Sudden buzz in Aviation Industry

I was planning for a week-long trip this November, and my plans started falling apart after I saw the airline ticket prices going up rapidly. The day (23rd Sept) I checked the fares, return tickets for two adults from BOM (Mumbai) to IXB (Bagdogara) via DEL (Delhi) travelling in November on  Air India (1 stop with the lowest layover time) costed Rs. 19,601. The fare for the same flight went up to Rs. 22,408  the very next day. On 3rd day, the fare again changed to Rs. 24,402. Today, the same flight tickets would cost me Rs.36,282.

Woot! That’s a rock solid increase of Rs. 16,681 in ticket fare in just 4 days for a flight trip planned almost 2 months in advance. I had to wait for my salary to come to book trip tickets for this huge amount, and it now does not make any sense. As you might assume, I backed off from booking the ticket. (more…)

Aviation woes

Having followed two of country’s biggest aviation debacles of this decade, I have started accepting the fact that they may not last long. Of the two, Kingfisher is already in doldrums and I have already covered it many a times on my blog. And the other one is Air India.

Why Air India now? Because I was just imagining what if today’s Air India was not backed by Government? It will just exactly be another Kingfisher.

What is plaguing aviation sector in India today? Is it higher fuel costs or inefficiency? If it was the former, then how come IndiGo Airlines is in profits today after just 6 years into its operations and also be the market leader? Jet Airways had always ruled the roost in India and is on top during last two decades among Private airlines and to topple them, you need meat! And thats exactly what IndiGo did.

What makes the airline different? For starters, it only uses one type of Aircraft, the Airbus A320. This keeps its cost in check and second, has outsourced its aircraft maintenance operations to SriLankan Engineering, a subsidiary of SriLankan Airlines. This is due to excessive taxations imposed on local MRO providers. Then it sticks to its low cost model and really does not experiment out of its core operations or have a business class on its planes. Except for its IndiGo plus services which offer on board meal and predefined seating at a small fee. While keeping the costs low, it has a very strong emphasis on on-time performance which makes it really likable for a frequent traveller. And hardly comments have come my way about rude IndiGo staff or unsatisfactory services as compared to other airlines, including Jet.

What surprises me even more is the fact that Indigo is rapidly expanding its fleet at the same time and is currently adding a new A320 every 6 weeks!

Now think about this with Air India and Kingfisher, both Airlines currently in doldrums while former is walking on a blanket of tax payer’s money. Air India has both Airbus and Boeing Fleet for its operations and Kingfisher is operating Airbus and ATRs, with a Boeing 727 exclusively used for UB Group. The maintenance costs for multi-make aircrafts goes significantly up as the airline has to hire specialists for a type of air craft or invest in months of training for its engineers. Air India has multi-make Aircrafts for political reasons too. India has been promoting foreign investment in India by the manufacturer in exchange of confirm orders for Airbus or Boeing.

I am reiterating my earlier post about Air India and its treatment of employees, its Internal customers. And Kingfisher is just following suit. Strikes, delay in payments. I wish to see the aviation sector continue to grow. And I will read these very words back again.

Feature Picture: Stock.Exchange

SpiceJet becomes first to import fuel

It came to me as a surprise! It was SpiceJet and not Kingfisher that got the nod first to import Aviation Turbine Fuel (ATF) among all the airlines in India. This will enable Spicejet to substantially lower its operational costs which is an estimated saving of approximately 10 per cent.

Another surprise was that it will be the Reliance Industries Ltd which is likely to import jet fuel for SpiceJet, being the only private oil marketing company that has presence in many airports across the country.

I am wondering what happened to Kingfisher. Given its dire situation it is in today, it should have been an ideal candidate for the nod. Am sure there is some logic to this situation but unclear to me.

SpiceJet will run a pilot to evaluate the whole process to check its economic viability.

Troubled Kingfisher seeks help

This is one of the many times Oil marketing companies have refused fuel to troubled Kingfisher airlines. In the past, they have done and they are doing it now too. The airline is pretty much grounded with 50 to 100 cancellations. I wonder how other airlines are able to cope up.

Vijay Mallya, the face of Kingfisher has even gone out of his way to seek help from government which has assured him of considering any sort of help possible, however not a bailout. I don’t think Kingfisher deserves a financial bailout but yes, any assistance other ways should be considered thinking of the fate of many employees who are at the risk of losing their jobs. It is the last thing aviation industry wants to see. As well, Kingfisher has sought to import fuel directly and use it for its airline operations. Hmm, that way he can save state taxes? I need some law people to help me understand how?

Kingfisher Airlines
Troubled Kingfisher Airlines trying to stay afloat

Having keenly observed the rise of aviation industry, a correction was due and airlines started responding by increasing the prices where possible and then seeking independence in pricing strategy from government. Mandates to fly non-profitable routes from government is hitting all airlines badly given the constant raise in the fuel prices. Plaguing issues like depreciation of rupee making expenditure in US Dollar or Euro terms even more costly.

I don’t think media has the right to sensationalize the issue linking up personal lifestyle of Vijay Mallya. He is the face of the airline, which doesn’t mean he is the only one running the airline. And the state of Indian aviation does not paint a rosy picture at the same time. Linking up to personal lifestyle is like linking up our Politicians to their chairs. Politicians cannot lavish on tax payers money and neither should.

Yes there are airlines which posted profits, like IndiGo. And if anyone asks me personally, I would like to Fly Kingfisher than IndiGo for the pure lure for luxury and something I could afford. After gobbling up Air Deccan and turning it into a Frills Low cost airline, Kingfisher Red, what Mallya has done is to give luxury to middle class. If Captain Gopinath has given Indians an airline to simply fly, Mallya gave it luxury.

I don’t align with the theory of Mallya’s decision to shut down Kingfisher Red. One business where you have volumes, where you have more opportunities to cut costs, gets much better efficiencies. Extracting profits, leveraging your prime slots, get back to the fight with medium fares to low fares. If I was in Mallay’s shoes and I had to shut down Kingfisher Red, I would have done that differently.

Kingfisher Inside
Kingfisher Inside

I would have brought back Captian Gopinath and ask him to manage this business separately with keeping 51% stake for myself and giving rest of the 49% for his company. And from the money I gain from the sale of 49% stake, I would have bailed out my airline. Or Captain Gopinath would not agree, I would have gone for someone else who is able enough.

From the recent news I hear, Kingfisher is in talks with an Indian Company for a stake sale. Yay, why did it took so long?