Jet Airways to lease three A330-200s to Turkish Airlines

by Devesh Agarwal and Vinay Bhaskara

In a December 12th filing with the Borsa Istanbul stock exchange (BIST), national carrier Turkish Airlines has said it will lease three Airbus A330-200 aircraft from India's Jet Airways for a period of six years. The financial details of the proposed lease were not made available. The middle-eastern giant will lease another five A330s from Dutch lessor AerCap for a period of eight years.

Bulk of Jet's A330s sitting on the ground. Photo copyright 2012 Devesh Agarwal.

Turkish Airlines (THY) has been leasing aircraft from Jet Airways since 2008 and once again in 2013, as the Indian carrier found it difficult to fill most of its international wide-body fleet. At one point 70% of Jet's Boeing 777-300ER fleet was leased out, with four aircraft leased to Turkish Airlines and three to Thai Airways. Jet even sold one of its Boeing 777s, strangely a money spinner for most of the world's airlines, but not for Jet.

Till recently, much of Jet's A330-200 fleet was grounded at Indian airports thanks to aggressive route rationalisation by the airline. In the second quarter of this fiscal year, Jet lost a whopping Rs.123 crores, just on the costs of keeping its aircraft on the ground.

Five of the ten grounded A330-200 aircraft have been leased by Jet, though on a short term basis, to 24% stake-holder, Abu Dhabi based Etihad Airways PJSC. The deal with Turkish was expected, after a deal to sell the remaining five A330s to Kuwait Airways fell through last month.

Repeated requests to Jet Airways for comments on this story were not answered.

It is an economically sensible deal for Jet Airways. In one stroke it is addressing a major cash drain, and ensuring long term dollar denominated revenue for itself. While a sale which would have brought in one-time income which would have reduced long-term lower cost debt, a lease will give Jet a long term hedge against potential rupee devaluations and the ability to pay off its $400 million high interest rate debt. Jet is reeling under a total debt load of about $1.9 billion.

As Jet Airways continues to turn over its long haul operations to Etihad and Abu Dhabi via the Jetihad partnership, look for the carrier to continue to seek out incremental opportunities to earn rent on its under-utilised assets.

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Jet Airways' new services to middle-east via Abu Dhabi scissor hub

by Devesh Agarwal

From January 15, 2014, Jet Airways is adding two new daily flights to Dammam, Saudi Arabia. A non-stop from Kochi, and from Chennai with a stop in Abu Dhabi. Jet is also re-timing its existing Kochi Abu Dhabi Kuwait flight to offer passengers an evening connection to Dammam on the Chennai Abu Dhabi Dammam flight.

All flights will be operated by Boeing 737-800s in a two class configuration either 16 seats in business and 138 in economy or 8 seats in business and 162 in economy.

9W 570 will depart Kochi at 06:20 arrive Dammam at 09:20.
9W 569 will depart Dammam at 10:20 arrive Kochi at 17:20.
9W 526 will depart Chennai at 20:15 arrive Abu Dhabi at 23:25. Depart Abu Dhabi 01:45 the next morning arrive Dammam at 02:10.
9W 525 will depart Dammam at 06:50 arrive Abu Dhabi at 09:15. Depart at Abu Dhabi at 10:45 arrive Chennai 16:15.

Using Abu Dhabi as a scissor hub, Jet Airways is rescheduling 9W 576, its evening Kochi Kuwait City flight via Abu Dhabi, to synchronise with the Chennai Abu Dhabi Dammam flight. This should give Chennai passengers a connection to Kuwait City should Jet Airways so choose and Kochi passengers connection to Dammam.

Map courtesy GCMap.com.

9W 576 will depart Kochi at 20:40 arrive Abu Dhabi at 23:30. Depart Abu Dhabi at 01:45 the next morning arriving Kuwait City at 02:55.
9W 575 will depart Kuwait City at 06:35 arrive Abu Dhabi at 09:15. Depart Abu Dhabi at 10:40 arrive Kochi at 16:00

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Etihad to commence Abu Dhabi to Jaipur flights

by Devesh Agarwal

Etihad Airways, the national airline of the United Arab Emirates, will launch a daily service from Abu Dhabi to Jaipur commencing on April 1, 2014. With Jaipur, Etihad will serve ten destinations in India Ahmedabad, Bangalore, Chennai, Hyderabad, Kochi, Kozhikode, Mumbai, New Delhi and Trivandrum.

Etihad will operate the service with an Airbus A320 aircraft in a two-class configuration, 16 Pearl Business Class seats and 120 Coral Economy Class seats.

