Latin American airlines need over 2,300 new aircraft in next 20 years

By BA Staff

Image courtesy Airbus S.A.S.

According to Airbus’ latest Global Market Forecast (GMF), Latin American airlines will require 2,307 new aircrafts between 2013 and 2032, including 1,794 single-aisle, 475 twin-aisle and 38 very large aircraft (VLA) worth an estimated US$292 billion. Globally, by 2032 some 29,230 new passenger and freighter aircraft valued at nearly US$4.4 trillion will be required to satisfy future robust market demand.

With GDP currently growing above the world average (3.6 percent per year over the last two years, versus 2.6 percent for the world) socio-economic indicators forecast that Latin America’s middle class will grow to represent more than half of the population by 2032. Between 2012 and 2020, Latin America’s economy is expected to outperform the world average, largely thanks to Mexico and Brazil’s consumer spending. As a result, traffic growth in Latin America in the next 20 years is expected to outperform the world average of 4.7 percent with an annual growth rate of 5.2 percent.

A growing middle class and increased consumer spending have led to air transport becoming more accessible throughout Latin America in the past 10 years, increasing 14 percent in terms of total number of cities served. Still, while almost 100 percent of the 20 largest cities in North America and Europe connect passengers with at least one flight per day, only 40 percent of Latin America’s top 20 cities do the same. As a result, in the next 20 years, intra-regional and domestic traffic is expected to grow at an impressive rate of 6.3 percent, becoming the biggest market for Latin American carriers.

This untapped intra-regional potential partly explains why Airbus forecasts that in the next 20 years two-thirds of the population in emerging markets will take a trip a year, positioning Latin American airlines to enjoy the second highest traffic growth rates worldwide, after Middle Eastern airlines.

While 10 of the 92 worldwide aviation mega-cities with over 10,000 international passengers a day will be in Latin America by 2032, additional opportunities exist for Latin American airlines to capitalize on. Currently, Latin America’s six largest carriers have 19 percent market share of the region’s long-haul traffic, while regions like North America and Europe enjoy nearly 40 percent.

Rafael Alonso, Executive Vice President of Airbus for Latin America and the Caribbean said:

“Very large aircraft, such as the A380, not only help alleviate traffic congestion at busy airports, but they can assist Latin American airlines to compete with their foreign competitors. At the same time the A380 addresses international air traffic requirements needed to serve long-haul flights to Europe.”

Another prevalent trend in Latin America is the rise of low cost carriers (LCC), which accounts for nearly 40 percent of the market share of total air traffic in the region, up from just 12 percent in 2003, with Mexico and Brazil representing nearly the entire market. A highly competitive LCC market has led airlines to constantly seek the most efficient aircraft available, largely driving the average age of Latin America’s in-service fleet to 9.5 years, down 42 percent since 2000, as compared to the world average age of 10.7 years.

While many Latin American airlines have gone through great efforts to maintain a young and highly-efficient fleet, the average aircraft age in Latin America could decrease further when Caribbean carriers start their renewal process.

Alonso said:

“Aircraft in the Caribbean average about 17 years of age - - that’s more than seven years older than the Latin America and world average. We’ve already started seeing some airlines in the Caribbean take advantage of current market opportunities and achieve greater operational benefits associated to newer generation aircraft. As more follow, the average aircraft age in the region will continue to drop.”

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Dubai International’s passenger traffic up 13.1 per cent in September

By BA Staff

Courtesy of Wikipedia

Passenger traffic at Dubai International, the world’s second busiest airport for international passengers, rose 13.1 per cent in September, according to the latest traffic statistics issued yesterday by operator Dubai Airports.

Passenger traffic in September totaled 5,407,326, an increase of 13.1 per cent compared to 4,780,394 during the corresponding month in 2012. Year to date traffic is up 16 per cent to 49,379,165 compared to 42,565,340 recorded during the first nine months of 2012. Aircraft movements totaled 30,746 during September, an increase of 10.2 per cent from the 27,909 recorded during the same period last year. Passengers per aircraft movement in September came in at 193.

All regions recorded positive growth in September with the exception of South America (-6.9 per cent).  Among the strongest markets in terms of percentage* passenger growth were Eastern Europe (+65.1 per cent), driven by flydubai expansion to multiple destinations in the region and Emirates’ new service to Warsaw. Passenger traffic to and from Australasia rose 38.6 per cent as a result of Emirates' expansion and Qantas’ new operation connecting Australia and London through Dubai. On a country level, Australia (+41.7 per cent), France (+23.7 per cent), Saudi Arabia (+22.4 per cent), Thailand (+21.8 per cent) and the UK (+21.7 per cent) saw the largest increases.

In terms of overall passenger numbers, Western Europe traffic took over as the top market thanks to robust growth (+14.8 per cent) during the month. AGCC came in second thanks to 15 per cent year-on-year passenger traffic growth. The Indian subcontinent, which took third spot, continued to show positive growth (+9.8 per cent) due to the expansion of several Indian carriers including Indigo, Spice Jet and Air India Express.

Air freight volumes rose 1.8 per cent in September with volumes of 196,823 tonnes compared to 193,261 recorded during the same period last year. Year-to-date cargo traffic totalled 1,785,539 tonnes, up 6.6 per cent from the 1,674,997 tonnes shipped during the same period last year.

Paul Griffiths, CEO of Dubai Airports said:

“Passenger and cargo traffic growth continue unabated and Dubai International is on track to eclipse our projections for 65.4 million passengers and 2.7 million tonnes of cargo. With the opening of our new passenger terminal at Al Maktoum International at Dubai World Central, and the ongoing expansion at Dubai International, Dubai’s aviation infrastructure continues to make it an attractive destination for tourism, trade and commerce.”

