Topic of the week: Vijay Mallya threatens to stop supporting Kingfisher Airlines

Yesterday, Kingfisher Airlines chairman Vijay Mallya sent out a letter to his employees, ostensibly in response to the industrial action by its employees earlier this week that led to the cancellation of more than 30 flights out of Mumbai and Delhi.

Unlike earlier letters which were much softer, this time, Dr. Mallya did not mince words. He informs employees of his efforts and commitment to re-capitalise the airline

As you may have read in the media, I have said that our Company will be re-capitalised whether the Government changes the current FDI policy or not.

If I was not confident about the future of our Airline, I would not make public statements nor arrangements to raise funds.

He is correct when he goes on to state that industrial action is destroying investor and passenger confidence, erasing existing razor thin margins.

In the letter, finally, Dr. Mallya, in effect, serves an ultimatum to Kingfisher employees

Why should I spend everyday to keep our Airline afloat if the actions of our own colleagues lead to loss of guest confidence and lower income by cancellation of flights or low load factors that result from uncertainty ?

What is the confidence that I can give to investors who I am in dialogue with ?

If some colleagues feel that I will be pressurised by flight cancellations, they are wrong. Instead, I will stop my own support as a few are effectively holding the entire Company to ransom.

He goes on to say, those employees who are unsatisfied are welcome to leave the company. Well, Dr. Mallya, those who could, already have.

Is your threat of "stopping support" for real? Will the Government of India, whose public sector banks have lent the airline thousands of crores let you walk away scot free? How will your other companies, and you, walk away from your guarantees.

Share your thoughts on the tone of this letter, and the Kingfisher Airlines in general, via the comment system below.

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Star Alliance members reject Air India, invite Jet Airways. Air India should choose oneworld

The Star Alliance, a global grouping of 27 airlines, has rejected the application of national carrier Air India to join the group. In over 14 years, and 28 applicants, this is the first time the application of any airline has been rejected.

A source, who wants to remain anonymous, confirmed, the alliance had effectively rejected Air India's application last year itself, but for diplomatic reasons termed the action, at that time, as a "suspension". The mountainous losses of Air India, and its crashing brand value, especially due to the recent pilots' strike, proved to be the proverbial straw that broke the camel's back. At a recent meeting, it is learnt, the majority of members of the alliance voted to reject Air India's application. The ballot is done in extreme secret and even the alliance members do not know of the vote of other members.

This rejection opens the door for India's largest private airline, Jet Airways, who has always eyed joining the alliance. Our co-editor Vinay Bhaskara has done an analysis on what this means for Jet.

As per a report in the Business Standard,

Ajit Singh, Minister for Civil Aviation, Government of India, said, “To be part of the Alliance, every member has to agree and that has not happened, especially after the pilots’ strike, when we lost a lot of credibility. They have practically said no, and had sent us a letter last week. We have asked Air India to look for other options and alliances.” Air India will now hold talks with other airline alliances like Sky Team and One World,

Which alliance for Air India?

In our opinion, oneworld will be the next best choice for Air India. The alliance is strongly committed to India, coming agonisingly close to being the first alliance to induct an Indian carrier, Kingfisher Airlines, before the carrier financially imploded. The alliance has also seen the closure of other members, Hungary's Malev and Mexico's Mexicana. So it is hungry for new members. The CEO of oneworld, Bruce Ashby, has strong Indian aviation experience as CEO of LCC IndiGo, and can work the delicate egos of the Indian bureaucracy.

Air India already operates flights to many oneworld hubs, London (British), Chicago and New York (American), Hong Kong (Cathay), Singapore (Cathay and Qantas), and Tokyo (JAL). Soon it will also commence flights to Sydney, hub of Qantas. Conversely, all existing oneworld carriers, save American, Qantas and LAN, operate to either, or both, Air India's hubs in Delhi and Mumbai.

oneworld currently has a weak presence in the Indian and South Asian market, and lacks strong connecting hubs east of Helsinki and west of Singapore. Amman, Jordan is too small, and Colombo, Sri Lanka is too far South.