Flight EY208 will depart Abu Dhabi at 23:00 arrive Jaipur 03:45 next morning
Flight EY207 will depart Jaipur at 04:45 arrive Abu Dhabi 06:45

The schedule is targeted to carry passengers onwards to African, European and North American destinations.

Post its 24% stake purchase in Jet Airways, which was coincidentally at the same time the Indian UAE (Abu Dhabi) bilateral air services agreement increased seat allocation by 300%, Etihad has been aggressively expanding to new destinations in India, and increasing the frequency and aircraft on its existing services to the country. It has already tripled the number of seats on the prime Abu Dhabi – Mumbai and Abu Dhabi – New Delhi routes.

The gulf carrier also intends to codeshare on a wide range of Jet Airways flights operated within India, and between India and Abu Dhabi, subject to regulatory approval.

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Kuwait Airways signs agreement to buy A350 and A320neo

By BA Staff

Kuwait Airways Airbus A350-900 CGI

European airframer, Airbus has signed an agreement with national carrier Kuwait Airways to buy 10 A350-900s and 15 A320neos.

A little over two weeks ago, Kuwait Airways had suspended its Chairman for publicly stating an intent to buy five A330-200s from India's Jet Airways.

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Etihad triples seats to Mumbai and Delhi, announces massive increase in India flights

by Devesh Agarwal

Etihad Airways has wasted no time in capitalising on its recent bonanza of seat quota increase under the new India UAE (Abu Dhabi) bi-laterial air services agreement (BASA).

It has announced a massive increase in flights to most of its destinations in India. Specifically

• Mumbai and New Delhi: from 7 to 14 flights per week with immediate effect
• Kochi: from 7 to 14 flights per week from June 2014
• Bangalore and Chennai: from 7 to 14 flights per week from July 2014
• Hyderabad: from 7 to 14 flights per week from October 2014

Cocking a snoot at the on-going legal proceedings challenging the BASA and Etihad's 24% stake investment in Jet Ariways, the gulf carrier has doubled the number of flights and tripled the number of seats between Abu Dhabi and Mumbai and New Delhi.

Etihad Airbus A330-200. Image copyright Vedant Agarwal. All rights reserved. Used with permission.

Under the expanded schedules, effective immediately, new mid-afternoon services to Mumbai and New Delhi are operated with single-aisle Airbus A320s, each seating 136 passengers, and existing late evening departures have been upgraded to larger aircraft.

On the Abu Dhabi-Mumbai route, the evening flight is now operated with 292-seat Airbus A340-600 aircraft, seating 12 passengers in Diamond First Class, 32 in Pearl Business Class and 248 in Coral Economy. This will add 2,044 seats per week from Abu Dhabi to Mumbai, taking the total from 952 to 2,996 seats in each direction – just over triple the previous capacity.

On the Abu Dhabi – New Delhi route, the evening service has been upgraded to a 254-seat Airbus A330-200 aircraft, seating 18 guests in Business Class and 236 in Economy. This will add 1,778 seats per week to and from New Delhi, increasing from 952 seats to 2,730 in each direction – almost triple the previous capacity.

Etihad A340-600. Photo courtesy Wikipedia. Photo copyright Maarten Visser. Used under CC license.

On the Chennai and Kochi routes, from June 2014 Etihad will upgrade its aircraft to Airbus A321s, seating 174 passengers from the existing A320s which seat 136 passengers. There is no mention of any aircraft change at Bangalore where Etihad operates a daily A320, where both its fellow gulf competitors Emirates and Qatar Airways operate A330 and Boeing 777 wide-body services.

Outlining a strategy to use Abu Dhabi as a hub to funnel-in passengers from India on to Europe, US, middle-east and Africa, James Hogan, President and Chief Executive Officer of Etihad Airways said

“India is one of the world’s largest and fastest-growing air travel markets, and will play an increasingly important role in our growth,” “Subject to receiving regulatory approvals, we will continue to expand our Abu Dhabi – India operations and work with our growing stable of partners to accommodate strong growth and deliver much greater choice for travel to and from India.” “Through our purchase of 24 per cent of Jet Airways – the first foreign investment permitted in an Indian airline – we have laid the foundations for major and exciting growth in air services between Abu Dhabi and India, and beyond throughout our global network,”

The new Etihad Airways flights will also be marketed by Jet Airways as an extension of the airlines’ existing codeshare partnership.

This is just a preview of what India can expect from all three gulf carriers in the years to come. With their hundred billion dollar aircraft orders, one shudders to think of the sheer capacity these airlines will add in the next decade; and the capacity they will be able to dump in the Indian market.