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Delta Air Lines reports strong September traffic results

by BA Staff

American full service carrier Delta Air Lines reported its traffic results for September 2013. Unit passenger revenues continued the summer's strong performance, increasing 5.5% year over year. Highlights include:

• 5.5% increase in passenger revenue per available seat mile (PRASM)
• Projected September quarter per gallon fuel price: $2.98 - $3.03
• September mainline completion factor 99.9%
• September on time performance: 90.2%

The table below provides a summary of the full traffic results

	Region	Sep-13	Sep-12	Change
RPMs (billion)
*Traffic	Domestic	9.08	8.99	1.0%
	Mainline	7.36	7.22	1.8%
	Regional	1.73	1.77	-2.2%
	International	6.99	6.8	2.8%
	Latin America	1.07	0.94	13.8%
	Atlantic	3.8	3.72	2.2%
	Pacific	2.11	2.13	-1.0%
	Total System	16.07	15.79	1.8%
ASMs (billion)
*Capacity	Domestic	11.24	11.17	0.7%
	Mainline	8.96	8.88	0.9%
	Regional	2.28	2.28	-
	International	8.06	7.81	3.1%
	Latin America	1.32	1.14	15.5%
	Atlantic	4.2	4.14	1.4%
	Pacific	2.54	2.53	0.2%
	Total System	19.3	18.98	1.7%
Load Factor	Domestic	80.8%	80.5%	0.3
	Mainline	82.1%	81.3%	0.8
	Regional	75.8%	77.5%	-1.7
	International	86.8%	87.0%	-0.2
	Latin America	81.4%	82.7%	-1.3
	Atlantic	90.6%	89.9%	0.7
	Pacific	83.2%	84.3%	-1.1
	Total System	83.3%	83.2%	-0.1
Passengers Boarded	Total System	13.25 million	13.12 million	0.9%
Cargo Ton Miles	Total System	201.57 million	202.71 million	-0.6%

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Infographic: India's ten busiest airports: June 2013 vs. June 2012

by Vinay Bhaskara

June was a mostly positive month for traffic at India's ten busiest airports. As the table below shows, traffic grew at eight airports, while declining at just two. Total traffic at India's ten busiest airports grew around 2% year-over-year to roughly 10.7 million passengers, positive news after some declines in passenger traffic earlier this year. There were no changes in the top ten, either in constitution or in order, though Bangalore moved closer to surpassing Chennai as India's third busiest airport as traffic grew 2.4% against a drop of 1.2% at Chennai. Just outside the top ten, fast growing Srinagar surpassed Goa to become India's 11th busiest airport in June, and will likely surpass Trivandrum by the end of the year (Srinagar trailed Trivandrum by 11,000 passengers in June).

Airport	June 2013	June 2012	YOY Growth
Delhi (DEL)	3133135	3072780	2.0%
Mumbai (BOM)	2573600	2494202	3.2%
Chennai (MAA)	1077267	1090302	-1.2%
Bengaluru (BLR)	1022158	998302	2.4%
Kolkata (CCU)	854846	890240	-4.0%
Hyderabad (HYD)	711677	702940	1.2%
Kochi (COK)	428251	382566	11.9%
Ahmedabad (AMD)	356558	348273	2.4%
Pune(PNQ)	297421	276496	7.6%
Trivandrum (TRV)	243968	232024	5.1%
TOTAL	10698881	10488125	2.0%

The following chart shows traffic India's top ten airports in June 2013 vs. June 2012 (click for a larger view)

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Cathay Pacific July 2013 traffic results

Hong Kong based full service carrier Cathay Pacific Airways posted its consolidated (including regional arm Dragonair) traffic results for July 2013, showing an increase in passenger traffic offset by a decrease in cargo tonnage. Find the details below.

20th August 2013

Cathay Pacific Airways today released combined Cathay Pacific and Dragonair traffic figures for July 2013 that show a year-on-year rise in the number of passengers carried. Cargo and mail tonnage fell compared to the same month in 2012.

Cathay Pacific and Dragonair carried a total of 2,679,193 passengers in July – an increase of 6.9% compared to the same month last year. The passenger load factor was up 3.9 percentage points to 85.0%, while capacity, measured in available seat kilometres (ASKs), rose by 0.1%. For the year to date, the number of passengers carried has increased by 2.1% while capacity has fallen by 4.1%.

The two airlines carried 122,920 tonnes of cargo and mail last month, a drop of 1.9% compared to July 2012. The cargo and mail load factor fell by 4.4 percentage points to 60.3%. Capacity, measured in available cargo/mail tonne kilometres, rose by 6.6% while cargo and mail revenue tonne kilometres were down by 0.7%. For the year to date, tonnage has fallen by 1.8% compared to a 0.6% capacity decline.

Cathay Pacific General Manager Revenue Management James Tong said: “We enjoyed a strong start to the summer peak period, with good loads on major long-haul routes and also to the key holiday destinations within the region. However, the comparison with last year is distorted by the effect of Severe Typhoon Vicente, which had a major impact on our operations in July 2012. The Economy cabins were particularly busy last month; demand in the premium cabins was generally weaker, but in line with our expectations for the summer peak.”

Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch said: “Demand was soft out of many of the major airfreight markets last month and once again we saw tonnage and load factor dropping compared to 2012, when business was already weak. The bright spots in our network were the transpacific lanes and demand on intra-Asia routes, particular out of Hanoi and Dhaka. Europe and Japan remain two of the weaker markets at the moment."

