CaliguyNYC wrote:lightsaber wrote:dtw2hyd wrote:
Different POV. SpiceJet is being force-fed for potential winter hibernation. If Modi is not next PM, SpiceJet is toast. SG will face the same fate as 9W.
What SG trying to do is make itself relevant.
SpiceJet seems to be profitable now:
https://m.moneycontrol.com/stock/SJ01/f ... /quarterly
Last quarter was a tough quarter yet they made money. If you mean by relevant is to increase economy of scale, I agree. Advertising is a fixed cost for a fleet of 20 or 200. So growing at an opportunity is key.
Jet's failure made this quarter and next quarter easy moneymakers. Then a set of traditionally profitable quarters. So I think SpiceJet is on the right track.
India needs more low cost transit. This is an opportunity to expand. There are suddenly 1,600 pilots, many 737 pilots, in need of work. Indigo botched their pilot quantity and will need six months to 9 months to recover. Who else will expand quickly? I hope GoAir (I'm a Pratt fan), AirAsia, and Vistara too.
I'm in R&D, so I'm trained to think long term. The MAX and NEO open up so much international expansion opportunities for SpiceJet and Indigo. Those two have the cost structure to expand. Indigo has the cash, but not the pilots. (Oops).
India has gone from over served to under served. I believe the market is about 8% under-served today. I also believe the market is growing 15% to 20%. So there is opportunity for profits. Airlines with low costs will sail through the next over-supplied timeframe. I predict that over-supplied condition is 15 to 24 months out (dependent on growth rates of India's economy as well as airlines).
So yes, POV. Now is the time to make hay.
Late edit:. Indigo was going to have 50% of their growth international in 2019. I wonder how Jet's failure impacts domestic vs. international growth. Obviously certain routes that were at their seat caps are key.
Does anyone have a list of the seats/week Jet abandoned? I'm only interested in capped markets.
It will be very interesting as to what EY does with the LHR slots that were Jet's.
Lightsaber - I don't get it. You say India had overcapacity before. Now that Jet is in trouble, instead of allowing the market to stabilize to the right size, you are advocating a mad dash to grab slots on the first come first serve basis (despite the govt saying it was temporary). How does this build a good process for aviation? You also threw in DXB slots. It doesn't need to be a mad dash and the smaller airlines should absolutely be given slots. Also the govt, with the govt banks, are still trying to save Jet or create a new Jet. Why would the govt be going through that process and at the same time dismantle all the value Jet has??? I have to say, I am really confused by your and edealinfo's posts. If your opinion is just kill Jet and let the banks not get anything for their debt own and have indigo be a bigger force in aviation, then your plan works best. Btw IMHO India needs as affordable air travel that is sustainable. Below cost airfare is destructive. The lowest tier of traffic that might be lost if fares rise say 5%, will travel via train. Business and tourists need stability in air travel. Employees want stable jobs as well.
Without air service, India's economy is going to grow slower. You cannot delay growth. If it happens, you multiply off it.
Right now I estimate India is short the capacity of about 50 to 70 aircraft. If those missed opportunities are not made up quickly, India will grow slower economically. There must be, as you called it, a mad dash to relate these aircraft. Jet has removed about 120 aircraft from service. So the oversupply is gone and we are in shortage.
If those aircraft are replaced timely, economic growth over the next 12 months creates a demand for another 100 to 150 aircraft.
Jet has no value in my opinion. If I am wrong, some of what they were will be saved. Customer loyalty is forever reduced. The fleet, even if restarted I'll be small.
Damage is being done to the Indian economy by not meeting customer demands:
How is hotel occupancy?
How is the pace of new business contracts?
There is more, but aviation enables business. Passenger air travel is a small part of the economy that enables much other growth.
I believe SpiceJet and Indigo are both sustainable. Both made profits during the worst.
Indigo will add 30% more capacity over the next 12 months no matter my opinion. They have the profits and means to do so. I believe 50 aircraft, but larger gauge.
SpiceJet will add the NGs (was it 15:or 26?) plus resume MAX deliveries soon. So a growth of what, 45 to 50 aircraft in 12 months?
GoAir will add NEOs. 8 to 15 over that time.
Vistara will grow.
AirAsia will grow.
Jet might return, but with how many aircraft?
So the market needs 50 to 70 aircraft NOW!
There will be economic growth for 100 to 150 more.
So I add up about 130 aircraft in 12 months out of a need for 150 to 220. Hence why I predict it will take 15 to 24 months to go back to over-supplied.
The market hasn't stabilized. It went from over-supplied to under-served. That is what happens when about 120 aircraft are suddenly withdrawn from service. Stabilization would be for me to snap my fingers and put 50 to 70 aircraft in service. That won't happen under any scenario.
I believe you are not understanding the nature of exponential economic growth. It is either enabled or doesn't happen. I believe India is approaching the steep portion of the S curve of economic growth. To achieve that they need transportation, electricity, education, clean water, and sewers.
Jet was one little part of the big picture, 14% of domestic travel and about the same international, perhaps a wee bit more.
So I believe my post is correct. The GoI had 8+ months to solve this problem.
I agree with stability is needed. But also markets need growth as demand asks for it. I believe Indigo, SpiceJet, and GoAir will provide that stability. The market is working.