Etihad's actions are bound to have impact on national carrier Air India who is trying to expand services to Europe and North America in its revival efforts. Fellow gulf majors Emirates and Qatar Airways will also start feeling the pinch. It remains to be seen what strategy Etihad adopts to start filling those 200% extra seats, though pricing is a sure-fire way to the Indian passenger's heart.

Share your thoughts on this development via a comment.

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Kuwait Airways Chairman suspended for announcing plans to buy five A330s from Jet AIrways

by Devesh Agarwal

Yesterday, Reuters quoting Kuwait Airways Chairman Sami Al-Nesif, reported that Kuwait Airways is buying five A330-200 aircraft from India's Jet Airways. According to Mr. Al-Nesif, Kuwait Airways wanted to take 11 jets from its old fleet of 17 out of service and use the Jet Airways' aircraft as a stop gap measure till its order of new Airbus aircraft commence delivery in 2018. Kuwait's present fleet average age is 18 years.

This would have been another major financial boost for the financially beleaguered airline, which finally concluded its deal with Abu Dhabi-based Etihad Airways PJSC for a 24% stake sale recently.

In its second quarter FY2014 earnings conference call, Jet Airways' executives had indicated the airline was trying to lease out much of its A330-200 fleet which has been sitting idle at airports across India, as the airline pulled out international flights due to poor performance. The airline lost over 123 crores in fees and costs relating to the non-utilisation of its A330 fleet in the second quarter alone.

However, later in the day, in another report, Reuters said the Kuwait Airways chief, has been suspended, after he had announced plans to buy five used aircraft from India's Jet Airways. The report went on to quote an unnamed source who said the deal was in doubt.

Talk about bizarre developments.

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InterGlobe and CAE inaugurate India’s largest pilot training facility

by Devesh Agarwal

Rahul Bhatia, InterGlobe, Marc Parent, CAE

InterGlobe Enterprises, the parent company of India’s largest domestic airline, IndiGo, and CAE, a global leader in flight simulators and training, inaugurated India’s largest pilot training facility in India. Located in Greater Noida, in the National Capital Region (NCR), the Centre, CAE Simulation Training Private Limited (CSTPL), is a joint venture between InterGlobe Enterprises and CAE with an initial investment of $25 million.

The Centre starts with two CAE Series 5000 A320 full-flight simulators certified level D, and has the capacity to expand to six simulators. The facility provides "wet" and "dry" type-rating, recurrent, conversion and jet indoctrination training for commercial aircraft pilots of IndiGo, and will commence training, GoAir’s A320 pilots from December. CSTPL will also be the first centre in India to impart Airbus certified training, and can train up to 5,000 pilots per year.

CSTPL is the fourth aviation training location that CAE operates in India. CAE already trains more than 1,500 crew members every year at its training centre in Bengaluru, the first independent training centre in India and the first to earn approval as a fixed-wing Type Rating Training Organisation (TRTO). CAE also operates a joint venture helicopter training centre in Bengaluru and in partnership with the Government of India, CAE operates ab-initio flight schools in Gondia and Rae Bareli, located in the parliamentary constituencies of former civi aviation minister Praful Patel, and India's first political dynasty, the Gandhis.

India is expected to be the fourth largest aviation market in the world, with a large demand for narrow-body pilots. IndiGo and GoAir have placed orders for 180 and 72 A320 family aircraft respectively. IndiGo already has 71 A320-232 aircraft in its fleet from an original order for 100 A320s.

The country's other two major carriers, Air India and Jet Airways have their own in-house training facilities.
 

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Jet Airways cancellation of Colombo-Chennai tied to Jetihad?

by BA Staff

Earlier today, it was announced that Indian full service carrier Jet Airways would be cancelling its longstanding daily flights between its Southern hub at Chennai, and Colombo from 3rd January, 2014. The route, which was operated with Boeing 737-800 equipment, had schedules as follow:

9W252 ~ MAA - CMB ~ 0055 – 0210 ~ 738 ~ Daily
9W253 ~ CMB - MAA ~ 0310 – 0430 ~ 738 ~ Daily

Jet Airways will continue to serve Colombo from its largest hub at Mumbai. The move comes as a bit of a surprise, given that the India-Sri Lanka market, especially with regards to inbound medical tourism at Chennai, remains robust. And at a time when Jet continues to incur massive losses on its domestic network, it makes little sense for Jet Airways to cancel a route of roughly domestic length, but with fares 30% higher. There are however, a pair of countervailing factors that could be the reason behind the move. The first is that SriLanka Airlines is planning a major Indian expansion, which could drive down fares and yields. But even more importantly, with the Jetihad partnership recently finalized, Etihad now has the ability to dictate Jet Airways' international route decisions. Is Etihad behind this route cancellation? Let us know in the comments below. 