CATHAY PACIFIC / DRAGONAIR COMBINED TRAFFIC	JUL 2013	% Change VS JUL 12	Cumulative JUL 2013	% Change YTD
RPK (000)
- Mainland China	775,166	9.5%	4,763,356	4.1%
- North East Asia	1,206,578	12.9%	7,539,802	7.2%
- South East Asia	1,279,559	6.0%	8,437,035	3.9%
- India, Middle East, Pakistan & Sri Lanka	666,415	-0.4%	4,711,537	-5.8%
- South West Pacific & South Africa	1,182,343	6.4%	8,073,930	-2.1%
- North America	2,378,062	-4.2%	15,551,810	-11.3%
- Europe	1,886,418	11.6%	10,840,134	0.6%
RPK Total (000)	9,374,541	4.9%	59,917,604	-2.2%
Passengers carried	2,679,193	6.9%	17,176,225	2.1%
Cargo and mail revenue tonne km (000)	715,127	-0.7%	4,839,502	-4.1%
Cargo and mail carried (000kg)	122,920	-1.9%	863,472	-1.8%
Number of flights	6,175	6.2%	41,197	5.2%

CATHAY PACIFIC / DRAGONAIR COMBINED CAPACITY	JUL 2013	% Change VS JUL 12	Cumulative JUL 2013	% Change YTD
ASK (000)
- Mainland China	995,472	6.8%	6,654,262	6.0%
- North East Asia	1,511,165	3.2%	9,825,641	0.9%
- South East Asia	1,561,896	0.8%	10,562,289	3.9%
- India, Middle East, Pakistan & Sri Lanka	872,564	-0.3%	6,228,611	-3.9%
- South West Pacific & South Africa	1,440,550	-1.3%	10,223,144	-6.6%
- North America	2,635,993	-6.5%	17,394,262	-13.2%
- Europe	2,008,263	4.9%	12,324,486	-3.2%
ASK Total (000)	11,025,903	0.1%	73,212,695	-4.1%
Passenger load factor	85.0%	3.9pt	81.8%	1.5pt
Available cargo/mail tonne km (000)	1,185,840	6.6%	7,792,496	-0.6%
Cargo and mail load factor	60.3%	-4.4pt	62.1%	-2.2pt
ATK (000)	2,234,229	3.4%	14,754,455	-2.3%

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INFOGRAPHIC: Airline-wise share of international passenger traffic, to and from India, 2011 to 2012

Based on a report in The Economic Times we have prepared this infographic showing the airlines' market share of international passenger traffic to and from India during fiscal 2011~2012.

The chart throws up some surprises. SriLankan Airlines and Oman Air feature on this list, but Singapore Airlines does not. Hard to accept? and where is AirAsia? Share your thoughts via a comment.

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IATA reports rising passenger traffic growth as business confidence returns

The International Air Transport Association (IATA), an airline industry association which represents some 240 airlines comprising 84% of global air traffic, announced global passenger traffic results for February showing that demand growth is accelerating on the back of stronger business confidence, particularly in emerging regions. Passenger demand rose 3.7% compared to February 2012.

October 2012 appears to have been a turning point for air travel markets. Since October, passenger demand has been growing at an annualized rate of 9%. This is almost double the growth trend over the first 9 months of 2012.

Read the Passenger Traffic Analysis for February 2013 at the end of the article

Tony Tyler, IATA Director General and CEO said

“February’s performance was good news. Demand for air travel continues to rise on economic optimism and improved business confidence. But that comes with a few caveats. Much of the growth is concentrated on emerging markets. Europe continues to be a laggard. And the handling of the banking crisis in Cyprus has reminded all of us that the deep problems in the Eurozone economies still remain,”

Capacity was up 1.0% on the previous February and the industry load factor stood at 77.1%. “Airlines are carefully managing capacity expansion, which is keeping the load factor at a record high. This is helping the industry to remain profitable despite persistently high oil prices.”

International Passenger Markets

February international passenger demand was up 3.6% compared to the year-ago period, and 0.9% compared to January. Capacity rose 1.1% versus February 2012 and load factor climbed 1.8 percentage points to 76.3%.

• Asia-Pacific carriers recorded an increase of 4.5% compared to February 2012. Continuing improvements in China’s economy and growth in intra-Asian trade provided strong support to the passenger business of the region’s airlines. With this robust performance, demand associated with Asia-Pacific’s emerging markets has been a major driver of the stronger growth in international traffic seen recently.
• European carriers recorded 0.8% growth compared to February 2012. Reflecting the contraction of the Euro-zone economy in the fourth quarter of 2012, European carriers have not seen any growth in international demand since October. They have responded by tightly managing capacity, which declined 2.0% year-on-year in February. This pushed the load factor up to 76.5%.
• North American airlines’ international traffic rose just 0.3% in February compared to February 2012; however this doesn’t reflect the significant underlying growth trend over recent months. International revenue passenger kilometres for North America are up 3% in February compared to October. The load factor rose to 76%, reflecting a 4.6% reduction in capacity year-on-year.
• Middle East carriers saw year-on-year demand expand by 10.6%--the strongest among all the regions. Capacity expansion was held to 9.7% with the result that load factor rose 0.7% points to 77.7%, the highest for any region.
• Latin American airlines posted year-on-year growth of 7.0%. A 9.9% rise in capacity, however, pushed load factor down 2.1 percentage points to 76.7%. Robust economic growth in countries such as Colombia, which is experiencing strong demand for commodities exports, is contributing to rising air travel.
• African airlines’ traffic climbed 7.7% compared to February 2012, second best among the regions, while capacity rose 3.9%, boosting the load factor 2.3 percentage points to 65.2%. The rise in load factor commenced in mid-2012, supported by an increase in demand and also from tighter capacity management.

