Jet Airways offers special airfare discount for Rotary South Asia Literacy Summit in New Delhi

by Devesh Agarwal

Jet Airways is offering a special discount on domestic airfares to attendees of the Rotary South Asia Literacy Summit to be held in New Delhi on December 14 and 15. The airline will extend a 5% discount on the base fare and fuel surcharge.

Use the discount code "JETRSA2013" when making the booking on the Jet Airways website.

Other terms of the offer :

• Sale Validity from 12 Nov 13 to 15 Dec 13
• Travel Validity 1 Dec 13 to 20 Dec 13
• Valid on all Jet Airways / JetKonnect domestic flights within India
• Valid on all classes

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Analysis: Jet Airways to withdraw from Bhubaneswar

by Vinay Bhaskara

According to several reports, Mumbai-based full service carrier Jet Airways is planning on pulling out from Bhubaneswar from the Winter 2013/14 season. Inventory has been zeroed out from 27th October onwards and flights to and from Bhubaneswar are no longer bookable on jetairways.com. Additionally, sources are saying that Jet Airways has not requested slots at Bhubaneswar for this winter, though we will have to wait for the release of route information onto the Global Distribution System (GDS) to confirm this news.

During August, Jet Airways has operated three flights per day to Bhubaneswar, daily Chennai-Bangalore-Bhubaneswar and return, daily Mumbai-Bhubaneswar and return, and daily Kolkata-Bhubaneswar and return. Mumbai-Bhubaneswar and Kolkata-Bhubaneswar are served with JetKonnect Boeing 737-800 equipment, while Bangalore-Bhubaneswar is served with full service 737-800 equipment. The current service level actually marks a reduction from planned levels at the start of the summer, as an additional two flights per day to Kolkata were initially filed with the Directorate General of Civil Aviation (DGCA) utilizing ATR 72-500 turboprop equipment.

If true, the cancellation of Bhubaneswar is a poor step on the part of Jet Airways. One of the few strengths remaining for the financially struggling Jet Airways is its powerful domestic network, with 49 domestic destinations. Bhubaneswar is the 18th busiest airport in India, and one of the most important destinations in Eastern India. However, Jet Airways has been facing challenges thanks to the steady growth of low cost carrier (LCC) IndiGo in the Bhubaneswar market. IndiGo is the largest carrier in the Bhubaneswar market, with nine flights per day this summer to five nonstop destinations; Delhi, Hyderabad, Kolkata, Mumbai, and Vizag.

Even with the increased LCC competition, it does not make sense that Jet did not at least keep around Mumbai-Bhubaneswar for feed purposes. With the new Mumbai integrated terminal arriving by the end of next year, Jet Airways has the opportunity to build a strong regional hub at Mumbai connecting passengers domestic to international and vice-versa. Since Mumbai-Bhubaneswar is served with JetKonnect equipment, with lower operating costs, it is likely losing the least money of Jet's Bhubaneswar services, and thus it would have made sense for Jet to keep Bhubaneswar around.

But the cancellation is just the latest a growing pattern of poor network decisions made by Jet Airways over the past few years. It is certainly possible for airlines to cut services on their way to profitability; but that usually applies to redundant or heavily money-losing capacity that does not serve a strategic purpose (Delhi-Milan being one rare example at Jet Airways); not a key short haul destination. 

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Jet Airways Q1 FY2013~14 performance analysis - part 2 - JetLite, aircraft utilization, and ancillary revenues

by Vinay Bhaskara

JetLite continues to be a (modest) bright spot in Jet Airways’ broader operations. The low cost wing of Jet Airways, which was recently merged with the JetKonnect brand to streamline low cost operations, reported a net post-tax profit of Rs. 6.9 Crore, down from Rs. 11.7 Crore a year prior.

An increased proportion of JetKonnect’s fleet was contained within the mainline operation, and standalone JetLite’s fleet declined to 13 frames from 19 last year. Thanks to this reduction in fleet size, revenues declined 17.2% on a 17% decline in available seat kilometers (ASKs) and revenue per available seat kilometer (RASK) declined 0.3% with cost per available seat kilometer (CASK) increasing 1.4% year over year (YOY). CASK and RASK are used to adjust revenue and cost figures for segment length. Operating margin for JetLite stood at 5.1%, up from 3.8% the year prior.

The low cost wing of Jet Airways continues to outperform the full service wing domestically. And given the economic slowdown, weakening salary growth, and heavy inflation, customers, even business travelers are likely to pinch pennies and be more frugal in consuming air travel. At least on domestic sectors, the Indian purchasing behavior pattern has skewed more heavily towards low cost carriers. It probably makes sense for Jet to focus on expanding its low cost operations as a proportion of overall operations. For example, JetLite (and by extension JetKonnect) have unit costs that are roughly 23.5% lower than those of mainline Jet Airways; a significant advantage in challenging the low cost carriers (LCCs) who have only grown in stature as Jet has shrunk in parallel.

Turning to a structural analysis of Jet’s business, one of the key factors dragging down financial performance for Jet is now its large net debt, as we mentioned in Part 1, which stands at Rs. 12,100 Crore ($2.1 billion). Commensurately, financial charges increased to Rs. 234.13 Crore for Q1. But Jet’s problems do not necessarily end there; the network may be an even bigger challenge. On the conference call, Jet mentioned that in the domestic market, it has no immediate plans to cut capacity from its Q1 levels, on which it operated 32,500 quarterly departures utilizing 42 737s split between the 737-700/800/900 variants (12 for JetLite) and 14 ATR 72 (one for JetLite). The remaining 19 737s, 14 A330s (10 A330-200s, 4 A330-300s), and seven 777-300ERs are used to operate the 9,350 quarterly departures internationally. 

On international sectors, we asked why Jet had chosen not to operate the A330-200 on shorter haul sectors as several of the aircraft are underutilized, and their Vice President of Commercial Strategy and Investor Relations K.G Vishwanath responded by stating:

From a financial standpoint, we have always seen that the 737 or a single aisle aircraft is the most suitable airplane for any flying distance between zero to five hours. And you have been in this business for four, five years and you know very surely that the margin you are able to make on the 737 is significantly higher as compared to the A330. The A330 airplane is basically an overkill for a short-haul given that fuel costs are very expensive and the fact that the flying distance is very short, you end up running more fuel and it does not give you the right kind of revenue per RPKM to be able to make a decent margin.

In our view, under-utilization of the A330 fleet is not justified by the (slightly) higher operating margins that can be driven on the 737. When you include the financing costs (leases and/or debt costs) of the A330 fleet, the airline is likely losing more money on the underutilization of the A330s, than it is gaining from the higher margins on the 737s. Moreover, the idea that the A330 is very expensive on shorter haul routes is correct to a degree, but not overall. The A330 has lower unit costs (CASK) than the 737s, which Jet needs volume to profit on. An expensive, unused asset is more costly in the short term than imperfect alignment of asset with mission.

Mr. Vishwanath also tackled ancillary revenues during the call:

So currently our ancillary revenues appears in the other income line you will see in the P&L. We’re currently at roughly 4 to 5% of our top line revenues. We would like to take this number up to 10% of top line in the next two to three years.

This is a very positive strategy on the part of Jet. Looking at the global airline industry, the West in particular, sustainable profitability for full service carriers has occurred over the past 4-5 years primarily because of ancillary revenues; especially checked baggage fees and change fees. Growing ancillary revenue is a good way for Jet to tackle the profitability issues that have cropped up in the domestic market.

Read Part 1 of this analysis here

Stay tuned for Part 3 of this analysis, in which we tackle Jet Airways’ fleet plans and a way to reduce their debt load.

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Jet Airways reduces free baggage allowances

Jet Airways and JetKonnect have effectively hiked their fares by Rs. 1,250 by reducing the economy class free baggage allowance from 20 kilos to 15 kilos on all domestic flights within India, effective May 15, 2013. Cabin baggage will be restricted to seven kilos, against a national norm of eight kilos.

Frequent flyers who are JetPrivilege elite status members, (Platinum/Gold/Silver), will continue to receive the additional free baggage allowance as per their status. Business class passengers will continue to receive 30 kg of free baggage allowance.

A flat rate of Rs.250 per kilo will be applicable for baggage over and above the free baggage allowance.

This is the first salvo being fired across the bows of the aviation regulator The Directorate General of Civil Aviation, who till now, has mandated, a 20 kilo checked baggage allowance. One can expect other airlines to follow suit.

For now, passengers who are travelling with extra baggage, we suggest you consider GoBusiness of GoAir which offers a whopping 35 kilos of free baggage allowance. i.e. about Rs. 3,750 ~ Rs. 5,000 worth of additional baggage for Rs. 2,500 extra, not including the additional goodies of extra leg space, meals, and free re-booking and changing of flights.