Along with Air India, oneworld can bridge this gap and gain a commanding presence in the Gulf to South-East Asia geography with the upcoming entries of Malaysia Airlines, and Sri Lankan Airlines.

T3 in Delhi is already a true connecting hub for Air India, has an existing strong portfolio of destinations, not just in India, but across south Asia, and the Gulf. One the integrated terminal 2 is completed in Mumbai, it will only add to the hub strength of Air India.

Adding Air India to the fold would also solve one of oneworld's biggest problems; getting passengers to and from secondary Indian destinations. Air India already operates connecting flights from various cities across India to connect and feed its long distance international flights from Delhi and Mumbai.

Having solved many of its system's problems during the attempted integration with Star, Air India will also be far more ready, and its integration quicker, should oneworld decide to pursue a partnership.

Air India used to provide good inflight service, and with the assistance of oneworld and the backing of respected airlines like British Airways and Cathay Pacific would hopefully allow Air India to re-shape itself as an excellent service provider.

Frequent Flyer Programme

With Jet being invited and a virtual shoo-in to join the Star Alliance, its frequent flyer programme (FFP) JetPrivilege is going to get a massive boost, with members being able to accrue and redeem miles across all the member airlines. Air India's Flying Returns FFP risks being swept away and becoming irrelevant as both passengers and partners seek a broader base.

 oneworld members have been voted as having the best FFPs in the world, American Airlines in the Americas, British Airways in Europe and Africa, and Cathay Pacific in the Asia, Middle East, Oceania geographies respectively. An alliance with oneworld will also provide Air India the similar broad-basing as well as linkages with existing oneworld partners in the non-airline section.

What are your thoughts? Share a comment via our new Disqus 2012 comment system below.

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SpiceJet Q1 FY 2013 financial and operations analysis

When Gurgaon based low cost carrier (LCC) SpiceJet reported a net, pre-tax profit of more than Rs. 56 Crore in the first quarter of fiscal year 2012-2013, it represented a huge positive step for the Indian airline industry.

After SpiceJet had slipped to a large net loss for fiscal year 2011-2012, mirroring the performance of the industry as a whole thanks to sharply rising fuel costs, additional costs due to the integration of the Bombardier Q400 turboprop into the fleet, and depressed fare levels that arose because there was too much capacity in the Indian market. But with the effective demise of full service carrier Kingfisher and its low cost subsidiary Kingfisher Red and their subsequent capacity drawdown, much capacity has been pulled from the market, supporting fares and pushing not only SpiceJet but even full service rival Jet Airways and its low cost wing JetKonnect into profitability.

Looking specifically at some of the information from SpiceJet’s first quarter, once again their growth was quite impressive. They added seven new aircraft to the fleet, including five more Bombardier Q400 turboprops, and grew their market share in the Indian domestic market 18.6%. 26% passenger traffic growth for SpiceJet is pretty much the trendline over the past five to six quarters but importantly, traffic growth significantly outpaced capacity growth as SpiceJet’s seat load factor nudged above 80% for the first time in more than a year and a half. This paid dividends for SpiceJet, as the higher fares thus translated to larger revenues.

More specifically, unit revenue growth for the quarter was superb, RASK (Revenue per Available Seat Kilometre) growing an incredible 36.6% to Rs. 3.97. In fact, this 36.6% growth in RASK on a year over year basis was the highest I've ever seen recorded by a publicly traded Indian airline after reviewing more than four years worth of financial results. What created this excellent revenue performance was actually what one would call a "perfect storm," of events during the first quarter.

On one side, you had LCC rivals IndiGo and GoAir not significantly expanding their domestic operations during the quarter (on an aggregate basis), as IndiGo set its sights on international growth and GoAir performed a pair of aircraft swaps and route swaps (bringing Chennai online into the network). Simultaneously, Kingfisher was entering into its "death by a thousand cuts routing," chopping off most of its low cost Kingfisher Red network as well as its regional network of destinations with ATR 72 turboprops. Given that Jet Airways was happy to benefit from the higher fares as well, this created a situation for SpiceJet where its chief LCC competitors were showing unusual capacity restraint, and they were entering into monopolies or duopolies on a lot of their Q400 regional routes thanks to Kingfisher's cuts. Add in the fact that the initial Q400 operations from Hyderabad, Chennai and the like have begun to mature (build up a customer base) and the recipe was set for unprecedented unit revenue growth at SpiceJet.