Domestic Passenger Markets

Domestic markets climbed 3.9% in February compared to a year-ago, driven primarily by surging demand in China, as all other markets experienced declines with the exception of Australia, which rose 2.2%. Total domestic capacity was up 0.8% compared to February 2012 and load factor rose 2.3% points to 78.8%.

• US traffic dipped 0.6% in February while capacity dropped 2.5%, pushing load factor up to 80.4%, second highest among the domestic markets. As with international traffic, the year-on-year growth rate is masking a recent uptick in the growth trend. The US market has been growing at an annualized rate of 9% since the fourth quarter of 2012.
• China’s domestic traffic soared 20.2% compared to a year ago, reflecting the impact of Chinese New Year-related travel, but also the continuing acceleration of the economy. With capacity up 13.7%, load factor jumped 4.5 percentage points to 83.8%, which was the highest for any domestic market. Compared to January, traffic was up 5.3%.
• Japan’s domestic market contracted 3.1% compared to February 2012 owing to the flat-lining economy and related weak domestic demand for air travel. Japan’s domestic traffic is 12% below pre-Tsunami levels. Capacity fell 4.7% year-on-year and load factor was the lowest for any market at 62.4%.
• Brazil saw traffic fall 4.3% on a 10.6% plunge in capacity as the country’s airlines act to offset downward pressure on profitability, with economic growth continuing to fall below expectations. Load factor rose 4.6% points to 70.7%.
• Indian domestic traffic dropped 9.1% in February compared to a year ago. In addition to the slowing economy, Indian airlines have been reducing capacity from previously unsustainable levels. Capacity declined 7.5% in February and load factor slipped to 74.5%.

See some great aerial views of the ramp at New Delhi airport

On March 20, IATA raised its outlook for the industry’s earnings performance to a net profit margin of 1.6% from 1.3%. While the airline industry outlook is positive, margins are still thin, and any shock, like that of Cyprus can have extreme repercussions.

IATA is also concerned on the flight delays, longer lines at security and border check-points at US airports thanks to budget sequestration measures which began to take effect on Monday, April 1.

Tyler was critical of these measures saying

“It’s unfair that air travellers should suffer the impact of sequestration given that airlines and passengers already pay around $4.5 billion a year in fees and taxes for the essential services of border control and airport security. It is unlikely that the savings that will be achieved from sequestration will offset the damage to the economy if air travel is discouraged by these cutbacks. Aviation is an important catalyst for economic growth and prosperity. The cost of the shocks, uncertainty and unpleasant surprises can only hamper efforts to revive the economy. The government’s priority should be on extracting the greatest economic benefit possible from aviation—not making it more difficult to do business,”

You can download the detailed Passenger Traffic Analysis for February 2013, here or read it online below.

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Airport Traffic Roundup: Beijing Airport hits 80 million passengers in one calendar year, Dubai Airport continues to grow

by Vinay Bhaskara

Earlier this week, Beijing Capital Airport (PEK), the world's second busiest airport by passenger enplanements, crossed 80 million passengers carried in one calendar year. According to Zhang Guanghui, general manager of Beijing Capital International Airport co., the airport is likely to cross the 90 million passengers per annum mark by 2015, allowing it to pass Atlanta's Hartsfield-Jackson International Airport as the world's busiest airport by passengers carried.

Meanwhile, Dubai Airport (DXB) reported a robust 10% growth in passenger traffic for November 2012. Dubai is now projected to handle more than 56 million passengers in 2012, and a whopping 66 million in 2013, which would exceed the current capacity of the airport. However, thanks to the opening of the new A380 concourse next year, passenger capacity should rise to around 75 million passengers per annum.

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Exclusive interview: Giorgio De Roni - CEO GoAir - Part 2: We first deliver results, we do not over-promise.

Continuing from part 1 of the interview with the the soft spoken CEO of GoAir, Giorgio De Roni, who has quietly turned around the Wadia family promoted airline from a rock bottom position, dismal market share, and reputation for frequent cancellations, to a top performing contender in the Indian airline industry, with some of the best performance parameters in the industry.

In the concluding part of this broad ranging two-on-one interview with Devesh Agarwal and Vinay Bhaskara, De Roni, shares his management mantras, techniques and methods utilised in the turn around of GoAir.

Q: How are things developing at GoAir and in the Indian airline industry as a whole over the past year?

Well the industry is going through a challenging period due to many issues in the market.

Certainly and foremost the cost of fuel and taxation on fuel. We have recorded an increase of 7%, which is a huge increase given that fuel represents more than 50% of our total costs.

Then we have a market that I’m fully confident and sure that in the medium to long term is growing. But unfortunately in the latest few months, we have recorded a drop in respect to last year, and that is a big concern in the short period.

We have some infrastructure bottlenecks and again this is penalizing airlines in India.

That said, I remain confident in the growth of the Indian aviation sector. We might require some revision of the regulatory environment which is a little bit old fashioned. If I’m not wrong the base of the legal framework is dated 1934, so even before the Chicago Convention.

I feel that some commitment from the government to revise and improve efficiency in the system is necessary. I feel confident that all stakeholders will be able to deliver us such an environment.

In my view, a country with 1.2 billion people should have a much stronger aviation sector. Definitely there is an opportunity to create a hub in India, and there is probably also a space for more than one hub. But we need some efficiency in all of the systems.