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Jet Airways site says they halved ticket pices in a sale, but we cannot find the savings

by Devesh Agarwal

Experience India’s biggest air ticket sale with 20 lakh seats on over 450 daily flights across 57 cities within India. Lofares on Jet Airways and JetKonnect flights starting INR 2,250.

is what Jet Airways' website screams at you as one of the largest Indian carriers launches a mega sale valid till February 24, in which it appears to have cut its fares in half.

Jet's sale appears to be another salvo in a fare war which is seeing the price discipline of Indian airlines over the last one year slowly disappear. This fiscal discipline which brought the airlines back in to profitability, has also seen passenger load factor percentages dip from the high 80's in to the 60's.

Earlier this year, low cost carrier SpiceJet, had offered one million seats at an all inclusive fare of Rs. 2,013 for any domestic flight between February 1 an April 30. Jet Airways is topping this offer with two million seats, for travel through the calendar year 2013.

However, like the SpiceJet sale, one has to take the Jet sale with a pinch of salt. A quick check of fares by Bangalore Aviation for fares in the first week of March on the airline's website for a round-trip Bangalore Delhi returned fares of Rs. 14,500 compared to Rs. 8,700~9,500 on fare search website Ixigo flown on SpiceJet or IndiGo. The comparison was done for similarly timed flights, and using the lowest fare in the time slot (morning, mid-day, late afternoon, evening) including the low fare JetKonnect.

Terms and conditions of the offer (as per the Jet Airways website at time of publication):

• Offer valid for booking in Economy between February 19, 2013 and February 24, 2013 (both days inclusive)
• Offer valid only for bookings on www.jetairways.com and www.jetkonnect.com
• Travel must commence on or before December 31, 2013. The travel validity for this offer may differ based on your journey but not later than December 31, 2013.
• Offer not valid on International flights
• Fares indicated are as on date
• This offer cannot be combined with any other offers / discounts / promotions / JPMiles redemption Award tickets from Jet Airways or JetKonnect

For more details visit the airline's websites. Be warned though, both sites are sluggish with many fliers taking advantage of this offer.

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Indian Aviation Review 2012. Part 2: The airlines' analyses

by Vinay Bhaskara

As promised, here is the second part of Indian Aviation's 2012 review, with an airline by airline analysis of the events in 2012.

Air India

2012 was another banner year in Air India’s agonizingly slow death spiral. Whether it was yet more labor turmoil related to the still not completed merger with Indian Airlines, a botched Entry Into Service (EIS) for the Boeing 787 Dreamliner (though admittedly 2013 has not exactly been a banner year for the 787 thus far), or a will they/won’t they attempt at selling off a portion of the Boeing 777-200LR fleet, Air India once again set new records for mismanagement.

The 787 EIS, while botched, is still an incredibly positive step for Indian and global aviation. The 787 is currently plying select flights between Delhi and Tier 1 metros (Kolkata, Bangalore, Chennai, et. al) as well as international flights to Dubai, Frankfurt, and now Paris. Even with Air India’s relatively uncomfortable configuration (18J/238Y) and atrocious interiors, the 787 is still a step forward in terms of product quality (read our trip report and review here). And as the airline integrates more 787s into its fleet, hopefully its good onboard product (the meals in Economy are excellent) will become more recognized.

See our cabin photos and cabin video walk-through here.

Routes wise, the year was mostly maintenance of the status quo, though parts of the long haul network were temporarily dismantled during the pilot’s strike. Toronto – the loss leader of the long haul network might not be coming back, which is finally a sensible move from Air India’s route planning department. Air India has appeared to settle on Delhi T3 as its primary long haul hub, which is fine with as long as they stick to it.

The strike of course was a microcosm of the broader challenges facing Air India; over-entitled employees asking for even more benefits (some highly unrealistic) despite market leading compensation. But from a practical perspective, Air India needs to get the labour situation sorted out as soon as possible. There are several inefficiencies that arise from having two “airline(s) within an airline” and Air India can hardly afford to lose more money.

During the last third of 2012, the airline was goaded in to action by the Ministry of Civil Aviation, Mr. Ajit Singh. We have not been given financial statements for almost two years from now, but here’s a (not-so) bold prediction, while Air India lost thousands of crores in calendar year 2012, its losses will be lower than from the years before.

GoAir

On the whole, GoAir had a relatively quiet year, at least by the standards of Indian carriers. It added the 13th A320 to its fleet, and with only 7 more current generation aircraft coming, it is pursuing modest growth for the foreseeable future. On the routes front, it added Chennai to the network but was otherwise quiet. I wonder however at the order for 72 A320neos. It’s viability is heavily reliant on GoAir getting approval to fly international routes as well where there is less competition and more room for individual airlines to secure their own niches.

Of course the most important fact about GoAir is that they are profitable, as Bangalore Aviation exclusively revealed in an interview with GoAir CEO Georgio de Roni back in October. Ultimately, that is the only metric that matters in this industry, and the following quote from Mr. de Roni was music to the ears: “Yes, we have a more cautious approach to growth. We are exclusively targeting profitability and not really market share.”

IndiGo

With no publicly available financial and operational data available for IndiGo, it is hard to qualitatively evaluate the airline. However, the major trend was a decided shift towards international expansion. IndiGo as well pushed towards international flying, though with a slightly different strategy than SpiceJet.

After launching services from Mumbai and Delhi to Singapore/Bangkok in Southeast Asia (Mumbai-Singapore/Bangkok have since been terminated and replaced with Chennai/Hyderabad – Singapore) as well as to Dubai and Muscat, it instead focused its 2012 efforts on growing its operations on the heavily trafficked route(s) to Dubai, adding services from Chennai, Hyderabad, and Kochi. It also added Kathmandu to the network with service from Delhi.

However, there is some question as to the viability of IndiGo moving forward. Already, reports have emerged that IndiGo is not operationally profitable and that its finances are supported primarily by high revenue from sale-leaseback of its fleet of Airbus A320 aircraft. Notwithstanding a potential collapse in the sale-leaseback market for current generation A320s as next generation re-engined products enter the market; IndiGo will thus have to maintain its high rate of A320 deliveries to keep delivering profits. They currently have 68 orders for the current generation A320, as well as the (formerly) record-setting 180 A320neos on order. But the question for IndiGo becomes, how will they adequately utilize all of these new aircraft?

Already with just 62 A320s in the fleet, IndiGo has found it hard to find enough flying. Beyond capacity dumping on Metro routes, the list of routes in India that can handle A320s is pretty much saturated by LCCs already. International operations are pretty much IndiGo’s only venue at this point, with the Gulf being the largest market within easy range of the A320s. IndiGo can replicate much of Air India Express’ market to the Gulf, though the process of securing flying rights from the Indian government is sure to be a challenge. In our opinion, IndiGo thus made a strategic blunder in committing to too many mainline aircraft and not ordering a turboprop like the Q400 or ATR 72 for service to relatively untapped tertiary markets.

Jet Airways

The year for Jet Airways was more mixed. The airline restructured its operations and saw rapid fare growth in the second half of the year as Kingfisher fell apart. They also fully embraced the power of sale-leaseback and made some good product decisions including unification of their low fare brands, (long overdue) reconfiguration of the 777-300ER fleet, and replenishment of the regional fleet. The flip side of course, is that Jet Airways still lost money overall for the year, but there steps in the correct direction.


I am a big fan of the international network restructuring; the most notable changes being the elimination of Brussels-JFK, Chennai-Brussels, Delhi-Milan, and Mumbai-Johannesburg, as well as several cuts to regional international flights. In today’s high tax, high-fuel environment, it represents smart capacity management which is not exactly a strong suit for Indian carriers. The benefits have already been seen, as Jet’s recent quarterly results have shown a marked improvement in international yield and brought revenues more in line with costs.

The A330-300 was inducted at the end of 2012, and the choice of the A330-300 was a smart one. The aircraft has very low unit costs (cost/available seat kilometer) and is a good tool for routes that have a lot of visiting family/relatives (VFR) and leisure traffic in economy class, and limited premium traffic. Moreover, the low economy class unit costs are especially important considering the growing competition for economy class travel from MEB3+1 rivals like Emirates, Etihad, Qatar Airways, and Turkish Airlines, all of whom have very low seat mile costs.

Similarly, reconfiguring the 777-300ERs into a higher density configuration will drive down unit costs on the flights to London-Heathrow. The 10 abreast configuration is rather uncomfortable but it is a necessary evil in competing with the MEB3+1. Emirates also has 10 abreast seating in its 777-300ERs. However, Jet should have gone further and stripped the extremely heavy First Class product from its 777-300ERs, thereby allowing the aircraft to do nonstop India-US flights.