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Jetihad is born. Jet Airways completes 24% stake sale to Etihad Airways

Abu Dhabi-based Etihad Airways and Mumbai-based Jet Airways today announced that they have closed the transaction of a 24% equity stake by Etihad Airways in Jet Airways.

Jet Airways' Boeing 777-300ER

In a release they said

"All requisite Indian regulatory approvals had been obtained by November 12th, 2013. Jet Airways has, on November 20th, 2013, issued and allotted 27,263,372 equity shares of a face value of Rs. 10 each at a price of Rs. 754.7361607 per equity share on a preferential basis to Etihad Airways.

Consequent to the above allotment, the paid up share capital of Jet Airways stands increased to 11,35,97,383 equity shares of Rs. 10 each. Following this issue and allotment of the said equity shares on a preferential basis to Etihad Airways, Etihad Airways holds 24 per cent of the post issue paid up share capital of Jet Airways (on a fully diluted basis)."

Mr. James Hogan, CEO, and Mr. James Rigney, CFO of Etihad Airways have been appointed as additional directors on the board of directors of Jet Airways as from November 20th, 2013.

Mr. Goyal and Mr. Hogan confirmed that the collaboration between the airlines would commence immediately with a view to delivering network and service benefits to customers as soon as possible.

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Jet Airways and Garuda Indonesia sign code share agreement

Jet Airways and national flag carrier Garuda Indonesia have concluded a code share agreement for connectivity between India and Indonesia.

Under the arrangement, using Singapore as a hub, Jet Airways will place its marketing code on Garuda Indonesia’s flights between Singapore and Jakarta and Garuda will place its marketing code on Jet Airways’ flights between Singapore and Mumbai, Delhi and Chennai.

The two airlines have also signed a frequent flyer partnership, allowing members of each others loyalty programs to accrue and redeem mileage on the code-share flights, the entire domestic network of Garuda Indonesia, and on Jet Airways' complete network, domestic and international.

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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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A detailed behind the scene insight on the making of the Jet Etihad deal

by Devesh Agarwal

The aviation enthusiast community may not have too much respect for The Economic Times newspaper when it comes to technical accuracy when reporting aviation related stories, but hats off to a great article that goes in to the depths on how the deal for a 24% stake by Etihad Airways in Jet Airways was negotiated and struck.

The article goes behind the scenes, giving insight in to the motivations, events, players, and tactics involved in the negotiations. A definitely must read.

One crucial observation, Jet Airways first met Etihad in June 2012, a full three months before the government announced the new liberalised policy of allowing foreign airlines to invest in Indian carriers. Quite clearly, Mr. Naresh Goyal's connections served him well.

Read the article here.

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As Competition Commision clears Jet-Etihad merger, it is goodbye Jet and hello Jetihad

by Devesh Agarwal

On Tuesday, beleaguered Indian carrier, Jet Airways cleared its final hurdle in its $397 million quest to sell a 24% stake to Abu Dhabi based Etihad Airways PJSC, when the Competition Commission of India (CCI), cleared the deal paving the way for the Naresh Goyal promoted Jet to receive desperately needed cash from the deal.

The Union cabinet had already cleared the deal last month on October 4, the CCI approval now means that the deal, the first since the government announced a liberalised policy allowing foreign airlines to invest in domestic carriers, can be fully operational within, as little as, the next fortnight.

Keeping public sentiment on the fear of the two airlines monopolising the India Abu Dhabi routes, the CCI has cautioned

"This approval should not be construed as immunity in any manner from subsequent proceedings before the Commission for violations of other provisions of the Act. It is incumbent upon the parties to ensure that this ex-ante approval does not lead to ex-post violation of the provision of the Act,”

This deal could not have come a moment too soon for Jet Airways, which is literally running on fumes. The airline which is reeling under a debt of almost $2 billion, desperately needs cash to retire high cost debt.

In addition to the cash from the stake sale, Etihad has purchased Jet's landing slots at Heathrow, will buy the airline's frequent flier programme JetPrivilege, and will provide/arrange for loans under soft and discounted rates, which will used by Jet Airways to retire its high cost debt.

The measure of financial need at Jet is visible in the performance of the carrier in the second quarter of this fiscal, where it posted an eye-popping loss of nearly Rs. 1,000 Crores.

Jet Airways A330-200s grounded at New Delhi IGI airport. Photo copyright Devesh Agarwal.

The operations performance analysis show an airline which is seriously lacking clarity. The international operations which were the bulk of revenue, have seen much of the airline's Airbus A330-200 fleet grounded as non-profitable routes were withdrawn or curtailed. In the second quarter alone, the airline lost over Rs. 123 Crore ($205 million), or the cost of one new wide-body,  just keeping the aircraft grounded.