While the revenue gains were important to the result (it can never hurt to record 55.1% top-line revenue growth), SpiceJet's results were unquestionably supported by the moderate decline in fuel prices over the quarter. In fact, their fuel costs on a per available seat kilometer (ASK) basis (given ASK growth of 16.7% in the quarter) increased just 13.4% YOY (the smallest increase of the last 5 quarters), which finally allowed SpiceJet's revenue and traffic growth to "catch up" to previously runaway fuel price inflation. However, it was troubling to note that SpiceJet's non-fuel cost per available seat kilometre (CASK) was up more than 30.7% YOY. While this can be partly attributed to the acquisition and leasing costs of 5 more Q400s, as well as to the large increase in fees at Delhi Airport by airport operator GMR since SpiceJet has more exposure (proportionally) to Delhi Airport than the rest of India's airlines. But it is the more than 40% rise in the accounting category "other operating expenses" that is most troubling. Despite multiple efforts, SpiceJet did not provide any explanation of the costs in this category.

SpiceJet must keep its costs down, even in a favorable revenue environment like we have today. Revenue gains are typically temporary, and if any new entrant comes into the Indian market, then we are back to square one with capacity discipline (or in that case lack thereof). But low costs are low costs regardless of the competitive environment, and they are critical to SpiceJet's continued financial success.

Looking forward for SpiceJet, it will be interesting to see if they can sustain this kind of revenue growth and profitability moving forward. But even this one profitable quarter has made SpiceJet a hot commodity for potential foreign direct investment (FDI) assuming government approval. With SpiceJet set to add service abroad over the next few quarters, perhaps they can improve these revenue and profit figures even further. SpiceJet, for the time being, is the best performing Indian airline (if only by default because IndiGo's results are not clear. Congratulations are due to the fine team at SpiceJet who did not allow a temporary lapse into unprofitability in FY 2011-2012 taint the overall business, and who had the vision to take on India's airline "giants" in the regional airline field.

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NTSB traces Air India Boeing 787 GEnx engine failure to fan mid-shaft fracture

The United States National Transportation Safety Board (NTSB) released an interim report on the progress of its investigation in to the failure of a General Electric GEnx engine on-board a Boeing 787 Dreamliner destined for Air India on July 28th last. The have traced the failure to a fracture on the forward end of the Fan Mid-Shaft.

Bangalore Aviation has exclusive obtained this exemplar image showing approximate location of the failure.

The National Transportation Safety Board continues its investigation of the July 28, 2012 contained engine failure that occurred on a Boeing 787 Dreamliner during a pre-delivery taxi test in Charleston, South Carolina. A contained engine failure is a specific engine design feature in which components might separate inside the engine but either remain within the engine’s cases or exit the engine through the tail pipe. This design feature generally does not pose immediate safety risks.

Last week, the NTSB sent an investigator to the scene to gather information on the incident and subsequently launched a full investigation into the cause of the failure, led by NTSB Investigator-in-Charge, Mr. David Helson.

On August 1, 2012, a team of experts from the NTSB, FAA, Boeing and GE Aviation specializing in engine systems and metallurgy traveled to a GE facility in Cincinnati, OH to disassemble and examine the failed GEnx engine. GE is the manufacturer of the GEnx engine. The parties to the investigation have been extremely cooperative in assisting NTSB personnel in its review and assessment.

As a result of the investigative work to date, the NTSB has determined that a fan mid-shaft on the failed GEnx engine fractured at the forward end of the shaft, rear of the threads where the retaining nut is installed. The fan mid-shaft is undergoing several detailed examinations including dimensional and metallurgical inspections.

GEnx engine cut-away drawing not part of NTSB release.

The GEnx engine is a newly designed aircraft engine. It is a “dual shaft” engine, meaning that one shaft connects the compressor spool at one end to the high pressure turbine spool at the other end. A longer “fan shaft” connects the fan and booster in the front of the engine to the low pressure turbine in the back.