Adding the ATR 72-600s is a good move, whether for replacing the existing ATR 72-500s, or for growth to combat the steady expansion of SpiceJet’s Q400 operation and expand on less competitive regional routes. Either way, it offers improved technology and fuel burn over the ATR 72-500 and should help bolster the regional operations at Jet.

The move by Jet Airways to consolidate LCC operations under the JetKonnect brand was a good one, as it helped reduce (but not eliminate) the brand confusion surrounding Jet’s multiple brands and service levels. However, the actual integration process has been slow, and the brand clarity is still lacking. When Kingfisher fell apart, much of the Konnect capacity was quickly converted back to full service to help fill the premium capacity void so perhaps there is some merit to the idea in terms of product flexibility.

Sale leaseback helped bolster the finances for Jet, even leading to a profitable Q1 for fiscal year 2012-13. But in general, the financial performance left something to be desired. Hopefully 2013’s finances will show improvement for Jet.

Kingfisher Airlines

2012 was a horrific year for Kingfisher, with the airline getting itself grounded and its airline operating license not renewed.

The depths to which this once mighty airline has fallen was symbolised by the suicide by the wife of one of its many unpaid employees, citing financial troubles. All this while the junior Mallya was tweeting about cavorting with hordes of models in sunny sands.

The government is still awaiting a viable business plan from the promoters, which will see scores of vendors including airport operators, fuel companies, and employees getting paid.

We’d like to do due diligence to Kingfisher with a proper eulogy. However, we will wait to see if Vijay Mallya can pull a proverbial “rabbit” out of his hat and resurrect Kingfisher before we write that post. Stay tuned!

SpiceJet

As with Jet Airways, 2012 was a mixed year for SpiceJet. On the positive side, the carrier grew its regional Q400 operation by leaps and bounds with great success and launched and announced several international routes. However, once again SpiceJet struggled financially, posting one quarterly profit over the course of the calendar year. It also failed to secure funding for an expansion of its Q400 fleet which signals a degree of market skepticism over SpiceJet’s business plan.

The expansion of the Bombardier Dash 8-Q400 turboprop operation was a very beneficial step for SpiceJet. The Tier I Metro routes between Chennai, Delhi, Mumbai, Bengaluru, Kolkata, and Hyderabad are heavily saturated with low cost and full service competition, and even the routes between Tier I and Tier 2 Metros are starting to reach that tipping point in many cases. The best point of expansion thus becomes the tertiary and even quaternary destinations like Vijaywada and Pondicherry where SpiceJet tends to have a monopoly or at worst duopoly with a full service carrier. Initial loads and yields for the Q400 fleet were very strong, that too from the relatively weak market of Hyderabad. As the operation expanded, SpiceJet began to shift capacity towards stronger business markets like Bangalore, Chennai, and Delhi, and the Q400 operation continued to grow in scope and reach.

First SpiceJet Q400 leaves Toronto for India

The Q400 fleet has the benefit of operating under special rules from the Indian government including reduced fuel taxes as well as takeoff and landing charges (ostensibly to grow air service to regional airports), so the Q400 operation is certainly a strong performer in SpiceJet’s tepid overall finances. The full order of 15 Q400s is now complete, and while SpiceJet has options to purchase 15 more from Bombardier, unfortunately it cannot find financing for the next 15 deliveries, which it desperately needs to expand the regional operation.

Internationally, SpiceJet launched several new destinations and flights. It already operates to Dubai, Riyadh, Colombo, Male, Kabul, Kathmandu, and will launch services to Guangzhou in 2013. It was smart for SpiceJet to make its primary international base at Delhi, as this is the largest base of VFR and leisure origin and destination (O&D) travel most likely to use a LCC. Overall, international expansion is necessary for any of India’s LCCs to utilize their fleet given the saturation of domestic routes with enough demand to support 737-800 and A320 size aircraft, and the Indian LCCs have all committed to significant fleet growth.

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Press releases - December 18

Boeing Names Michael Kurth as VP/GM, Unmanned Airborne Systems Programs

David Pitchforth to lead Boeing Defence UK Ltd.

ST. LOUIS, Dec. 17, 2012 -- Company veteran Michael Kurth will oversee Boeing's [NYSE: BA] unmanned airborne systems as of Jan. 1. Kurth, currently managing director of Boeing Defence UK Ltd. (BDUK), will relocate to St. Louis as vice president and general manager, Unmanned Airborne Systems Programs, reporting to Boeing Military Aircraft President Chris Chadwick.

David Pitchforth, managing director for UK Rotorcraft Support, a division of Boeing Global Services & Support, succeeds Kurth. In this position, Pitchforth will oversee BDUK's entire portfolio of products and services that support the Ministry of Defence and U.S. military programs.

"Mike Kurth has a sterling reputation for excellent performance within Boeing and in service to the United States," said Chadwick. "With his proven background in managing and executing diverse programs, developing strong customer relationships and opening new markets for Boeing products, there’s no one in the enterprise more suited for this role."

Most of the company's unmanned programs had been part of a Missiles and Unmanned Airborne Systems division. Effective Jan. 1, these programs will stand alone under Kurth to emphasize the strong potential of the unmanned market. In order to increase affordability, Unmanned Airborne Systems Programs will share functional support, such as Finance and Legal, with other elements of Boeing Military Aircraft.

Boeing wants to reduce its Defense, Space & Security business unit's costs by another $1.6 billion by the end of 2015, adding to the $2.2 billion it has identified since 2010.

Kurth, a retired U.S. Marine Corps colonel and graduate of the University of Wisconsin, joined Boeing in 1997. Prior to his current position in the UK, he led Business Development for what is today known as the Boeing Phantom Works advanced technology organization.

Since joining Boeing in January 2009, Pitchforth has been responsible for coordinating rotorcraft support activities and business development in the United Kingdom. To harness the breadth, depth and strength of the entire Boeing enterprise, Pitchforth will continue to work closely with Boeing UK President Sir Roger Bone as part of the in-country team designed to bring the best of Boeing to its commercial and defense customers.

Prior to joining Boeing, Pitchforth was senior vice president, UK Government Business Unit, and Westland Helicopters transformation director for AgustaWestland. Until March 2005, he was managing director and chairman of the Jaguar Racing Formula 1 team, a role that he undertook at the request of the Ford Motor Company.

A unit of The Boeing Company, Boeing Defense, Space & Security is one of the world's largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world's largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $32 billion business with 60,000 employees worldwide. Follow us on Twitter: @BoeingDefense.

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Boeing Raises Dividend 10 Percent and Resumes $3.6 Billion Share Repurchase Program

CHICAGO, Dec. 17, 2012 /PRNewswire/ -- Boeing (NYSE: BA) Chairman, President and Chief Executive Officer Jim McNerney announced a 10 percent increase in the company's regular quarterly dividend to 48.5 cents per share and the resumption of its stock repurchase program with repurchases currently expected to total between $1.5 billion and $2.0 billion in 2013.

"Strong cash generation, consistently solid core operating performance and a positive growth outlook enable us to take these steps to deliver value for our shareholders," McNerney said. "As returns accelerate on the investments we made in innovative new products, we plan to continue our balanced cash deployment strategy, increasing returns to shareholders, investing in our core businesses and our workforce, and maintaining a strong balance sheet with healthy credit ratings."

The repurchase program is expected to use the remaining $3.6 billion previously authorized by the Boeing board of directors in October 2007. Boeing plans to begin repurchasing shares following its fourth-quarter earnings announcement in late January 2013.

Boeing plans to make the share repurchases on the open market. The number and timing of shares to be purchased will be based on the level of cash balances, general business conditions and other factors, including alternative investment opportunities. The repurchase program also may be suspended or discontinued at any time.

The dividend is payable March 8, 2013, to shareholders of record as of Feb. 15, 2013.

Caution Concerning Forward-Looking Statements

Statements in this press release relating to the company's intention to repurchase shares of its common stock under the stock repurchase program are forward-looking statements. There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, the market price of the company's stock prevailing from time to time, the company's cash flows, general economic conditions and other factors identified in the company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and the company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Contact: Boeing Communications (312) 544-2002

SOURCE Boeing


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IATA Premium Traffic Monitor - October 2012

We are pleased to send you herewith IATA's assessment of premium and economy travel in October.