Q: Till a little more than a year ago, GoAir did not enjoy the best reputation in the industry in terms of dispatch reliability. In the last 1.5 years, that has turned around literally 100%. GoAir ranks, right at the top in terms of least cancellations and best on-time performance. Can you share with us what were the issues confronting GoAir and some of the steps you took to solve them when you joined the airline?

Well I think that quality to customer is one of the pillars of any airline, and we are committed to deliver value for money. Definitely I am aware that in the past, GoAir was suffering in terms of on-time performance. We are now averaging around 90%. And notwithstanding the high on-time performance, we also have high aircraft utilization, because in July we achieved 13 block hours per aircraft per day, which is remarkable for a narrow-body airline.

I think that the only thing that I am trying to reach within the organization is trying to deliver consistent strategy, and a consistent approach throughout the management team and down to the front line. We are investing hugely in terms of training and hugely in processes and procedure. We were IOSA approved [IATA Operational Safety Audit] at the end of 2010. Since it is a 2 year approval, we are now going through the renewal of that certificate. All these aspects are contributing to keep our quality and standard of performance high.

IOSA? We didn’t know that you had undergone IOSA. We only knew that Air India had undergone IOSA.

Well, one of our characteristics is not to overpromise, but first to deliver the result and then communicate. Sometimes my shareholder [Wadia family] blames me, saying that we [GoAir management] should be more proactive in communication.

Well my view is that we have to communicate only what we are able to deliver. And definitely IOSA is a good achievement.

But in the end, does a passenger choose GoAir for being IOSA certified? No I don’t think so.

I think that it is more important to deliver on-time performance, and good service, both on-board and on the ground. And that is why we are investing significantly in training.

Q: You mentioned that GoAir is achieving 13 hours aircraft block utilisation time, That is almost 20% or 30% more than IndiGo or SpiceJet. You appear to have probably the best aircraft utilization in the country?

Well last year we received an award by Airbus for being the best operator of the A320 in whole of Asia Pacific, Middle East and Africa in our fleet size. [Editor's note: A320 behemoths AirAsia and IndiGo are in the same geography]

And this is remarkable because of course the higher utilization continues to keep fixed costs more efficient , but also it is remarkable because it is accompanied by a very good on-time performance.

Q: How long are you looking at keeping the same level of aircraft utilization?

I hope that as soon as we get approval, we can start operating on international flights and increase the aircraft utilization by adding some flights at night. Of course on a daily basis we need to carry out maintenance checks on all the aircraft. And these keep the aircraft grounded for 3.5~4 hours every day, so the limit for the utilization is 20 hours.

We have a turnaround time of between 25 and 30 minutes depending on the size of the airport and efficiency of the airport in providing turnaround services. And that’s the limit I cannot go beyond.

Because our first departure is at 05:15 and our last arrival is at 01:00 the following day. Of course not all of the aircraft have such an intensive utilization, but we manage to have a pretty good utilization.

Q: So does this high utilization change the timeline on heavy maintenance checks for the A320s?

We do have C-checks. Another policy of the company is to keep the fleet as young as possible, because this brings efficiency in maintenance and efficiency in fuel consumption, and a good product to our customer. It means that C-checks. Yes we have undergone 8 C-checks for the fleet. These keep the aircraft grounded for around 3 days. We outsource the C-check maintenance. We also have engines updated but considering that we have spare engines, the high utilization is not as much of a concern.

Q: Many Indian carriers are moving to the concept of "power by the hour" with engine manufacturers. Is GoAir using this business method?

[Editor's note: In this business method, airlines agree to pay engine manufacturers a unit price per hour of usage of the engine. The manufacture is then responsible for the performance and maintenance of the engine.]

We do not do so currently, but we are exploring this method. If it saves us money and helps us improve our despatch reliability we will consider it most strongly.

Q: Can you share some of your operational numbers? What are your average number of flights per aircraft per day?

We operate roughly 100 nonstop flights, but the network is constructed to offer as many “via” [connecting] opportunities as possible, particularly via Delhi and via Mumbai. And we carried roughly 3.5 million passengers last year and we have a target of 5.5 [million]. Why? Not only due to the increase of aircraft, we grew capacity by 22% as well.

Q: So you will be targeting growth up to 5.5 million passengers this year?

Yes 5.5 million. Due to increasing capacity by 22% and a higher seat factor. We also slightly increased the productivity by 15 minutes – which is peanuts. But at the end of the day, we can deliver some positive results.

Q: How many rotations do you achieve on average per aircraft per day?

We achieve 7.6 legs per aircraft per day.

[Editor’s Note: Mr. De Roni clarified that he meant 7.6 one way flight segments per aircraft per day.]

Q: Can we ask you for CASK or RASK numbers? (Cost per Available Seat Kilometre, Revenue per Available Seat Kilometre)

Sorry No.

Q: You mentioned the enhanced connectivity that you are looking at through Delhi and Mumbai. Looking forward, how much do you want to grow connections? Will it play an increasing role in the business model or will the primary focus still be point to point connections (P2P)?

Well the main focus will continue to be on point to point, but definitely connectivity might increase without diluting the overall revenue. Furthermore, we also must consider that due to some infrastructure bottlenecks, it wouldn’t be easy to add additional slots in Mumbai or at peak times in Delhi. So we also have a strategy to increase our presence in other areas of the country. We are already relatively strong in the Northwest; in Jammu and Kashmir we are the market share leader in Srinagar. We have recently deployed second aircraft nonstop at Bangalore Airport and the January A320 delivery will be most probably deployed in the South of the country, bypassing both Delhi and Mumbai.