The airline was expecting to lease a couple of aircraft to Etihad, but could not do so due to "various reasons". Can we attribute this lack of clarity to the transition in operational control from Jet to Etihad?

Etihad is extracting its pound of flesh for its money. While both Jet and Etihad may publicly say otherwise, there is a clear re-alignment and re-organisation of operational strategy and divestiture of control to Etihad. Senior executives have resigned, including the CEO Nikos Kardassis, and Vice President Network Planning K.G. Vishwanath.

Recently the Business Standard reported that Rajeev Nambiar, sales head of Etihad, is likely to replace Sonu Kripalani, Jet’s vice-president (Sales). We had Bangalore Aviation had earlier reported the expected departure of Jet's Chief Commercial Officer, Sudheer Raghavan. The Business Standard report confirms our report saying

In another move Willy Boulter, Etihad’s vice-president (commercial and network planning), is likely to take over as Jet’s chief commercial officer, replacing Sudheer Raghavan. Sources say Raghavan is leaving the organisation, as his powers and responsibilities are being curtailed.

The commercial cooperation agreement (CCA) between the two airlines places enormous burden on Jet, requiring it to re-route its profitable and short-haul direct India-Dubai and India Sharjah routes via Abu Dhabi. One has to ask, why would someone replace a two or three hour direct flight with a four to five hour one-stop one? The CCA further goes to require Jet to re-route most of its international destinations via Abh Dhabi, with the exception of London, South-East Asia, and Australia-New Zealand.

Reports are of Jet mounting flights to Newark, Toronto, and Chicago via Abu Dhabi. Agreement aside, Abu Dhabi Chicago is almost 7,300 miles just 50 miles less than New Delhi New York, a route, that the Jet Airways Boeing 777-300ER was not flying non-stop due to its ultra-heavy first class suites. Is Jet going to modify its cabins to achieve Etihad's dreams?

The agreement will also require Jet to dilute its scissor hub at Brussels, not operate flights in competition to Etihad, with the reverse not being true, not operate and discontinue existing bilateral relations and code-shares with other airlines which may be in competition to Etihad.

In another Business Standard report

According to the terms of the CCA-a copy of which has been reviewed by Business Standard-Jet would have to route its services from India to Sharjah and Dubai through Abu Dhabi as soon as it becomes economically viable.

In what may additionally water down Jet's operations out of its hub in Brussels (Belgium), the Indian airline would have to develop Abu Dhabi as an exclusive hub for flights to North America, South America, Africa and the United Arab Emirates ('exclusive territories'). Canada too would be included in the list of "exclusive territories" once relevant amendments are made to bilateral air-services agreements to permit Jet to fly to Toronto via Abu Dhabi. Jet currently flies to New York and Toronto via its hub in Brussels.

The agreement, however, says exceptions can be made to allow Jet to mount non-stop operations between India and destinations in the 'exclusive territories' if Etihad agrees that it would be economically viable to do so. A Jet spokesperson, while declining to share details of specific plans, says, "As the Jet and Etihad alliance is being examined by the concerned regulatory authorities and their consequent approvals are awaited, it would be inappropriate for Jet to respond at this stage."

The CCA also restrains the Indian carrier from entering into code-share arrangements with third-party airlines, the impact of which may result in Abu Dhabi being bypassed as a hub for traffic to and from the exclusive territories.

According to the terms of the CCA, Jet would have to exit existing joint ventures or code-share arrangements with other airlines which can adversely impact business prospects of the alliance it has forged with Etihad. Jet can form code-share arrangements with third parties to destinations within exclusive territories not served by Etihad or its affiliates - but only till such time as they do not commence operations on these routes.

The two airlines have set up a coordination committee to "study" and implement "better cooperation" between themselves.

Quite clearly, it is goodbye Jet Airways and welcome to Jetihad Airways.

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SpiceJet posts record Rs. 559 crore loss in Q2 FY2014. Needs urgent capital infusion.

by Devesh Agarwal

Gurgaon based low fare carrier SpiceJet Ltd., continued the record of disastrous performance in the Indian airline industry when it announced a record Rs. 559 crore loss for the second quarter, ended September 30, of the fiscal year 2013~2014.

This compared to the Rs. 163.5 crore loss from the same quarter last fiscal, and a Rs. 50.5 crore profit from the first quarter of this fiscal.

On October 23, India's largest private carrier Jet Airways reported a monstrous loss of almost Rs. 1,000 crore.