Key points:

• Premium traffic was just 2.3% higher in October compared to a year ago, down on the September result of 3.8%;
• Economy class travel was up 4.4% in October year-on-year, slightly weaker than September’s 5.0% growth;
• Hurricane Sandy was not the cause of weaker international travel in October, accounting for less than half a % point of the fall;
• In fact premium travel has been slowing for some months, with annualized growth of just over 1% since Q2;
• Within Europe and the North Atlantic have been the weaker markets, with year-to-date growth a fraction of 2011 performance;
• By contrast, premium markets connecting the Far East, Africa and Middle East continue to expand robustly;
• Looking ahead, the weak business environment is showing some signs of stabilizing as previous declines in business confidence reverse;
• Consequently, downward pressure on growth in air travel, particularly in premium markets, is expected to stabilize over coming months.

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Enerjet optimizes flight operations with Lido/FMS and Lido/iRouteManual

The Canadian airline Enerjet has decided for the Lido/iRouteManual navigation charts for the iPad and Lido/FMS navigation database from Lufthansa Systems. Both companies recently signed a contract to this effect.

Enerjet will use the Lido/iRouteManual iPad solution as the primary navigation source during all phases of flight. The app delivers professional navigation charts for instrument flight rules (IFR charts) to the iPad. Lufthansa Systems’ dynamic worldwide enroute chart provides superior de-cluttering for best readability at any zoom level. Enerjet is the first Canadian airline to fly completely paperless with the iPad. The Lido/FMS (Flight Management System) navigation database allows optimization of the flight route and supports the autopilot onboard modern aircraft. The navigation data is based on worldwide aeronautical information which is updated every 28 days according to the AIRAC cycle.

Enerjet is a charter airline headquartered at Calgary International Airport in Calgary, Alberta, Canada. The airline’s state of the art Boeing 737-700 Next-Generation Aircraft is available for charter to Canadian companies, organizations and groups, for domestic and International charter flights.


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oneworld News

oneworld wins two more 'best airline alliance' awards

18 December 2012
oneworld® has collected two more "best airline alliance" awards - named the World's Leading Airline Alliance in the World Travel Awards for the 10th year running and retaining the Best Airline Alliance title in the second annual awards presented by Australian Business Traveller.

After last week collecting the Best Airline Alliance awards for the third year running by Global Traveler in the leading business travel magazine's GT Tested Reader Survey 2012 Awards, it means that oneworld has retained all three of these leading "best alliance" accolades.

It also holds both alliance awards for the quality of wines served by member airlines - Global Traveler's Wines on the Wing and Business Traveller's Cellars in the Sky.
The World Travel Awards have been described by the Wall Street Journal as the "Oscars of the travel industry".  With this year's success, oneworld now has retained number one spot as its "leading airline alliance' for a full decade.

Among the individual airline winners, American Airlines was named the World's Leading Airline to North America and also North America's Leading Airline, while LAN was honoured as South America's Leading Airline.

For full details, see http://www.worldtravelawards.com/

Australian Business Traveller presented its debut industry awards in 2011.  oneworld was named its best airline alliance then - a title it retained in its 2012 honours, announced today.

The judges said: "oneworld partner airlines can take you almost everywhere a business traveller needs to go - a selection now bolstered through the inclusion of airberlin, with Malaysia Airlines and Qatar to follow.  It's easy to rack up oneworld frequent flyer points and status - and that status counts for plenty, with the oneworld Emerald tier opening the doors at some stunning First Class lounges even if you're flying Economy."

In the individual airline categories, British Airways and Qantas were judged first equal for Best International First Class Seats, while Qantas was honoured also for Best International Premium Economy and Best Australian Lounges.  Cathay Pacific took prizes for Best International Business Class and Best International Lounges.

For full details, see Australian Business Traveller

About oneworld
oneworld aims to be the first choice airline alliance for the world's frequent international travellers.   It brings together some of the best and biggest names in the airline business - airberlin, American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Qantas, Royal Jordanian and S7 Airlines, and around 30 affiliates.  Malaysia Airlines is on track to join on 1 February 2013, followed later by SriLankan Airlines and Qatar Airways.
Between them, oneworld's active member airlines and members elect:
    •    Serve some 860 airports in almost 160 countries, with more than 9,300 daily departures.
    •    Offer some 550 airport lounges for premium customers.
    •    Carry almost a million passengers a day on a combined fleet of more than 2,500 aircraft.
    •    Generate nearly US$ 120 billion annual revenues in total.
oneworld enables its members to offer their customers more services and benefits than any airline can provide on its own.  These include a broader route network, opportunities to earn and redeem frequent flyer miles and points across the combined oneworld network and more airport lounges.   oneworld also offers one of the most extensive ranges of alliance fares.

For more news from oneworld, see www.oneworld.com/news-information/oneworldnews/

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JET AIRWAYS IMPLEMENTS PROACTIVE FOG PREPAREDNESS PLAN

MEASURES TO MINIMISE PASSENGER INCONVENIENCE DURING THE WINTER MONTHS


Mumbai, December 18, 2012: Jet Airways, India’s premier international airline, and its low fare brand JetKonnect, have undertaken steps to minimize guest inconvenience in the likelihood of flight disruptions and cancellations on account of fog this winter season.

In case of anticipated flight delays/cancellations, guests are requested to check the status of their respective flights before leaving for the airport by calling the Jet Airways and JetKonnect call centres on 3989 3333, as also the airlines' toll-free numbers 1800-22-55-22 and 1800-22-30-20 respectively.

Flight status/updates can be retrieved via the airlines' Jet Mobile facility wherein guests may send an SMS: Jet (Flight number) to 56388. This service is also advertised on NDTV 24X7, India’s leading news channel.

In the event of flight disruptions due to fog, the airline plans to deploy additional aircraft for relief/additional flights, where possible. In case of flight diversions, operations out of alternate airports have been planned, while certain existing scheduled services will be re-routed or combined to ensure smooth operations during the fog period.

Consequent to the above, certain Jet Airways and JetKonnect flights have been re-scheduled, effective December 15, 2012 to January 15, 2013.

In terms of flight operations, all Jet Airways and JetKonnect aircraft are equipped and maintained to national and international standards for all weather operations (AWO), and our flight crew are trained and qualified to operate under these conditions.
The following flight has been cancelled with immediate effect until January 15, 2013: 9W 2647/2648 (Delhi-Gorakhpur-Delhi)

The airline will also provide the electronic media with regular flight updates throughout the day to ensure that passengers are constantly updated on the latest flight situations.

Jet Airways and JetKonnect will provide facilities to travellers affected due denied boarding, delays or cancellations in flights, as specified in the CAR issued by the regulator (DGCA).


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Pilot Workshop's Monthly Audio Lessons with Rod Machado

We are thrilled to introduce a unique, monthly audio program featuring one of our favorite flight instructors - Rod Machado.

Each month, Rod will deliver fresh audio content designed to renew and refresh your flying fundamentals. Learn new tips and techniques, or reinforce the good habits and skills you have developed over the years.

This program is appropriate for all pilots, from new students to Airline Transport Pilots and everyone in between.

Each lesson is approximately one hour in duration and can be played on your computer, smartphone or MP3 player (the files are formatted for easy import into iTunes or Android). As an option, we will also mail you an audio CD each month containing the lessons.

Listen to these audio programs in your car, at the gym or in your favorite chair. These fast-paced lessons are delivered with humor and a unique style that Rod is famous for.

We are offering special, introductory pricing for the "charter" subscribers. You'll receive a 50% discount off the regular subscription price and also get access to Rod's private online discussion forum.

More details here...

http://PilotWorkshop.com/t/Machado-Audio.php

This offer ends on December 23rd at midnight. Take advantage of this special, one-of-a-kind opportunity...you will have some fun and learn something really valuable in the process!

Respectfully,

Mark Robidoux

P.S. You can earn WINGS credits for each monthly audio program you complete!


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British Airways’ Pilots Switch To iPads

Posted on Tuesday, December 18th, 2012

British Airways is equipping its 3,600 pilots with iPads to further improve customer service and operational efficiency levels.

The move, which follows the airline’s rollout of iPads across its cabin crew and ground operations teams, is part of the company’s £5bn investment in new products and technology to provide the best possible flying experience for British Airways’ customers.

By having access to additional real-time operational data, shared with ground colleagues, pilots will be able to plan the flight more efficiently using the most accurate information available pre-departure.

This means our flight crew can provide customers with faster and more accurate flight information than ever before. With the latest operational updates customers will be better informed and able to make plans if their flight time has changed for any reason.

Pilots will also be able to use historic and current data, supplied by the customer, to provide an even more personalised service during the flight.

British Airways’ director of flight operations, Captain Stephen Riley said: “As pilots we want to deliver a safe and memorable experience for each and every British Airways customer, on every single flight.

“The iPads will help us to achieve this goal by giving us the means to provide a more personalised service and share more timely flight information with our customers and colleagues.”