The cockpit voice recorder and flight data recorder, which is a combined unit on the 787 Dreamliner, was transported to the agency's Recorders Laboratory in Washington, DC for processing and readout. Both recordings captured the event and analysis is ongoing.

Moving forward, investigators will continue the detailed examination of the engine and metallurgical analysis of its components. The investigators have also begun reviewing the engine manufacturing and assembly records.

This investigation is ongoing. The information released today is factual in nature and does not include any analysis. Additional factual information may be released as it is developed.

Engine experts in India say that the main component carrying shafts inside an engine are an important part of the engine, but it is too early to say whether this fracture was caused due to materials flaw, a fault in manufacturing, or a design flaw. Depending on the reason for failure, it has the potential to become serious. However, the NTSB has not issued any recommendations yet. Boeing is due to deliver a GEnx powered 787 to Ethiopian Airlines early next week.

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Guest post: Vishal Mehra's list of top commercial aviation blogs, websites, and resources

Today, we feature a guest post by a regular reader of Bangalore Aviation, Vishal Mehra, a Digital Marketer by profession, and an aviation geek by passion. At our request, Vishal prepared his choice of top aviation sites and resources. We are honoured to be among some of the best known names in aviation information. Thank you Vishal.

Devesh Agarwal
Editor

With my last post, The Social Dutchman, I reached readers from 24 countries with inspiring feedback, providing me the urge to do better with my next. A benchmark was set for me and for over two weeks I thought about how to engage with more geeks like me, whether those are Social Media, Digital Marketing, Technology or in the case of this post, Aviation Geeks, or as they are called on twitter, #AVGeek.

There would have been other lists done before, maybe yes, then what is the value addition I bring to the table? As a Digital Marketer, I get asked this question on daily basis.

I bring my own experience of being an ardent aviation reader for over three years to the table, during which I have been to over 120 aviation websites and blogs.

I have been fond of airplanes for as long as I remember, being in awe of pilots walking to their craft, clicking pictures with crappy cellphone cameras, reading every word of safety manuals in seat pockets,  along with my fellow AVGeeks, was probably the biggest fan of Pan Am, the show which ABC dropped, nerdy stuff like that but I delved more into the industry with the arrival of twitter, my favorite social network as I mentioned in the last post as well.

So this list compiles seven of the best commercial aviation related web resources (listed alphabetically) that I know of, hopefully enthusiasts, from noob to pro level, all of them would find something they like.

In the spirit of Bangalore Aviation, your comments are welcome. You will find the comments section below this article..

Airline Business Blog

Although Airline Business is a monthly international magazine for senior airline management, it also has a blog on the flightglobal blog page, focusing on “a sideways look at the airline industry”.

13 other blogs jostle for attention on the same page, including the famous FlightBlogger. With such rich content and renowned contributors, Airline Business Blog has carved a loyal following for itself by providing unparalleled coverage on Airline News, Interviews, Infographics and well researched opinion pieces.

Max Kingsley-Jones article on Boeing’s 787 at this years Farnborough show has been 1 of my favorite off late, summing up the Blog for me by being precise, studied and descriptive.

Arun Rajagopal’s How to know your Airbus from Boeing

Although Arun’s blog is full of marvellous information about aviation and his trip reports (Read this with a tissue; his report on last Kingfisher international flight), this article, more so a plane spotter's guide, as Arun explained me himself, has been “one of the best things I have ever done in my life”

Differentiating between an Airbus and a Boeing aircraft is one of the most important things for an enthusiast, a conversation starter and a handy way to show off among your friends, I can vouch for the last one.

Arun wanted to know more himself and realized there wasn’t any resource online suitable enough for him, so he wrote his own guide, took him 2 weeks but clearly it was well worth it and we can consume those 2 weeks of hard work, complete with explanatory pictures, in less than 40 minutes.

Aspire Aviation Analysis

This is where I come when I need commentaries on issues pertaining to Asian aviation scene in large. Their location, Hong Kong, one of the world’s biggest aviation hubs, certainly helps in their coverage of stories.

Although Aspire Aviation is primary an aerospace consultancy business, their analysis section piques my interest with every visit, Daniel Tsang, the founder and chief analyst of the site told me he wanted to start a blog where he could express his views about industry developments and with time they added editors increasing the diversity offered.