The airline blamed the poor performance on the precipitous drop in the exchange of the Indian Rupee vs the US Dollar which occurred in the quarter and contributed Rs. 42 crore to losses. In a statement released late this evening, it said

“The civil aviation sector in India continues to struggle under the burden of several adversities mainly the Indian rupee that saw unprecedented weakness during the quarter,”

Poor demand due to a slowing economy saw a drop in income to Rs. 1,257.22 crore from Rs. 1,701.543 crore in the first quarter, though marginally better from Rs. 1,185.244 crore from the same quarter last fiscal. A 9% growth in number of passengers out-stripped the 17% increase in capacity measured in available seat kilometres (ASK), resulting in a 7% in average passenger yields from Rs. 4,001 to Rs. 3,711. Desperate sales at cut-throat fares have also taken their toll.

A lack of capacity discipline by virtually every Indian carrier, especially domestic leader IndiGo, and Jet Airways, continues to exasperate the soft demand situation, and we see the same indiscriminate financial indiscipline as we did in 2008.

Expenses shot up to Rs. 1,791.623 crore against Rs. 1,641.933 in the first quarter, and Rs. 1,357.305 crore from the same quarter last fiscal. Aircraft maintenance costs shot up almost 64% from Rs. 199 crore to Rs. 325 crore largely driven by Rs. 78 crores in engine maintenance expenses due to a bunching up of shop visits.

Fuel costs fell from 45% of total expenses to 39.7% but thanks to the plunge in income, increased from 43.8% to 57% of income.

Continuing losses have put the airline in a precarious financial position. It is estimated the airline requires a minimum Rs. 1,500 crore capital infusion. While the airline has announced the appointment of Sanjiv Kapoor, the former chief executive of GMG Airlines of Bangladesh, as its Chief Operating Officer, it still lacks a Chief Executive, since the departure of Neil Mills, nearly three months ago.

The silver lining for SpiceJet is that parts of the third quarter and the fourth quarter sees high air travel due to the festival season and returning Indian travel.


The supply-demand imbalance is heading for a precipice with expected the commencement of new airlines AirAsia India, and Tata-SIA.

Share your thoughts via a comment.

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United States grants approval to Etihad-Jet Airways code share request

by Devesh Agarwal

On September 4th, Etihad Airways and Jet Airways had petitioned the United States Department of Transportation (USDOT) to authorise them to code share i.e. put their marketing codes on each other airlines' flights. Download the original petition in PDF format here or scroll to end of the article to view it and the approval letter.

Etihad requests a blanket Statement of Authorization to permit it to display Jet Airways' "9W*" designator code on any current or future US-United Arab Emirates services operated by Etihad (These may be either nonstop services or services operated via an intermediate point or points; as such, codesharing will not necessarily take place on segments directly to/from the operating carrier's homeland).

Jet Airways requests a blanket Statement of Authorization to permit it to display Etihad's "EY*" designator code on any current or future US-India services operated by Jet Airways.

Initially, Etihad will display the 9W* code on flights operated by Etihad between Abu Dhabi on the one hand and Chicago, New York (JFK) and Washington, DC (IAD) on the other hand, for purposes of carrying Jet Airways' traffic between India and the United States on a blind-sector basis. Jet Airways will display the EY* code on flights operated by Jet Airways between Brussels, which is served as an intermediate point on its India-US services, and Newark, for purposes of carrying Etihad's traffic between the United Arab Emirates and the United States on a blind-sector basis.

The USDOT has provided its approval to the request.

The request though seems to be in conflict with the commercial cooperation agreement that is signed between the two airlines. The agreement reportedly states that Jet Airways will not fly to those destinations already served by Etihad, especially on the west-bound direction, except via Abu Dhabi, the base of Etihad.

The lucrative United States is one of the territories that fall under this. Jet has proposed flights from Mumbai, Delhi, and Bangalore via Abu Dhabi to New York, Newark, and Chicago. So will Jet Airways' current service from Brussels to the United States continue in the future? In a conference call the senior Jet Airways management called their Brussels hub a "long term engagement".

What are your thoughts? Share a comment.

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Jet Airways' JetPrivilege inks partnership with Color Plus

By BA Staff

Jet Airways' JetPrivilege frequent flyer program announced a partnership with ColorPlus, a clothing brand for men.


JetPrivilege members will get rewarded with 10 JPMiles for every Rs. 100 spent on purchases made at ColorPlus exclusive stores across India.

JetPrivilege members will now get to experience premium ‘Smart casuals’ and the many product enhancements, introduced by ColorPlus' innovations, including Wrinkle-Free Chinos, Golf Ball wash, Wrinkle-Free linen, Stain free shirt variants.