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Aircraft to Employee Ratio in Air India

As on 31.01.2012, the aircraft to employee ratio in Air India was 1:237. There is no benchmark for aircraft : employee ratio in the industry. It varies from airline to airline depending upon the nature and extent of functions performed in house as well as the operational network of that airline. Most of the airlines have outsourced majority of their non-core functions such as aircraft major maintenance activities, ground handling activities, vigilance, transport, medical, civil engineering, etc. and also do not maintain departments such as Raj Bhasha, Internal Audit, etc. where as Air India performs these functions in house. The Government has approved hiving off the MRO and Ground handling business by Air India to its subsidiary companies viz. Air India Engineering Services Ltd. (AIESL) and Air India Air Transport Services Ltd. (AIATSL), which would bring down the number of employees in Air India and improve the Aircraft: Employee ratio to 1: 92.

This information was given by the Minister of State for Civil Aviation Shri K.C. Venugopal in a written reply to a question in Rajya Sabha today.


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Complaints of NRIs Regarding AI Flights

Ministry of Civil Aviation is receiving complaints from NRIs highlighting their difficulties faced during Air India flights. The complaints mainly correspond to Kerala-Gulf sector and relate to cancellation of flights, hike in air fare and flight timings etc.

Kerala-Gulf is a strategic market for Air India and its subsidiary Air India Express. Air India Express is trying to hire/recruit dedicated pilots for its fleet so that schedule integrity is maintained. It has chalked out a detailed time bound plan to recruit pilots so that scarcity of pilots can be addressed. Air India Express is a Low Cost Carrier, hence, fare is always kept at a lower level but it has to be commercially viable also. Air India Express also operates additional flights during festival season like Onam, Eid and school vacations to mitigate the difficulties faced by the passengers.

This information was given by the Minister of State for Civil Aviation Shri K.C. Venugopal in a written reply to a question in Rajya Sabha today.

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Infographic: Jet Airways fleet and aircraft orders matrix

By Devesh Agarwal

Thanks to one of our loyal readers, below is the type-wise aircraft fleet and order matrix for Jet Airways and JetKonnect.

Read more »

Jet Airways offers old Indian Airlines pre-paid booklet scheme to counter passenger flight to trains

Indian airlines are in a no-win situation.

From one side they face excessive taxation which distorts input prices like aviation fuel to twice its international price, from the other, airports hiking up charges.

After years of bleeding, the airlines have, for the last six months, been hiking airfares to redress the situation. However, many of the hikes are simply too high. For example, a two day advance notice one-way airfare from Mumbai to Ahmedabad ranges from around Rs. 11,000 to over Rs. 16,000.

The rule of thumb is that the aviation industry grows at twice the rate of a country's economic growth. Even with a low 5.5%, airlines should have seen a growth of 10%. Instead thanks to these fare hikes, air passenger number are dropping, down over 15% from a year ago.

The passengers are travelling, but they have migrated, en-mass, back to surface transport; trains and buses, especially on regional sectors of 300km~750km. Business travellers who often travel on short notice, especially regionally, are simply unable to afford these sky high fares.

The natural solution that comes to mind is, reduce the fares!!!! That is easier said than done. Any move will trigger a fare ware between the airlines, who simply cannot afford to bleed more money.

Caught between the devil and the deep blue sea, in a bid to counter this mass migration, Jet Airways is introducing the concept of the pre-paid coupon book called the “ONE FARE PASS”. The new booklets, valid for six months from the date of purchase, contain four coupons, each of which are applicable for one sector travel on domestic flights that are less than 750kms in distance, on either Jet Airways or JetKonnect flights. Connecting flights will require two coupons.

The price of a booklet for travel in Premiere class is Rs. 49,216 inclusive of all taxes (Rs. 12,304 per coupon). A four coupon economy class booklet is Rs. 19,606 (Rs. 4901.50/coupon) for Jet Airways, and Rs. 17,254 (Rs. 4313.50/coupon) for JetKonnect. The company release did not clarify whether a Jet Airways coupon could be used for a JetKonnect flight.

The booklets may be purchased by individuals and organisations and the blank coupons can be transferred  to any person till details are endorsed on the coupon. Once endorsed coupons will be non-transferable. The booklets are on sale till March 31, 2013.

Readers may recall this booklet concept was first introduced, many years ago, by the erstwhile Indian Airlines which is now the domestic arm of Air India, except at that time, the booklet was valid for any domestic sector regardless of distance. Jet Airways is capping the distance to 750km as this is the distance maximum impacted by the flight of passengers to surface transport of trains and buses.
This scheme is targeted to individuals who travel short distances, often at short notice. Last minute fares are frightfully expensive (Bombay Ahmedabad on a two day notice is between Rs. 12,000~Rs. 16,000, Bangalore Hyderabad or Chennai is Rs. 5,500~7,500, etc.), and individuals and organisations will get the benefit of a predictable fare. Organisations will further benefit as the booklet is not tied to any one person till a booking is made and the coupon is endorsed in the traveller's name.

The typical sectors that Jet as aiming at are Mumbai Ahmedabad, Baroda, Aurangabad, or Indore, Bangalore Hyderabad, Mangalore, Chennai, Trivandrum, Chennai Hyderabad or Trivandrum, Delhi Jaipur, Chandigarh or Amritsar, and Kolkata Bhubaneshwar, Dibrugarh, Patna or Guwahati.

One business which can benefit from this scheme can be travel agents. I am sure some of the travel agent readers of Bangalore Aviation can consider this booklet scheme as a long term investment and offer a last minute passenger a 50% discount on a Rs. 16,000 airfare, and still make almost 100% profit on investment. A commission of 10% of the profit may please be donated to Bangalore Aviation for the idea.

On further investigation, we find that Jet Airways is also offering a similar four coupon six month One Fare Pass in Premiere class for international travel with the Gulf, SAARC, and South East Asia for about Rs. 1.09 lakhs. The terms and conditions are here.

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Air traffic plunges 11.5%, as air fares rise. Jet Airways group crashes almost 21%, IndiGo down 11%.

Talk about irony. In March this year, Dr. Dinesh Keskar and Bangalore Aviation were discussing the double digit, yet profitless growth occurring in the Indian airline industry.

Less than six months later, air traffic continues its fifth consecutive month of decline. Within, just the third calendar quarter, (second quarter of the fiscal year 2012~13), air traffic plunged over 11.5%, from 4.537 million passengers in July, to 4.018 million in September. August at 4.369 million passengers was down 3.7% from July, and September was down 8.03% from August.

No airline could avoid the contagion. Jet Airways group is down a whopping 20.63% for the quarter, dropping from 1.207 passengers in July to 0.958 passengers in September. Even market leader IndiGo which is steadily growing its fleet, is down a significant 10.77%. SpiceJet is down 8.04%, Air India down 5.95%, and Kingfisher down 9.62%. GoAir performed the best, losing 2.85% of its passengers.

Year on year for the nine month period January to September this year 43.839 million passengers travelled by air domestically, compared to 44.218 million last year. Down 0.9%.

For the month of September, IndiGo continued its market leadership, but it appears the fare war unleashed by Air India has gained it passengers at the expense of all other airlines. Air India even beat Jet Airways, carrying 0.775 million passengers compared to 0.729 million by Jet Airways.

Put the blame for this contraction on the significant increase in airfares over the last six months, driven by the collapse of Kingfisher Airlines. Airlines are reducing the excess capacity, which has already increased fares over 20%. For the winter schedule which commences October 28, Indian carriers will fly 20% less flights than last year. 10,935 vs. 13,541 flights per week. Experts, expect air fares to rise another 10%~15% during the winter season which is also highest in terms of demand.

No airline crossed a passenger load factor of 70%, even the traditional leader IndiGo which used to regularly be in the top of the eighties or low nineties.

How will this capacity decrease impact passenger numbers? What is your view? Share a comment.

Also, do you think such major fare increases bodes well for the Indian consumer? Share your thoughts.

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Ajit Singh's desire for Air India to be number one unleashes a fare war amongst Indian airlines

Less than a week ago the Union Minister of Civil Aviation Mr. Ajit Singh asked Air India to submit a plan to enhance its share in the domestic passenger market, with the ultimate goal of being number one. This desire, against a continuing decline in domestic air passenger numbers. In August only 4.369 million passengers travelled, down 4% from the 4.537 million of July, thanks to surging airfares and a slowing economy.

Jet Airways (down 1.4%) and Kingfisher (down 0.3%) were double hit, as more passengers shifted towards the low fare carriers IndiGo, SpiceJet and GoAir, but Air India kept its market share steady; an decent performance for a full fare carrier, in these trying times.