Daniel also realized that Aspire could provide qualitative analysis for free, instead of hefty fees charged by others, as information cost fell significantly and they were in a unique position to provide Asian perspective to issues.

Besides Asian Aviation, Daniel, along with Vinay Bhaskara has also authored detailed posts on Airframe manufacturers like Airbus, Boeing and Bombardier.

Bangalore Aviation

I remember visiting Devesh Agarwal’s Twitter page, through Mashable’s top aviation list in 2009, which led me to BangaloreAviation.com.

Since that day, without a shadow of a doubt, Bangalore Aviation has been my first stop for everything related to Indian Aviation news and analysis; turns out hundreds of thousands of other enthusiasts feel the same way.

Devesh, joined off late by Vinay Bhaskara, has this uncanny way of making the industry approachable for newbies, as well as make the pros feel at home, with their concise approach and detailed analysis. I, especially look forward to Airlines financial analysis, which Vinay undertakes for the site.

I understand aviation has been in Devesh's blood since childhood, he has flown aircraft, has covered millions of miles as a passenger, and advised the Minister of Civil Aviation on Bangalore's HAL and BIAL airport, giving him an edge which very few can boast of in this beat.

Cranky Flier

I’m not at all surprised that Crankyflier.com usually figures in the top aviation blogs list everywhere, as Brett Snyder has been responsible for one of the world’s best online destination for people’s thrust (literally) for aviation industry.

My regular lunchtime reading aviation tweets usually have a link to a latest piece on cranky and I marvel at the ease with which the articles envelop the reader with excitement and information.

Brett calls himself the President and Chief Airline Dork for Cranky Flier LLC, and that dorkiness has been with him since he was a kid, like going to LAX to pick up airline timetables and birthday gifts which led to plane spotting. He has worked with airlines, travel companies and now consults on various projects, along with running a personal concierge service.

You should visit crankyflier for insights and happenings in American aviation industry, and checking up on Brett’s regular articles for Conde Nast Daily Traveler and other blogs.

SimpliFlying

Simpliflying is probably the world’s best combination of marketing and aviation for me. Shashank Nigam’s (CEO, SimpliFlying) quote during our discussion explains it best, “Our brand engagement with a can of Coke is about 10 minutes. With Starbucks, it's about 2 hours. But with an airline, it's anywhere from 2-24 hours. And that's just within the cabin. So why do airlines keep applying the same marketing principles as Coke and Starbucks, despite seldom turning a profit?”

That’s why we have Simpliflying today, right from explaining how weather problems are airline brand business, to key influencers making a difference, Shashank and his team have explained all this and more through easy to understand infographics, video content, presentations, interviews, webinars, articles and even an iPhone app.

The Points Guy

I came across thepointsguy while I was preparing myself for a business trip to US and it has quickly become my go-to site for information on frequent flyer programs, credit card and hotel deals.

Although I would admit that the site is mainly focused on American readers, it still has some great resources for overall understanding about collection points, like The Beginners Guide, which has step-by-step instructions to become an addict.

For my travel, I was able to extract two important links concerning my hotel bookings, for example: I got to know how I could earn up to 5x air miles (in my case, it was KLM Flying Blue) by staying at Hyatt Reston, and another link helped me in deciding between going for Hotels.com free nights or Hotel Points offered at their sites. (I went with the latter of course).

During my communication with Brian Kelly’s office, the founder of the site, I was able to clearly see that unlike other similar sites, he disseminates information to his readers in a more intuitive, easy to understand and most importantly street smart way to work effectively with the system.

It has inspired me to travel one day in J class with a bag full of miles and points, instead of cash.

SPECIAL Mention:

I would like to mention Live From A Lounge, hosted as part of Boarding Area, an India dedicated site for Credit Card, Airport Lounges, Hotel and Airline miles, run by AJ, I certainly enjoy reading his reports and he answers reader questions frequently as well.