Q: What do you see happening in Mumbai with regards to an integrated terminal? Will it be something similar to Delhi where you have an LCC terminal and a separate integrated terminal.

First of all, I am not Indian and I am not particularly able to forecast Indian decisions. And even if I am able to forecast, since it is sometimes a frustrating experience, I prefer to keep to what is the final the result.

Because media coverage is unpredictable – one week they say that FDI will be approved by Friday, the next Saturday, it is next month, and the next month, it is in a few months time.

So I have the habit of let’s see what happens and planning consequently.

Q: The reason we ask is that if in Bombay they structure the integrated terminal similar to Delhi, will the cost structure be similar to Delhi?

Yes. And it will create inefficiencies in the cost structure if we have to share activity between two terminals. So I do hope that this kind of consideration will be analyzed before any sort of decision is made.

[Editor's note. Please see part 1 of this interview where Mr. De Roni explains how high fees are impacting Delhi airport with reduced traffic]

You recently asked the DGCA to grant you a waiver from the 5-year and 20-aircraft rules for international flying. How confident are you in receiving a waiver, and would this signal a shift in strategy towards more international flying?

No, the core business will remain domestic. I personally see a strong potential for more growth domestically, considering that only 60 million passengers travelled by air last year out of 1.2 billion people.

If there are opportunities to fly internationally, I feel relatively confident to be authorized to fly internationally.

We already have, as you know, the 5 years of experience required, but we are flying less than 20 aircraft. I do not see why foreign airlines are allowed to fly international flights to India with just 1, 2, or 3 aircraft and Indian carriers are not allowed.

In my view, allowing GoAir to fly international, will increase opportunities for employment, flows of currency and tourism, and will serve the economy of the country better, and at the end of the day, it will create a dynamic competitive environment to the benefit of the final customer.

[Editor’s Note: Just to give some examples of this disparity. Avia Traffic Company, an airline with 5 aircraft that is banned in the EU, is allowed to operate in to India. Bhutan's Druk Air with just 3 aircraft, and several sketchy Afghan airlines with very small fleets, operate non-stop international services into Delhi? Yet GoAir with its now sparkling reliability and safety record is not allowed to do so?]

Q: Looking at your network, Mumbai and Delhi seem to be roughly equal in size. Will you increase in Delhi?

We are slightly more present in Delhi, historically due to a lack of slots in Mumbai. But definitely also due to the fact that the cost in Delhi has increased greatly. Thus the expansion plan will mostly be outside Delhi.

Q: One thing we’ve noticed is that the bulk of the expense at Delhi Airport seems to have occurred on Terminal 3. Yet GoAir, SpiceJet, and IndiGo passengers, who do not use T3, are made to pay fees for T3. Your comments?

Unfortunately, this is the common approach to airport development. And with this kind of approach we have weaknesses in the efficiency of the system. We have to survive anyhow.

Thank you sir for the revealing details. It was a pleasure.

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Indian airlines should implement United's 'flat tire' rule and put late-coming passengers on next flight

Photo copyright Weltenbummler. Licensed under CC.

It is a well known business fact, that satisfaction and trust are created when contracts are balanced. Yet, globally, airline ticket contracts are extremely one-sided in favour of airlines, especially when it comes to flight delays and cancellations. In India, while the aviation regulator DGCA has rules on facilities to be provided to a passenger in the event of a delay or cancellation of a flight, it also has a provision of "circumstances beyond an airline's control". With peak hour demands at major airports, outstripping runway capacity, the unfortunate reality, is, that airlines in India, do delay or cancel a reasonable number of flights. The almost universal reason given, is, "circumstances beyond our control".

Yet, if a passenger cannot reach the airport in time, due to reasons beyond their control, a traffic jam, a procession, an accident, or even a tyre puncture, they stand to lose the entire ticket cost, due to being a "no-show". The fear of this loss results in late passengers risking their life and limb, along with those of fellow road users, in a crazed rush to the airport, or even the few ultra-stupid ones who decide to call in a bomb-threat.

Why this double standard? If an airline can have its flight delayed by "ATC delays" (read air or airport traffic jam), then why cannot a passenger be held up by road traffic jam? Both situations are unintentional, caused by "circumstances beyond control". In the world's largest democracy, what is stopping us from practicing this fundamental tenet of equality? This thought has been vexing me for many years.

I am not advocating a blanket refund policy for "no-shows". Such a policy would be instantly abused into oblivion, and will be unfair to airlines. However, there surely must be some middle ground?

The solution comes from United Airlines via consumer rights activist Christopher Elliot's article. It is called the 'flat tire' (tyre puncture) rule.

In essence the rule says, if you have a flat tire on your way to the airport, or are otherwise delayed because of circumstances beyond your control, United will put you on the wait-list for the NEXT flight to your destination at no extra charge. Yes, no extra charges!! No change fee, no fare differential, no "no-show" fee, nothing. If there is a spare seat of the next flight, after clearing that flight's confirmed and previously wait-listed passengers, United will put you on that flight.

To qualify for the 'flat tire' rule, the passenger must arrive at the airport within two hours of the original scheduled departure.

It is an ethical policy that treats the customer with fairness and a modicum of humanity. By accepting the fact the passenger was delayed by uncontrollable circumstances, over a period of time, customers to will reciprocate that acceptance of delays by the airline.

Will such a policy be beneficial for the aviation industry in India? Yes. Is it required? Again Yes.