Mr. Ajit Singh asked Air India to come out with innovative and customer focused strategies to achieve optimum utilisation of all planes and also maximum utilisation of each plane, but it appears the folks at Air India seem to know only one way to increase market share, a method on which, my fellow analyst, Vinay Bhaskara, made a telling comment

"Once the chase for market share commences, industry-wide bankruptcy looms"

Yes, you guessed right dear readers; to meet the minister's "wishes" Air India has unleashed a fare war to gain market share. It promptly dropped its 30 day advance purchase fares by 15%. The very next day, the country's largest private full service carrier, Jet Airways, followed suit with fare drops on 30 day and 21 day advance purchase APEX fares. Yesterday, other Indian carriers, including, IndiGo and SpiceJet have joined the fare slashing party.

Yet, this is no fun party. These airlines, for all practical purposes, are eating their young to survive. In this war of attrition, everyone is going to be the loser. As passengers we maybe getting a good deal in the short term, but in the long term, it will be us passengers, who will have to make good the losses of the airlines by paying higher fares.

Additionally, as tax-payers, our tax Rupees are being forcibly wrested to infuse Air India with an unlimited lifeline, and if anything, the carrier, and its political masters, have a moral obligation to be more careful and judicious in the use, some may say, waste, of our money.

Surely a well educated Ajit Singh, an alumnus of the prestigious I.I.T. Kharagpur and Illinois Institute of Technology, Chicago, realises what his well intentioned comments are resulting in, and reigns in this disastrous fare ware before it gets out of hand.

What are your thoughts on this situation? Please share a comment.

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Jet Airways Q1 FY 2012-2013 analysis - prudent cost cutting leading to profits

When Mumbai based full service carrier Jet Airways reported a Rs. 33.3 Crore net pre-tax profit in the first quarter of fiscal year 2012-2013, it represented a resounding statement that the Indian airline industry may have finally found its footing.

Photo copyright Devesh Agarwal.

Having slipped to net losses in each quarter last year due to the near constant rise in fuel prices, insufficient control of other operating costs, and poor capacity discipline, Jet Airways swung to a profit due to increased profits from sale-leaseback of aircraft, stronger unit revenues thanks to increased capacity discipline in the market, and a boost from cutting underperforming international routes.

Digging into some of the specific trends for the quarter, (relatively) low fuel prices were certainly a huge factor in the quarterly improvement. Versus the fourth quarter of FY 2011-2012, the overall fuel bill increased just 7.9% against a 1.5% increase in available seat kilometers (ASKs), yielding a 6.3% rise in unit fuel costs (the more important measure in the aviation industry). This may seem like a big jump, but it is in fact very tame given that Jet over the past 4 quarters has been routinely recording jumps of between 12-17% in that very same metric. Year over year, fuel cost per ASK did jump more than 20%, but this increase was more than offset by Jet’s superb revenue performance; the first time Jet has achieved such growth during my entire tenure here at Bangalore Aviation.

For the quarter, Jet recorded an incredible 16.66% growth in unit revenue Revenue per Available Seat Kilometre, or RASK), despite 10.4% growth in ASKs and a whopping 29% increase in passengers carried to 4.82 million (both figures year over year). The RASK growth was particularly good on the international front, where Jet achieved an absolutely incredible 30.0% growth in unit revenues despite 7.8% growth in ASKs.

This growth was buoyed in part by the first part of Jet’s international capacity cuts taking place. During the quarter, Mumbai-Riyadh (1 of 2 daily frequencies), Trivandrum-Sharjah, Delhi-Colombo, Mumbai-Johannesburg, Chennai-Dubai, and Chennai-Kuala Lampur were all cut. These routes were all poor performers (especially Mumbai-Johannesburg), and pulling this capacity has definitely yielded benefits to Jet.

It is equally clear that Jet, along with all other Indian airlines, has benefited immensely from Kingfisher’s demise and the resultant capacity reduction. The environment also offered Jet an additional benefit from Kingfisher's withdrawal from the long distance international market. IndiGo and SpiceJet are operating only on shorter distance routes to the Gulf, SAARC, and ASEAN markets. Air India's long distance international operations were virtually closed, thanks to the pilot's strike; and the benefits flowed to Jet’s London, Hong Kong, and Bangkok routes.

Of course the proverbial “elephant in the room” when considering this quarter’s results is in fact the growing sale leaseback income recorded by Jet. For the quarter sale-leaseback income recorded was Rs. 128.46 Crores, of course an integral part in Jet’s overall net profit. It is true to some degree that this sale-leaseback income masked Jet’s true performance in the quarter, but it should not overshadow the very real progress made. Jet broke even on an operating cost basis both domestically and internationally, and this is ultimately the most important metric. Furthermore, it is important to ask; why does it matter that Jet used sale-leaseback so shrewdly?

India’s largest domestic airline, IndiGo, has been using this strategy for several years now to increase cash on hand and lower operating costs by leveraging faster payments to obtain better discounts from vendors including airports. One could even make an argument that IndiGo has artificially lowered its fares by using sale-leaseback revenue to fund operations. Why should Jet be derided for taking advantage of the same? Jet meanwhile has built a fleet of more than 100 aircraft without using sale-leaseback excessively, but it has slowly caught on, and you should expect most of Jet’s narrowbody fleet growth and even non-leased widebody deliveries to occur with sale and lease-back.

Looking forward for Jet, the second quarter results should continue to be strong as the airlines have tempered capacity growth and Kingfisher continues to slide. On the downside, SpiceJet’s new Q400 operation in Delhi and the growing maturity of their other regional operations will put downwards pressure on domestic yields. Internationally, Jet will get positive yield growth as the second half of their cuts (including Brussels-New York) start to really kick in.

On the revenue side, Jet is re-configuring its Boeing 777-300ER (77W) fleet to increase economy class seating from 274 to 310. From a comfortable 9-abreast 3-3-3 18.5" width, Jet is mimicking Emirates and Etihad to go 10 abreast in a cramped 3-4-3 17" width seating. Jet's 77Ws are primarily deployed on Jet's London Heathrow routes, where Emirates flies Airbus A380 super-jumbos equipped with far more comfortable 19" width seats in economy class.

The deployment of these re-configured aircraft will commence in 15 day intervals starting from October 16, in time for the winter rush traffic. It remains to be seen if passengers continue to pay the premium fares commanded by Jet on its London flights, for this cramped seating.

Right now, Jet Airways stock is trading roughly in the 370s, and the long term play looks relatively attractive. Assuming that the airline continues to leverage sale-leaseback shrewdly, earnings potential looks good over the next few quarters. While the current price to earnings (P/E) ratio is relatively high, it is important to note that Jet’s share price is more than 56% off its November 2010 peak. Especially if the airline can return to paying dividends (which it would in the case of sustained profits), Jet Airways stock looks like a smart long term buy.

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IndiGo pips Jet to become largest domestic carrier in India. Mumbai airport most punctual.

Carrying 1.226 million passengers in July 2012, Gurgaon based IndiGo pipped the Jet Airways' group (Jet Airways and JetKonnect) at 1.207 million, to become the largest domestic carrier in India. IndiGo's market share has grown to 27.02%, at the expense of a failing Kingfisher Airlines whose market share has declined to a mere 3.44%.

The country's aviation regulator reports based on passenger traffic data submitted by various domestic airlines. Total passengers for July 2012 was 4.537 million, down almost 10% from the 5.108 million of June. The ending of the summer holidays, as well as dampening due to rising airfares are the primary factors.

Year to date from January to July 2012 the total domestic passengers are 35.452 million up a meagre 1.74% from 34.847 million for the same period in 2011.

Growth rates have been steadily declining in both seat capacity, measured in available seat-kilometres (ASK) and, passenger demand, measured in revenue passenger-kilometres (RPK). From a high of almost 20% a year ago, demand is in negative figures and capacity is flat for the last three months.

IndiGo's secret sauce of high punctuality, coupled with a 'no-fuss no-frills' service has continued to hold it in good stead. From the past few months, the DGCA has been collecting and presenting 'On-Time Performance' (OTP) reports, based on data from the six largest airports in India. IndiGo leads the airlines across the country with 90+ OTP performance.

Mumbai airport enjoys the best OTP across all airlines with OTP scores of 90 or higher. Is it a function of larger block times, which give cushion to airlines, or a positive response by airlines, airport operations, and ATC to the DGCA diktat issued in 2009 to streamline operations? May be it is a combination of both. But ultimately, all long as results are being delivered, the passengers couldn't care less.

Time for Delhi airport to pull up its socks, and for Bangalore to work closely with SpiceJet and Air India to get in to the '90+ club'.

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Jet Airways levies charge for duplicate e-ticket printouts

The below mail from Jet Airways is self explanatory. So please carry your ticket prints with you.