Update: I have received an email from AJ, requesting for some additions to this summary :

LFAL is an India-dedicated site covering Indian aviation and hotels, focusing on how to travel smart and in style from India by making the best use of deals, miles, points and credit cards offered in India. Live From A Lounge frequently features in the Top 20 travel blogs worldwide as per Technorati, the global authority on blog rankings.

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Kingfisher Airlines' strikes lead to flight cancellations and disruptions

The Press Trust of India is reporting that disgruntled employees of the financially ailing Kingfisher Airlines went on a wildcat strike at Mumbai and Delhi earlier today which led to the cancellation of over 30 flights, with ripple disruptions across the airline's national network.

The protesters were mostly pilots and engineers who are protesting non-payment of their salaries for many months now.

Today also happens to be the first day of the monsoon session of the Parliament of India, and coincidence is too strong to ignore. The strike will surely attract the attention of law-makers. Whether it results in something positive, only time will tell.

Dr. Mallya's over-riding hope of saving his beleaguered airline is foreign direct investment (FDI), which has been stalled in political circles. If one has to believe the rumour mills, airlines from Mumbai and Gurgaon near Delhi, are putting political spokes in the veritable wrench, to ensure a decision on this policy issue is delayed for a long time, This would cause the implosion of Kingfisher and the elimination of a competitor that will surely rise like a Phoenix from the ashes if FDI is approved.

What are your thoughts? Should Kingfisher continue to limp along, not giving up the fight, and resurrect once FDI is approved? Or should Dr. Mallya recognise the writing on the wall, admit defeat, and gracefully exit the airline business?

Share your views via a comment in the section below.

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Coincidence in the registration series of Jet Airways' 737s VT-JFx and IndiGo's A320s VT-IFx

This is an interesting snippet and for the interest of plane spotters.

At present, the two leading airlines in India are Jet Airways and IndiGo; and they also happen to be aggressively adding aircraft to their fleet. By sheer coincidence, the registration sequences for the new aircraft for both these airlines happen to be very similar. Jet's new Boeing 737s are in the VT-JFx sequence, and IndiGo is in the VT-IFx sequence. VT-JFA (see picture here) joined the Jet fleet a couple of weeks ago, and VT-JFB just couple of days ago. IndiGo will expect its A320 VT-IFA (see picture here) within this month.

The registration number of aircraft is much like a car number plate, except in the case of aircraft it is on a national basis. All aircraft in India have their registration number commence with VT, followed by three alphabets.

Airlines, with the exception of Air India and the erstwhile Indian Airlines, try to use the next three alphabets as a branding of the airline's number or abbreviation.

VT-VJM on take off

So Jet Airways has VT-JAx, VT-JBx, VT-JCx (ATR-72s), VT-JEx (Boeing 777s), VT-JNx, and VT-JWx (Airbus A330s), and now VT-JFx. JetLite has VT-JLx and also VT-SJ (from the acquired Air Sahara).

Kingfisher has VT-KAx (ATR-72s), VT-KFx, VT-ADx, VT-DKx and VT-DNx (from the acquired Air Deccan), and their A330 fleet was VT-VJx (Dr. Vee Jay mallya perhaps). Dr. Mallya's private A319 Corporate Jet is registered VT-VJM and his Boeing 727 is registered in the USA as N727VJ (all US registrations begin with N). Incidentally, VT-VJM used to always operate as Kingfisher flight 11.

SpiceJet has VT-SJx, VT-SGx (the IATA airline code for SpiceJet is SG), and VT-SUx (Q400s).

IndiGo began with VT-INx, then VT-IGx, then VT-IEx (IndiGo's IATA code is 6E) and now VT-IFx. I wonder what passengers will make of VT-IFE, considering IndiGo's A320s do not have an In-Flight Entertainment (IFE) system, or VT-IFK or VT-IFU?

Air India's sequences appear to be less about the airline and more about individuals. For example the current A321s in the fleet are VT-PPx (Praful Patel perhaps?). However, the Air India Express subsidiary has its 737-800s registered VT-AXx which have some wonderful tail art. Read our stories explaining the tail art of each aircraft.

Please share your interesting anecdotes or thoughts via the comments section below.

