize hubbing at DEL/BOM to maximize the RASM and cut the routes that will not be cash flow positive.

Quoting aeroblogger (Reply 43):
Personally, I'm hoping for a downgrade - it'll be a nice slap in the face of the politicians who have landed us in this mess.

It would be a slap, but you do not want that. Below investment grade is a big deal. The constriction on credit happens far quicker than a rating downgrade that stays above or below BBB-. That is the 'step function' as a large fraction of money may not invest below that rating. (Well, they can keep 2% in below investment grade bonds, IIRC, but that is it.)

It is best to impliment the changes to avoid the bond rating cut below investment grade. Once cut, it takes a minimum of a year to climb back up. I've never seen it that quick, but it is theoretically possible.

Quoting aeroblogger (Reply 43):
The most ideal solution to the alliance issues AI is facing would be for 9W to announce that it is joining SkyTeam. Then AI can join *A almost immediately.

Yet 9W seems to be further along with *A. I'm not sure why 9W isn't accelerating plans as the added revenue that an alliance should bring is just enough to put them into the black.

Quoting aeroblogger (Reply 43):
AI's IT issues have been resolved for almost a year now.

That time frame does not jive with *A statements.

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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 8:14 pm

Quoting lightsaber (Reply 44):
Yet 9W seems to be further along with *A. I'm not sure why 9W isn't accelerating plans as the added revenue that an alliance should bring is just enough to put them into the black.

At the beginning, 9W declared that it was like EK and that it would be highly successful alone.

After AI and IT were happily in bed with *A and SA)">OW respectively, 9W decided that it also wanted to join an alliance. It is choosing between *A and SkyTeam, because SA)">OW was "taken" by IT at the time...

I think that once IT goes under (and it'll have to happen soon enough), maybe SA)">OW might be smart and grab 9W, or even AI. It's far better than being shut out of the Indian market.

If 9W chooses *A, AI will not be permitted to join *A (1 airline per alliance policy). That is pretty much the only thing which will move AI towards another alliance at this point - AI is thoroughly aligned with *A right now, with SQ, LH, SA, TK, and Adria all being major partners...

Quoting lightsaber (Reply 44):
That time frame does not jive with *A statements.

I am confident in my source. AI's IT has been ready since last July.

Quoting lightsaber (Reply 44):
Poor AI, the logic escapes me... AI needs to be run like a business. Rationalize hubbing at DEL/BOM to maximize the RASM and cut the routes that will not be cash flow positive.

AI has done this to an extent, with the DEL hub. In fact, it's one of the greatest things to happen to AI in recent history - choosing a single hub and actually trying to utilize it properly. And with the new Terminal 3 infrastructure, AI actually runs a pretty decent operation.

However, money losing routes need to be cut. YYZ, ORD are the 2 which stand out as being the most unprofitable right now.

And no, unless the Slovenian government is paying for the entire operating costs, it's unlikely that LJU is going to make AI more profitable. Most people have never heard of Slovenia, forget wanting to go there.

Quoting lightsaber (Reply 44):

It would be a slap, but you do not want that. Below investment grade is a big deal. The constriction on credit happens far quicker than a rating downgrade that stays above or below BBB-. That is the 'step function' as a large fraction of money may not invest below that rating. (Well, they can keep 2% in below investment grade bonds, IIRC, but that is it.)

It is best to impliment the changes to avoid the bond rating cut below investment grade. Once cut, it takes a minimum of a year to climb back up. I've never seen it that quick, but it is theoretically possible.

I don't think UPA-II is capable of reform. It doesn't seem to be in their vocabulary unfortunately.

If a bond downgrade is what it takes to get the message that reform is necessary to our political leaders, so be it. We elected these idiots, we get to deal with the mess  
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 8:36 pm

Quoting aeroblogger (Reply 45):
I think that once IT goes under (and it'll have to happen soon enough), maybe SA)">OW might be smart and grab 9W, or even AI. It's far better than being shut out of the Indian market.

I agree 9W could choose their alliance. None want to be left out of India. However, my point is that 9W will see a rapid increase in revenue after joining an alliance. Any alliance (with some being better options than others). I wonder why they are not selection an alliance to join?

Quoting aeroblogger (Reply 45):
AI is thoroughly aligned with *A right now, with SQ, LH, SA, TK, and Adria all being major partners...