Dear Mr. Agarwal,

This is to bring to your notice that effective immediately, requests received for duplicate e-ticket printouts at Airline Ticketing Offices and City Ticketing Offices in India across Jet Airways and JetKonnect will attract a fee of Rs. 50 per e-ticket (revenue / award ticket) reprint. Please note that this fee is applicable only to requests for a reprint / duplicate copy of the existing booking.  JetPrivilege Platinum members are exempted from the e-ticket reprint charge.

Warm regards, Kaushal Satam  Head – JetPrivilege

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"How can you save money, except by getting the 787?" Interview with Dr. Dinesh Keskar, President, Boeing India

On the sidelines of the India Aviation 2012 show at Hyderabad, Devesh Agarwal had an exclusive one-on-meeting interview with Dr. Dinesh Keskar, President, Boeing International Corporation India Pvt. Ltd., and Senior Vice President of Sales, Asia-Pacific and India, Boeing Commercial Airplanes. Dr. Keskar also chairs the Committee on Aviation at the Federation of Indian Chambers of Commerce and Industry (FICCI) which organises this show.

The interview was held on-board the 787-8 Dreamliner, N1015B, in Air India configuration, line number 35, specially brought in for the show. (See cabin photos and video walk through here.)

Dr. Dinesh Keskar

Bangalore Aviation covered a wide variety of questions with Dr. Keskar, from the 787 to 737 MAX to 747-8i to 777-X, and not just in his official capacity at Boeing, but also as a seasoned and well informed observer of the Indian commercial aviation industry. Dr. Keskar answered all the questions posed to him, and gave us a frank opinion, on what he sees happening in the ailing Indian airline industry.

Q: Please give us an update of what’s going on at Boeing, from an India, Asia-Pac, to a global perspective?

A: The bottom line is, the world is a big market with 33,504 sales as a long term forecast. Within that, I think Asia-Pacific has the largest potential. If we come from that perspective, Asia is the booming thing right now, Europe is still struggling, the US is kind of flat, and then you have India at the bottom, which is a good market, but as I said yesterday [at the public Boeing press briefing], the growth is there, still double digits, but it is a profit-less growth, and that is our big problem right now.

Q: You have brought the Air India version of the 787 to India. How has been the response to the aircraft? From the public? from [launch Indian customer] Air India? from Government officials?

A: Tremendous… Everybody who has walked in is absolutely impressed with the airplane. Those people who have seen the airplane from the inside, who have seen the features, who have looked at the full flat business class seats, who have played with the electronic windows; who have looked at the economy seats and are absolutely ecstatic. They cannot wait to have this airplane in India so they can start making money with it.

You can see it for yourself, bigger bins, larger windows, better humidity, we talked about what the passengers can see themselves. Then there is also what they can feel, which is the air filtration system, the dust elimination system, the cabin altitude [787 cabin pressure is maintained at 6,000ft MSL vs. 8,000ft of other aircraft], and I mean you can go on and on. These are not present in any other airplane, and these are all important factors.

Q: Have you been successful in your efforts to persuade the government that the Dreamliner is the aircraft Air India needs to succeed in its efforts to turn around? There has been a lot of talk about the Indian government reducing the order due to financial constraints? Can you please comment on how confident you are in retaining the original order of 27 787-8 Dreamliners? [Editor's note: About a month after this interview, the Government of India, in its financial bail-out package of Air India, confirmed the airline will take delivery of all ordered 27 aircraft.]

A: I cannot comment on the Government of India’s mindset or on the on-going negotiations. It is the government's prerogative on what to do; but I will say that this is the best airplane we have. You can see the data. 850+ planes sold, five aircraft already delivered, 59 customers, one has started taking delivery.

Which other airplane gives the fuel efficiency that this aircraft does? 30% lower maintenance costs, 10% lower operating costs. There is no other airplane like this. It is an amazing airplane. How can you save money, except by getting an airplane like this?

Q: How are the five delivered Dreamliners performing at [launch customer] ANA (All Nippon Airways)? Are there any issues?

A: You should talk to ANA too, but they are clearly very pleased with the plane, and they have made a statement to this effect. Over 100,000 passengers have flown on the different sectors that they fly, and it has over 98% dispatch reliability, which is unthinkable for an airplane which is going into service for the first time in the world.

Q: What are some of the other critical indicators, there are concerns some of the initial airplanes were overweight?

A: That’s true, but the plane is making all the missions. One has to see what are you really getting? On the initial airplanes , instead of 20% improvement in fuel efficiency, you are getting 18%. Airlines kill for 1% and this is straight 18%. We are doing programs and we are continuing to improve the program in such a manner that we will be able to make up for these initial deficiencies, reduce the weight, and we will try to improve the aircraft’s engine and engine integration, so that we will get back to the efficiency that we initially advertised.

Computer generated image Lion Air Boeing 737-9 MAX

Q: Switching tracks now. You led the team that closed the largest aircraft order in history, very recently, with Indonesian LCC Lion Air for the 737-9 MAX. What does this order mean for Boeing in general, and for the MAX program in particular?

A: So obviously, it is the third customer after American and Southwest. These are big orders. People were always worried who Lion Air is, but now they’ve taken delivery of their 60th 737-900ER just about 10 days ago, and they are making a lot of money with these aircraft.

Q: Lion Air was the launch customer of the 737-900ER. Will they be the launch customer of the 737 MAX 9 as well?

A: Yes.

Q: What has this done for the MAX program?

A: First of all, it is a clear indication that people believe in this aircraft, when you have airline’s putting belief in this aircraft [by ordering it] in these quantities of numbers. And again, if you look at it, Indonesia is a perfect market, where there are 17,000 islands, across 7 time zones, bigger than the US. You fly 6 hours and you are still in the country. So they can generate lot of RPKs [Revenue Passenger Kilometres - a measure of airline performance], and that is why they need such airplanes. The ASEAN [Association of South East Asian Nations] is being opened up. When there will be open skies in ASEAN, then there is no limit to where they [Lion Air] can go; and that’s where, if Lion Air can run an efficient airline, a profitable airline, which he does in this environment with the fuel price where it is, they’re going to be the leader in the ASEAN low cost segment.

Q: Please elaborate on Boeing's plans for the 737 MAX in India?

A: Jet Airways [group which includes JetLite, now re-named to JetKonnect] flies a majority fleet of 737s which are NGs [737-700, -800, -900/ER], and then SpiceJet is all NG, and Air India Express is now at 23 737-800s. When you are looking for replacement for these airplanes, clearly you are going to get the same thing. We are showing customers what this [the MAX] is all about, and we are showing them how we’re not changing today’s 737. We’re not changing the body, we’re not changing the interior, we’re just changing the engine. So it is whatever is there today, it’s just becoming 15% more fuel efficient. So it’s going to be an amazing thing for airlines. No cockpit changes, nothing.

Q: Currently, Boeing has 451 orders for the MAX, but you have more than 1,000 commitments (which includes these 451 orders). Lion Air has demonstrated their confidence in the form of an order. Why are other customers hesitating to convert their commitments into firm orders?

A: I won’t say it's hesitating. It takes time to define everything, and people have different things going right now. And they’ve stepped up to say that they want this airplane because, as you can appreciate Devesh, the more they wait, they might not get the early positions. Lion Air has locked up the early positions in 2017, so has Southwest, and clearly there’s an advantage to that. But they have to weigh that with respect to their other things going in their life as an airline. But I don’t put too much stock into that difference (between orders and commitments). Some people might think, it’s 2012 and the aircraft is 5 years away, what’s the big rush?

Q: We understand your competitor is facing some issues with CFM. How confident is Boeing in the LEAP-X engine, especially since its a single source engine for the MAX?

A: We feel pretty good. I have not heard anything other than that, and we have time to fix it. Clearly we have given them [CFM] the numbers. We have told them what missions this airplane has to do. It can only happen if they deliver. After all what is the big change on the MAX? its only the engine, and we if we don't have that, we are left with an NG.

Q: What future does Boeing see for the 787 in India, beyond the 27 and ten orders with Air India and Jet?

A: So you are asking who else, in India, do you think can fly the 787 internationally? The rest of our customers are all regional airlines. The two airlines that are capable of flying it [the 787] internationally have already purchased it. Other airlines are still flying within a zone, that is very small and regional. The 787 is not the airplane to go to Dubai and back.

Once we have those airlines interested, we’ll be talking. Even SpiceJet’s people went through this airplane today. So, it’s not like we’re not talking to them, but you have to be realistic also. When will they have the flight plan for using the 787? When will they be able to fly the airplane, etc.? We are working with the various airlines. In any case, even if they came today, right now I could not give them the airplane till 6~7 years down the line, unless they lease it. So it works out all well.