According to Mr. Sudheer Raghavan, Chief Commercial Officer, Jet Airways:

 “JetPrivilege has always endeavoured to offer its members exceptional value and an enhanced lifestyle experience with programme partnerships across varied categories and segments. The introduction of this elite lifestyle brand to our JetPrivilege programme is yet another step in that direction, enabling our JetPrivilege members to enjoy exclusive offers in the retail space. We are delighted to bring yet another vibrant brand - ColorPlus to our esteemed JetPrivilege members, with benefits like a fine retail experience as also earn JPMiles. Above all, this makes for an unmatched shopping experience."

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Jet Airways guests can now book and pay for their JetEscapes hoildays on jetairways.com

By BA Staff

Jet Airways has introduced an option for guests to book and pay for their favourite JetEscapes Holidays, on the website www.jetairways.com.

Jet Airways has crafted theme based holidays for its guests. Guests can select their preferred holidays from an array of popular themes like beach, pilgrimage, historical, wildlife, family and corporate holidays. 

These holidays include return air travel on Jet Airways, airport transfers, hotel stay with breakfast in budget to luxury hotels, sightseeing, travel insurance, besides offering guests the opportunity to earn five JP Miles for every Rs.100 spent.

Mr. Sudheer Raghavan, Chief Commercial Officer, Jet Airways, said

“Jet Airways' customer-centric approach, with a clear focus on providing enhanced travel experience, a high standard of service offering with consistent delivery, has enabled us to become the airline of choice. The introduction of our maiden JetEscapes Holidays direct to guests gives us the unique opportunity to offer our discerning guests a refreshing end-to-end travel experience. Through these attractive JetEscapes Holidays, we aim to make travel for our guests truly memorable, while providing multiple opportunities to explore destinations in India and abroad. At Jet Airways, we have constantly endeavoured to offer our guests exceptional value and an enhanced flying experience through innovative products and services. We are confident that our holidays to these destinations will prove to be extremely popular with travellers.”

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Sudheer Raghavan leaving Jet Airways?

by Devesh Agarwal

The rumour mill has that Jet Airway's Chief Commercial Officer Sudheer Raghavan will be leaving the airline soon and is expected to be succeeded by Mr. Wayne Pearce, currently the CEO of Oman Air.

Pearce reportedly enjoys a good rapport with Etihad CEO James Hogan. Etihad which is in the process of completing a 24% stake purchase in Jet Airways for $379 million, has been strengthening its hold within Jet Airways management, steadily taking over key management positions in planning, strategy, and operations.

If Raghavan quits, he will be the third high level exit from Jet following the Etihad investment in April. In June, CEO Nikos Kardassis resigned. Recently, Mr. K. G. Vishwanath, Vice President – Commercial Strategy and Investor Relations resigned. It is understood that he was considered close to Jet Airway's Chairman Naresh Goyal, in an function where Etihad wants its own people.

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Boeing 787-9 Dreamliner successfully completes first flight

by Devesh Agarwal

The second member of the Boeing 787 Dreamliner family, the 787-9 successfully completed its first flight, beginning a comprehensive flight-test program leading to certification and delivery in mid-2014. The aircraft performed a 5-hour, 16-minute flight, taking off from Paine Field in Everett, Washington state, at 11:02 a.m. local time and landing at 4:18 p.m. at Seattle's Boeing Field.

Boeing 787-9, line number ZB001 registration N787EX, takes off for its first flight

The 787-9 has its fuselage stretched by 20 feet (6 meters) over the 787-8 which is flying with many airlines including Air India. The 787-9 will carry 40 more passengers an additional 300 nautical miles (555 kilometres).

787-9 Senior Project Pilot Mike Bryan and 787 Chief Pilot Randy Neville departed to the north. During the flight the reached an altitude of 20,400 feet (6,218 meters) and an airspeed of 250 knots, or about 288 miles (463 kilometers) per hour, customary for a first flight. The two Captains tested the aircraft's systems and structures, while on-board equipment transmitted real-time data to a flight-test team on the ground in Seattle.

Powered by two Rolls-Royce Trent 1000 engines, the first 787-9 will be joined in flight test by two additional airplanes, one of which will feature General Electric GEnx engines. The additional airplanes are in the final stages of assembly in Boeing's Everett factory.

Boeing says it is on track to deliver the 787-9 to launch customer Air New Zealand in mid-2014. Twenty-five customers from around the world have ordered 388 787-9s, accounting for 40 percent of all 787 orders. National carrier Air India has ordered 27 787-8s only, and no 787-9. Jet Airways has 10 787-8s on order with no purchase options (though it can shift these orders to other Boeing products).