When faced with doubts and questions, Rotarians apply the "Four-Way Test" asking these questions :

• Is it the TRUTH?
• Is it FAIR to all concerned?
• Will it build GOODWILL and BETTER FRIENDSHIPS?
• Will it be BENEFICIAL to all concerned?

United's 'flat tire' rule meets the test in all ways.

• The rule is based on trust and truthfulness between the passenger and airline.
• It creates a level of equality in the contract, which makes it fair to both, the passenger and the airline.
• By putting the passenger on a wait-list for the next flight, the airline is not losing any money, while by accepting the customer on his/her word it builds goodwill for the airline and improves customer loyalty (friendship).
• This creates a beneficial win-win-win situation for the passenger, the airline, and those on the road, who lives are not risked in the mad dash to the airport.

Is there a potential for abuse if such a rule is offered in India? Sure there is. Any privilege can be abused, and not just in India.

One must ask these questions though. In today's hectic schedule driven world, would a passenger knowingly disrupt their schedule? It is important to note, the rule can call for the airline to put the passenger on the wait-list for the next flight, not some flight in the future, and it does not guarantee a seat on the next flight. If the next flight is full or the passenger cannot be accommodated, then he/she gets wait-listed on the next flight after that. The passenger has to be present at the counter when the waiting-list of each flight is cleared. Will a passenger knowingly be late and want to endure such uncertainty? I doubt it.

What are your thoughts? Share them via a comment.

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2011 gives airlines mixed signals. Passenger traffic up 5.9% but freight contracts 0.7%

The International Air Transport Association (IATA) reported that full year 2011 passenger demand rose 5.9% compared to 2010, in line with long-term growth trends. In contrast, cargo markets contracted by 0.7% for the year.

Growth in demand lagged behind capacity increases at 6.3% for passenger and 4.1% for cargo putting downward pressure on load factors and fares. The average passenger load factor for 2011 was 78.1%, down from 78.3% in 2010, while the freight load factor was just 45.9%, down from 48.1% in 2010.

2011 was the year of constrasting signals. Healthy passenger growth, was offset by a declining cargo market. Optimism in China and India contrasted with gloom in Europe. Towards the latter half of the year while the US grew, China and India shrank. Traffic grew but profits shrank.

International Passenger Markets

International air travel rose 6.9% during 2011, bouyed by 6.2% growth from February to July, but dipped to 1.2% from September to December. International capacity climbed 8.2%, pushing the passenger load factor down to 77.4%.

Robust business travel to long-haul markets saw European carriers shrug off the ill effects of the sovereign debt crisis and post the second highest growth rates, behind Latin American carriers. Demand rose 9.5% last year while capacity climbed 10.2%, resulting in a load factor of 78.9%.

North American carriers had the industry’s highest load factors for the year at 80.7% reflecting a tight approach capacity management which grew 6% in the face of a demand increase of just 4% for the year.

Latin American airlines led the industry in traffic growth in 2011 with a 10.2% rise in demand compared to 2010. This also was the only region in which demand growth outstripped capacity growth for the full year, with capacity up 9.2%.

Middle Eastern carriers’ traffic rose 8.9% for the year, against a 9.7% climb in capacity, putting pressure on load factors, which at 75.4%, was the second lowest, behind only Africa. While airlines in the region have slowed their pace of expansion, their price competitive products and well-positioned hubs enable carriers to continue to improve their share of long-haul markets.

Asia-Pacific airlines experienced the widest traffic-capacity gap for the year, with annual traffic up 4.1% versus a 6.4% climb in capacity driving average load factors down to 75.9%. There is no let up in the imbalance and December load factors further slid to 74.7%. A significant part of this slowdown was due to the earthquake and tsunami in Japan, which was coupled by a business slowdown in key Asian economies in the latter half of the year.

African airlines saw passenger demand rise a mere 2.3% for the year, primarily due to civil unrest in North African countries like Egypt and Libya. Capacity climbed a mere 4.4% for the 12 months and load factors were the weakest in the industry at 67.2%.

Domestic Passenger Markets

Domestic RPKs (Revenue Passenger Kilometres -- a measure of actual performance) account for about 37% of the total market. In North America domestic operations constitude about 66.5% of operations. In Latin America, domestic travel accounts for 47.3%. In Asia-Pacific, the large domestic markets in India, China and Japan mean that domestic travel accounts for 42.2% of the region’s operations. It is less important for Europe and most of Africa where domestic travel represents just 11% and 11.6% of operations respectively. And it is negligible for Middle Eastern carriers for whom domestic travel represents just 5.5% of operations.

Passenger demand in domestic markets for the full year rose 4.2% against a 3.1% increase in capacity, leading to load factors of 79.3%. Individual markets varied dramatically in their performance.

US demand rose just 1.3% for the year but capacity growth too was near flat at 0.5%, reflective of the market's maturity and a sluggish US economy. Industry leading load factors of 83%, helped boost airline revenues.

Chinese domestic demand rose a strong 10.9% in 2011 on a 7.8% capacity increase, keeping load factors at a high 82.2%, helping the profitability of the country’s airlines.

India had the strongest annual growth globally, with passenger demand up 16.4% but capacity was increased a dizzying 18.6% driven mostly by IndiGo, SpiceJet and GoAir, and load factors dived to a dismal 74.7%. Indian carriers seemed to show no sense of moderation and the imbalance during December, traditionally the one of the highest months of air travel, worsened with a 15.5% increase in capacity on a passenger traffic increase of only 9.3%. Like 2008, Indian carriers seem to be intent on devouring each other and themselves with blind capacity increases. This imbalance is once again keeping Indian carriers leading the world -- in losses.