Q: What future do you see for the 777, and 777-X when it does develop, and your 747-8i?

A: The 747-8i, I feel, the potential may only be with Air India, if at all. The reason for that is, you just look at Bombay London, or the India London routes for that matter. Six to seven years ago, we only had 25 to 30 frequencies a week. Today we have 120, just on India London. With that kind of number, you clearly can see that you can’t take a big 747 and fly it because there are five other airlines that are flying a flight within the same hour.

So you got to have an airplane that is right-sized that is more efficient, and that’s what 777 and 787 are all about. We think that the 777 has a tremendous future. As we build variants like the 777X going forward they too will have a solid future. Once you have the base, and we have the base, as an example look at the cockpit; people that fly the 777 can fly the 787 with just five days of training. The 777X is not going to make a radical change either. Whereas, to go to an Airbus requires a long training period and a complete change in philosophy.

We’re going to continue to work with all our airline customers and keep them informed; in fact I am doing that as we speak right now, to airlines about what's coming in the future, and also taking their inputs so the airplane is what they want and like, as opposed to what we tell them it will be.

Q: What kind of demand do you see for new build freighters within the India market?

Not much, though, there is a market for used conversion freighters. That is already happening with Blue Dart, and we only have one dedicated freight airline, in India, today, and that too is regional and small. The reason for that, is that we’ve created a 777 that carries 15 tons of cargo in its belly, that’s half of the 737 freighter’s capacity. 787 is another good example, it’s got 14 tons of belly cargo capability. With that kind of capability, we are creating airplanes which already have a mini-freighter built in the belly, allowing airlines to leverage their passenger operations better.

Q: The Indian economy is growing fast, the passenger market at double digits. It has one of the highest growth rates in the world at 15-20%, yet Indian carriers are losing money, hands over fist. Why?

A: Simply put, because the airlines are pricing lower to artifically stimulate demand. If they continue this behaviour, it is not an industry that can be sustained.

Q: This question is for you, not as a Boeing person, but rather as an informed observer of global aviation. Many Indian airlines are leasing out their 300 plus seat aircraft out to foreign carriers, who then make a lot of money with the aircraft, before returning them back. In your opinion, what factors, are specific to the Indian market, that are holding back Indian carriers from making money with the very same aircraft? [Editor's note: For the last two years, bulk of Jet Airway's Boeing 777-300ER fleet has been leased out to Turkish Airlines, Gulf Air, and Thai Airways. Air India too, is considering leasing its 777s.]

A: So the fundamental answer to that question is that fares from India are a lot different than fares from another country. Dubai and Singapore [Emirates and Singapore Airlines, the two largest operators of the Boeing 777], with the same aircraft make billions of dollars of profit, while we have trouble filling that aircraft because they’re taking away the market. And why is that? it’s because of their connectivity. Once you go to Dubai, you can go anywhere in the world nonstop. Jet Airways will take you to London and then what happens. You don’t go anywhere. When they take you to Hong Kong, you don’t go anywhere. When I fly SQ [Singapore Airlines] from here to Singapore, 75% of passengers connect to somewhere else. So if you understand the fare segment, if you buy Jet Airways up to Singapore and other airline after that, you’ll pay 30% higher fares, so the only way to solve this is the connectivity.

Q: So you’re saying that the Indian carriers have to drastically expand their network to make these larger aircraft work for them?

A: Through Brussels Naresh [Goyal, Jet Airways] does okay. He has a scissor hub, What does Air India do? They go to New York and stop, they go to Chicago and stop, which is better than going just to London, but it still falls way short of the global connectivity offered by SQ and EK [Emirates]. The secret is the connectivity along with the fare.

Q: These last questions are for you in your capacity as Chairman of the Aviation committee at FICCI. What, in your opinion, are the critical steps to correct the problems in the Indian aviation market?

A: We’ve got to find money for the airlines, FDI [foreign direct investment] is one way, but the second thing is that you’ve got to find ways to reduce their cost, fuel being an important one. We also ought to find how they can rationalise their routes. There’s no point having 45 flights between Bombay and Delhi when the demand is only for 35 flights. Finally, there has to be cooperation at the airports. You come to Hyderabad, there’s a ladder from SpiceJet, there’s a ladder from IndiGo, and every airline has its own. Why can’t we have an airport provide those implements, charge for it, and reduce everybody’s costs? If the costs of the consolidated ground handler is high, it needs to be talked and looked into, as to why it is high. We should not abandon the idea.

Q: What about the airport charges? Some people say, India does not need gold plated five star airports with high charges.

A: Great question. You either increase the fare or the airport charge, the effect is the same, you lose the passenger. And this is why AERA [Airport Economic Regulatory Authority] was created, it’s a tough job, I don’t envy them at all.

Thank you Dr. Keskar, a pleasure as usual.

Thank you, Devesh.

Special thanks to Vinay Bhaskara for helping with the transcription.

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Jet Airways consolidates low cost Konnect and JetLite brands but increases brand confusion

Rishul Saraf and Devesh Agarwal

India's largest domestic airline Jet Airways, has announced a unification of its two low cost brands JetLite and Jet Airways Konnect to be called JetKonnect from March 25, 2012.

• As per the airline, a "gradual rebranding" of the JetKonnect brand will commence on March 25, manifesting itself on letterheads, the JetKonnect website, boarding passes, tickets, stationery.
• Signages at all check-in and ticketing counters will have dual branding reflecting the existing Jet Airways and the new JetKonnect logos.
• Ticket sale for JetKonnect flights will commence from March 20 2012, with travel validity from March 25, 2012 onwards
• Effective March 26, 2012 guests to jetlite.com would be automatically redirected to the new, re-branded jetkonnect.com
• Some JetKonnect flights will operate under the S2 code, while others will have flight numbers prefixed by the 9W code. 9W and S2 will also continue their existing Codeshare agreement.

This is definitely a step forward for Jet which has long battled brand dilution and confusion due to presence of multiple brands which frequently overlapped each other.

One step forward, two steps back

Without enlarging, is this a Jet Airways plane or a Konnect?

Our special correspondent Rishul Saraf had proposed, in his earlier article, that Jet Airways should merge its two low cost brands to remove brand confusion.

To eliminate the prevailing brand confusion in the Jet Airways setup, Jet has uplifted Konnect from a temporary sticker on mainline full service Jet Airways planes into a full fledged “JetKonnect” LCC brand, and merging the colour schemes of the JetLite brand (see picture of the new livery here.)

Over the long term this will result in brand recall, but, Jet Airways appears to have taken one step in the right direction, and two steps backwards in the confusion department.

Two airlines, one brand ..... confusion

One has heard of one airline operating two brands, but for reasons unexplained, the JetKonnect brand will be operated under both the low cost JetLite airline code (S2) and the existing full service Jet Airways airline code 9W.

Two airlines, one brand? How will the passenger differentiate the two?

Unfortunately, there is no clarity from Jet Airways. The airline's answer "we will put a small tag line showing Operated by JetKonnect".

This is already being done, which then begs the question, why this branding exercise?

LCC to drag down mainline full service brand ........ what is Jet thinking?!?!

If the confusion between the two existing LCC brands Konnect and JetLite isn't enough, the crew on the new JetKonnect LCC flights will wear the same uniform as the mainline full service Jet Airways, and JetKonnect will offer the same business class cabin on certain routes where guests will receive identical services as on the mainline full service Jet Airways Club Premiere class.

If you can imagine what the planners at Jet are/were thinking, please do post a comment, for we cannot. Talk about downgrading the mainline carrier?

Who is a target customer of Jet for the premium cabin (previously called Konnect Select)? Low fare or premium buyer?

As an Low Cost brand, JetKonnect cannot command the same fare as the mainline Jet Airways, even though it is the same identical cabin, cabin staff, and service offering. At the same time, by offering the same cabin at a lower fare in the LCC brand, the mainline Jet Airways passenger will come to expect the premium cabin for lesser fares, and then over time, will value it less. It is a lose-lose scenario for Jet.

Two airline codes, three brands, complete confusion

Imagine a passenger steps on-board a JetKonnect stickered aircraft, operated under the S2 code, served by a Jet Airways attired crew. How is a passenger supposed to absorb and differentiate the triple combination of airline code, aircraft, and crew attire?

Step back, review, and revise.

The consolidation of the two LCC brands within the Jet stable is desperately needed, and JetKonnect as a permanent brand is welcome. However, the manner in which Jet Airways has chosen to proceed with this brand merger appears to create more confusion instead of removing it.

May be Jet should take a step back, re-think and revise some of its actions, and implement a plan with much more clarity.

What are your thoughts? Post a comment.

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