Agreed. I wonder if that is why 9W wants into *A, to disrupt AI.

Quoting aeroblogger (Reply 45):
I am confident in my source. AI's IT has been ready since last July.

Interesting. I wonder how much this has to do with 9W and *A then?

Quoting aeroblogger (Reply 45):
AI has done this to an extent, with the DEL hub.

I'm an engineer. We always find room for improvement.   I think AI could boost their long haul RASM another 5% by further optimization at DEL.

Quoting aeroblogger (Reply 45):
However, money losing routes need to be cut. YYZ, ORD are the 2 which stand out as being the most unprofitable right now.

Then cut them. One question, if YYZ were to be cut, would it help ORD? Just a question that should be asked.

Quoting aeroblogger (Reply 45):
And no, unless the Slovenian government is paying for the entire operating costs, it's unlikely that LJU is going to make AI more profitable. Most people have never heard of Slovenia, forget wanting to go there.

I know people buying property in Slovenia. It isn't to do business... I just do not see the business case.


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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 8:42 pm

Interesting that ULH to North America is losing money. Any reasons why?

One would think, that these would be solid money-makers for any airline given the amount of traffic. Really, if ULH fails, then the Gulf 3 will own traffic between NA and India.
 
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 8:45 pm

Quoting lightsaber (Reply 46):
Interesting. I wonder how much this has to do with 9W and *A then?

Everything. AI wanted exclusivity in *A. *A wanted both AI and 9W. MoCA declared the 1 airline per alliance rule. AI's membership was suspended. Very simple chain of events.

Mind you, this is completely from the AI perspective. If you look at it from *A's perspective, it looks different of course. But it doesn't change the fact that AI's IT is ready.

Quoting lightsaber (Reply 46):
Then cut them. One question, if YYZ were to be cut, would it help ORD? Just a question that should be asked.

If AI partnered with AC for YYZ flight feed (and this was going to happen after joining *A), I think the YYZ flight would do fine. Ditto with UA and the ORD flight.

Currently, AI has a serious feed problem. Therefore, they are stuck depending on O&D - and in order to fill the aircraft, the yields are crap.

I agree that if a route is losing $60 million a year, and AI can't come up with a solution, it needs to be cut. Sadly, that's easier said than done.

Quoting lightsaber (Reply 46):
I agree 9W could choose their alliance. None want to be left out of India. However, my point is that 9W will see a rapid increase in revenue after joining an alliance. Any alliance (with some being better options than others). I wonder why they are not selection an alliance to join?

I wonder the same. Often.

But 9W has shown a lot of irrationality in its management, especially of late. It's difficult to figure out why they do anything, assuming they have a reason at all.
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RE: Indian Aviation Thread: Part 98

Wed Jun 20, 2012 9:15 pm

Quoting YTZ (Reply 47):
Really, if ULH fails, then the Gulf 3 will own traffic between NA and India.

I would disagree. The hubs in Europe will continue to funnel a large amount of traffic to India. Right now the issue is the lack of Indian carriers in an alliance post Kingfisher's down-sizing.

Quoting aeroblogger (Reply 48):
Everything. AI wanted exclusivity in *A. *A wanted both AI and 9W. MoCA declared the 1 airline per alliance rule. AI's membership was suspended. Very simple chain of events.

I would just add more than a few steps:

AI wanted into *A (and expected exclusivity for India)
Two years go by...
*A wanted both AI and 9W (it happend far along in the process)
MoCA declared the 1 airline per alliance rule.
AI's application was suspended.

9W is left with?

Quoting aeroblogger (Reply 48):
If AI partnered with AC for YYZ flight feed (and this was going to happen after joining *A), I think the YYZ flight would do fine. Ditto with UA and the ORD flight.

The *A partners were equally frustrated. But at some point AI must demonstrate they will play by *A rules. Unfortunately for AI, *A demand to India is basically met through FRA hubbing from North America (during the downturn).

Quoting aeroblogger (Reply 48):
But 9W has shown a lot of irrationality in its management, especially of late. It's difficult to figure out why they do anything, assuming they have a reason at all.

I have come around to that opinion. Did they have a management change since 2007? Or did growth mask the irrationality? Or couse it?  

9W should choose an alliance soon. Really soon (as in within 90 days). That, due to political reasons, pretty much leaves Skyteam...

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