Japan's airlines are still feeling the impact of last year’s earthquake and tsunami. Demand is down 15.2% as is capacity by 11.5%. Load factors were the lowest at a mere 58.8%.

Brazilian carriers saw a 13.7% increase in demand and grew capacity 11.2%. Load factors remain low at 69.3%.

Air Freight (Domestic and International)

Air freight markets shrank 0.6% in 2011, but, December performance increased 1.5% over November, reflective of growing business confidence with growth of the largest economy in the world -- the United States. Even though dedicated freighter fleets have been reduced, airlines have added twin-aisle passenger aircraft like the Airbus A330 and the Boeing 777 which provide plenty of cargo space. This capacity expanson, has seen freight load factors decline to 45.9%.

The Bottom Line

2012 is still showing significant contrasts. The US economy is improving, but Europe, China and India are slowing down. Will the Eurozone crisis explode? Or will the political leaders be able to put a rabbit out of the hat? What impact with the new EU-ETS have on global air travel

It is far to early to predict.

What are your thoughts for 2012? Do you see a trend? Spare a moment and share your views via a comment.

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Bangalore grows 23% to surpass Chennai and become third largest airport in India

On the back of strong economic growth in the region, Bangalore has grown its passenger traffic 23% to 11.24 million for calendar 2010 surpassing Chennai to become the third largest airport in the country. For the last five years, Bangalore had been leading Chennai as the third largest in domestic passenger and freight traffic, but this year in May the Bengaluru International Airport has helped the city reach the number three slot in overall passenger traffic.

Read 2009 performance here

The passenger traffic in the last quarter was 3.06 million and just six days ago, on December 17, the airport handled 38,134 passengers, the highest ever reported since airport opened in May 2008.

Flight movements grew 8.2% to reach 110,437 averaging 312 movements per day and airlines fly to 30 domestic and 19 international destinations from Bangalore. Air Asia, Air China, Silk Air, Qatar Airways, and FedEx commenced operations to Bangalore during 2010.

The Best Managed Airport in India
The entry of the GVK group has energised airport operations which were facing a resource crunch. The airport won the title 'Best Managed Airport in India' in the CNBC AWAAZ Travel Awards 2010.

The airport operations group led by President Marcel Hungerbuehler and Director Hari Marar have been pushing for continuous improvements in efficiency. The airport maintained flight punctuality of over 85%, within 15 minutes of the scheduled time of departure. Baggage delivery has averaged six minutes from arrival time of aircraft on stand, for the first bag. Check-in wait times too are short at two and a half and four minutes for domestic and international flights respectively. (Read related story on the airport operations control centre.)

However, the management of the airport is going to have to work extra hard with government agencies to reduce the lines and wait times at immigration and to some extent security.

Air Cargo
With the resurgence of manufacturing activity in the hinterland, the airport's two cargo operators Menzies-Bobba Aviation and Air India-Singapore Airport Terminal Services (AI-SATS) saw an impressive 33% growth over last year to 210,000 metric tonnes. FedEx Express commenced direct flights to Bangalore and one can look forward DHL following suit, considering it has a major operations hub at the airport along with partner Blue Dart.

Due to the nature of its high-technology, pharma, food, floriculture, aviation and precision engineering industries, Bangalore has always led India in percentage of GSDP shipped by air. The local Customs commissionerate has traditionally been highly efficient compared with the rest of the country and many an industry from as far away as Chennai has considered importing cargo via Bangalore due to it faster clearing times.

The future
Based on economic projections and the accepted rule of thumb that air traffic grows at twice the GDP growth rate, one can safely estimate a growth of 15% year-on-year for the next two years.

Bangalore Aviation readers may recall the over-crowding in the departure halls soon after the airport opened in 2008 when traffic was at 10.3 million. The economic slowdown of 2008 and 2009 provided a breather to then promoters of the airport, but they chose not to invest in terminal expansion when they had the time.

Luckily for Bangalore, the airport operating company Bengaluru International Airport Limited, was acquired by the GVK group. The re-jiged management led by Managing Director Mr. Sanjay Reddy has fast-tracked the expansion of the existing terminal which is expected to be completed by 2012 and will increase the capacity by about 35%. See photos and video of the proposed expansion.

Indian carriers miss the international bus
The economic slowdown of 2008 and 2009 saw a 20.5% year-on-year contraction in domestic passenger traffic, while international traffic grew at 6.68%.

Despite this strength in international passenger traffic, while Indian carriers are increasing their domestic operations to capitalise on the growth, the three Indian carriers with significant international operations, Jet Airways, Kingfisher and Air India, have largely chosen to ignore Bangalore for their international operations, handing over the international passenger market to foreign carriers. Emirates still remains the largest carrier to Bangalore with 20 wide body operations per week, followed by Lufthansa, British Airways, Singapore Airlines, Thai Airways, Air France and DragonAir.

Abu Dhabi based Eithad will commence a daily Airbus A320 service to Bangalore joining Qatar Airways to complete the gulf carrier troika.

The airport authorities are hopeful of snagging Thai Air Asia, Thai Tiger, DHL cargo, TNT cargo, China Southern and ANA, though I doubt Thai Tiger, TNT cargo and All Nippon commencing operations any time soon.

Related articles

• Jet flight delayed, flyers fume at Delhi's T3 (ibnlive.in.com)
• Despite healthy patronage, lone Salem flight cancelled (thehindu.com)
• Breakfast at Bangalore International Airport (kish.in)
• Appeal for more flights out of Mysore (thehindu.com)
• For Air Cargo, a Screening Conundrum (nytimes.com)

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