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Jet Airways switches co-branded credit card partner from Citibank to HDFC

JetPrivilege, the frequent flyer programme (FFP) of Jet Airways, has chosen a new partner for its co-branded credit card. HDFC Bank.

Like in its earlier Citibank avatar, the JetPrivilege-HDFC Bank Credit Card will be offered on the MasterCard platform, but this time in three variants, World, Platinum and Titanium, unlike the previous one.

Co-branded credit cards convert loyalty points offered for using the card in to miles in the FFP of the airline. For example, the highest end credit card, the World Card, will entitle cardholders to earn 6 JPMiles for every Rs. 150 spent.

The product sheet detailing benefits is below.

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Photos and Video: Lufthansa's Boeing 747-8i receives water cannon salute at Delhi airport on first arrival

Whenever a new aircraft arrives at an airport for the first time, it is given the traditional water cannon salute by the airport's fire trucks spraying water high in to the air from both sides, to form an arch under which the aircraft passes.

India's capital New Delhi's India Gandhi International Airport welcomed the first Lufthansa's Boeing 747-8 Intercontinental D-ABYA as it touched down for the first time in India at 00:35 today on its flight from Frankfurt. It was welcomed by the water cannon salute at Terminal 3.

Full details on the service and the aircraft, including a detailed white paper are available in this article.

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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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Analysis: Jet Airways Spinning Off Jet Priviledge

Mumbai based full service carrier Jet Airways recently released its annual report for fiscal year 2011-2012, and amongst the many things discussed was this (not so) little nugget about Jet Airways' frequent flyer program JetPrivilege.

The loyalty industry is evolving in India. Your Company proposes to leverage this evolving business opportunity by setting up a marketing services company engaged in the business of managing reward points and loyalty programs for its program partners. Initially, the marketing services company will be a 100% subsidiary company. As and when negotiations with the potential knowledge partners crystallize into a concrete decision, it is proposed that some percentage of the Company’s stake be offered to the knowledge partners.

Your Company currently runs a frequent flyer programme, the JetPrivilege programme, through which members can earn and redeem JPMiles. The JetPrivilege programme is managed and operated in-house. Your Company proposes to transfer the JetPrivilege programme to the marketing services company and in the process transform the JetPrivilege programme into a larger retail-based coalition loyalty program and through its operations unlock greater commercial value.

Approval of the Shareholders for transfer of the JetPrivilege programme to the subsidiary company will be sought through postal ballot in due course.

Therefore, the Board of Directors, at the Meeting held on 24th May, 2012, granted its unanimous approval for an investment up to 100% in the Share Capital of the proposed maketing services company.

While Jet Airways did not give any timeline for the move, it is still interesting that they would choose to spin off JetPriviledge, especially in light of their comments about increasing ancillary revenue during the first quarter analyst's conference call. Jet Airways is certainly not the first airline to spin off its frequent flyer program and use it for profit generation (known as a profit centre). Air Canada's Aeroplan and American Airlines' AAdvantage are both run separately as profit centres where the airline will sell off its miles to various partners (primarily credit cards), and then allow those partners to use the miles as rewards for their own loyalty programs, then provide award space where those miles can be redeemed for flights. At Western airlines, such profit centre frequent flyer programs have annual turnover of more than $1 billion and profits that run into the hundreds of millions of dollars.

The move also comes at a time when Jet is almost entirely remaking JetPrivilege. The program already has a ton of airline redemption partners, and the recently announced entrance into Star Alliance (pending government approval) will only make the frequent flyer program more attractive. Jet also recently dropped its 10 year partnership with CitiBank in favor of three different miles-earning credit card partners.

I think that the spin-off is likely to be very beneficial to Jet, as their frequent flyer program is already the most attractive one in India, and the potential addition of the entire Star Alliance global network to the redemption options will make Jet Airways frequent flyer miles a very valuable commodity. At the same time, Jet Airways has to be careful not to overuse the profit centre capability. Have you ever heard the saying, "if everybody's rich, then no one is?" Similarly, if the spin off creates a ton more Jet miles, then the existing miles will be devalued. The prices for award redemption would go up, which could anger and drive away current Jet Airways frequent flyers, who in the end are much more important to the company's prosperity than transitory mileage program partners.

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