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Kingfisher lawsuit against IAE shows Vijay Mallya's desperation

by Vinay Bhaskara and Devesh Agarwal

Earlier this month, defunct Indian carrier Kingfisher Airlines, which has been grounded since 20th October, 2012 when the Indian regulator, the Directorate General of Civil Aviation (DGCA) suspended its flying license, filed its annual report for fiscal year 2012-2013.

Instead of focusing on finding a way to pay off the nearly Rs. 7,000 Crore debt the airline owes to a consortium of lenders led by the State Bank of India, Kingfisher used the annual report as a mouthpiece to announce a lawsuit filed in the City Civil Court at Bangalore against engine manufacturer International Aero Engines (IAE) for $235 million (damages of $210.4 million plus $24.6 million in punitive damages), claiming that the IAE V-2500 A5 engines used to power Kingfisher’s once 32-strong fleet of Airbus A320 family aircraft were “inherently defective, both in design and manufacture.” The Kingfisher annual report says.

United Breweries (Holdings) Limited has filed a suit in the City Civil Court at Bangalore against International Aero Engines AG, its shareholders / joint venture partners and your Company being O.S. No. 6406 of 2012, alleging that the IAE V-2500 A5 engines supplied to your Company were inherently defective, both in design and manufacture, and has claimed damages of USD 210,400,000 plus Rs. 1,621,000,000 (aggregating to approximately $24.557 million as per the current exchange rate of approx Rs. 66  per US Dollar) and has reserved liability to claim further damages. No relief is sought against your Company in the said suit.

This lawsuit smacks of desperation on the part of Kingfisher and its management, as the carrier continues to flounder.

Considering that it did not operate for most of the year, if Kingfisher still managed to find enough cash to pay CEO Sanjay Aggarwal US $591,000 in an annual salary, clearly demonstrates a carefully managed business strategy will allow the airline to slowly pay off debt without resorting to doomed strategies such as this lawsuit.

Kingfisher restart would be a strategic mistake

Kingfisher also continues to pursue the flawed idea that the carrier should “restart” operations with up to 20 aircraft, or that the carrier will make back the money by selling itself to an investor. This is a mistake. Re-launching operations in today’s Indian airline industry would be a tragic mistake. For starters, the Indian macroeconomic picture is very poor; the Indian Rupee has continued to decline and growth projections for the fiscal year have slipped beneath 5%. This has driven demand for Kingfisher’s premium style product lower than when Kingfisher shut down, and that too up against a somewhat re-vitalized Air India, a re-capitalized Jet Airways, a market leading IndiGo, and a soon to arrive behemoth AirAsia India. 

Moreover, India’s other airlines have committed to firm orders of at least 93 current generation narrow body aircraft, as well as 272 next-generation re-engined products (which doesn’t even include an expected re-engined order from low cost carrier (LCC) SpiceJet. This doesn’t even include the fleet of well-capitalized startup AirAsia India, who we project to grow to a fleet of between 10 and 12 Airbus A320s, and regional startup Air Costa, who is supposedly on the verge of launching operations within the next two months. And all of these orders and startups have locked Indian carriers into domestic capacity growth, even with the persistent demand weakness. LCCs have been flooding major Metro markets with capacity (see IndiGo driving out Jet Airways with a massive capacity dump in the Bhubaneswar market as just one prime example).

Even at the peak of the Indian market, Kingfisher as an airline was not profitable and the one part of their network which was profitable, the regional ATR network in the South, has been co-opted by LCC SpiceJet using a fleet of Bombardier Dash 8 Q400 turboprops. SpiceJet already has 15 Q400s in its fleet, and is working to secure financing to grow the fleet by another 15 frames. For example, one of Kingfisher’s most profitable routes pre-shutdown was the trunk route between Bangalore and the industrial Karnataka city of Hubli, but Hubli is now a SpiceJet monopoly with service to five destinations using the Q400s. And Air Costa is due to start operations, muddying up the waters with even more capacity.

One cannot blame Kingfisher’s investors for the idea that if only Kingfisher were to be re-started and/or sold, they will make back their money over time. This sort of playbook is present all over the global airline industry, most notably with US LCC Virgin America whose investors have continued to swallow persistent losses over the past six years in hopes of making their money back via an initial public offering. This would be a mistake in the Indian market, where the existing carriers are already struggling. SpiceJet, Jet Airways, and Air India have all hiked their fares by more than 25% in recent days to offset the rise in the Rupee, with GoAir and IndiGo expected to follow suit soon. Kingfisher re-launching into this environment would just be a recipe for racking up thousands of crores more, in further accumulated losses.

It is better to leave Kingfisher's aircraft rotting on tarmacs across the country where they could at least serve as a reminder to Dr. Mallya, how he, and his incompetent mis-managers, drove a great airline concept in to tatters.

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