Article-Big Big Losses for Airlines in India

[NGFellow]

:{New Delhi/ Mumbai: Analyst expect all three listed airlines in India to report steep losses for the quarter ended June, a deterioration from year-ago results when they reported a small profit or smaller losses. A poll of four analysts points to consensus minimum loss of Rs282 crore for the country’s oldest private carrier, Jet Airways (India) Ltd, with the highest estimate pegging losses at Rs412 crore, excluding its subsidiary JetLite. It will declare results on 29 July.
http://www.livemint.com/images/02BF6630-D546-46C0-9E68-98E1322F4A87ArtVPF.gif Cost pressure: A file photo of a Jet Airways plane at Mumbai airport. Jet will declare its results on Tuesday. (Photo: Hemant Mishra/Mint)

Two analysts predict low-fare carrier SpiceJet Ltd will post losses ranging between Rs70 crore and Rs87.5 crore.
Losses for India’s largest low-fare carrier Deccan Aviation Ltd, which is merging with Kingfisher Airlines Ltd and is now tracked by few analysts, are estimated at Rs350 crore, according to a single analyst’s projection.
“Broadly, the entire industry is estimated to lose nearly Rs2,200-2,500 crore this quarter,” said Kapil Kaul, an analyst with aviation consulting firm Centre for Asia Pacific Aviation.
SpiceJet will declare its results on 30 July. Deccan hasn’t set a firm date for reporting its results.
Jet Airways, Deccan and SpiceJet, whose shares are listed, have nearly 45% of the domestic market share with National Aviation Co. of India Ltd-run Air India, Kingfisher Airlines Ltd, InterGlobe Aviation Pvt. Ltd-run IndiGo, GoAir (India) Pvt. Ltd-run GoAir, Jet’s subsidiary JetLite and Paramount Airways controlling the rest of the market as per the June figures released by the Directorate General of Civil Aviation.
On Friday, Jet Airways shares rose 3.35% on the Bombay Stock Exchange to close at Rs433.50. Deccan Aviation’s shares fell 1.12% to close at Rs79.55 a share, while SpiceJet’s shares closed at Rs26.70 a share. Fuel prices, which have nearly doubled since last year and 15-20% hikes in airfares that then led to a slowdown in passenger traffic—which declined for the first time in four years in June—are largely seen as the reasons for the projected losses.
“The appreciation of dollar is also going to hit the carriers, especially Deccan and SpiceJet. These two carriers do not have any income through dollars, while most of their expenses are dollar-denominated,” said a Mumbai-based analyst, who asked not to be named as he is not authorized to speak with the media.
The brokerage he works for estimated a revenue of Rs545 crore for Deccan and a net loss of Rs350 crore, while SpiceJet is estimated to post a net loss of Rs200 crore with Rs455 crore in revenue. Jet Airways is estimated to post Rs350 crore loss on a revenue of Rs3,120 crore, this analyst said.
An IDFC-SSKI Securities Ltd report projects Jet to show revenues of Rs2,740 crore this quarter, a 52% growth year on year primarily because of its international operations launched last year, while SpiceJet is expected to increase its revenues by 115% year-on-year to Rs571.1 crore and post a Rs70.1 crore loss compared with a profit of Rs18.5 crore in the year-ago quarter.
Nearly all Indian airlines have cut flights to reduce losses. SpiceJet, for example, has been using 15 aircraft for its daily operations from a fleet of 19, leasing out one of its aircraft to a European carrier and is looking to lease the others, of which one is undergoing scheduled maintenance. Until early this year, it was using a fleet of 18 aircraft, with the other delivered later.
Sreesankar R., head of research, IL&FS Investsmart Ltd, said the impact of higher fares will be felt more by the full service carriers in there results for the quarter.
“They will feel the pinch more then low-fare carriers,” he predicted. “What happens is that when everyone increases fares, businesses, too, tell their (executives) to save on cost, leaving them to fly low-fare carriers.”
The aviation sector slowdown is also reflecting on hotels sector. A Citigroup Global Markets report on the Indian hotels sector estimated business and tourist passengers as a segment is shrinking.
“With macro economic signals weak, business-tourist air-traffic growth down to 11-12% in first quarter of the calendar year 2008 against 31% in FY07 and supply risks on the rise, we believe the best for the hotel sector is over,” Ashish Jagnani and Karishma Solanki said in there note released last week.
Meanwhile the current quarter isn’t going great either.
“Traditionally these (months of July-September) are lean season,” notes an executive of a full-service airline.
“Though we have started imposing fuel surcharge and fixed basic fare to tide over the rising jet fuel prices, seat occupancy factor has been adversely affected because of high fares. I don’t expect any drastic change in the second quarter too.”
Analyst Kaul expects the July-September quarter to be a “shocker” before some stabilization in the October-March peak travel period if oil prices don’t spike again. “Some of the numbers will be unbelievably bad in Q2,” Kaul predicted.
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[Left Wing]

Fuel prices, which have nearly doubled since last year and 15-20% hikes in airfares that then led to a slowdown in passenger traffic—which declined for the first time in four years in June—are largely seen as the reasons for the projected losses. as simple as that...

[NGFellow]

Airlines cut flights to battle lean season bluesAnirban Chowdhury / New Delhi July 29, 2008, 0:05 IST
Number of passengers falls 4 per cent in June for the first time in three years.Domestic carriers have resorted to ad-hoc measures and last minute cancellations to improve loads as a lean season and high input costs have left the Indian aviation industry reeling.
SEARCHING FOR OPTIONS

The number of passengers flying in India saw a fall of 4 per cent in June this year

Around 200 flights were cancelled last week at the Delhi airport alone

Estimates say airlines still can't cover costs despite having doubled the fares over the past year

However, no airline, other than Kingfisher and Jet Airways, has increased the fuel surcharge this month

Around 160 of 1600 daily flights have been cancelled for the next two to three months

Travel portals were of the view that unlike past low seasons, airlines are focusing more on value-added offers than rock-bottom fares

For the first time in three years, the number of passengers flying in India saw a fall of 4 per cent in June this year.
“I have not seen such low load factors ever, even during the lean season. Nor have I seen such a huge number of ad-hoc cancellations happening everyday at most airports,” said Kamal Hingorani, vice-president, sales and marketing, SpiceJet.
Agreed an executive of another low cost carrier (LCC), “This being a low season, most carriers are getting load factors of around 50 per cent compared to 60-70 per cent earlier. With most of our flights only half occupied, it is a better option to combine two flights which are closely scheduled.”
The executive said that on an average, every airline was cancelling around six to eight flights every day.
Take the case of Delhi airport: Around 200 flights were cancelled last week. Interestingly, LCCs accounted for as much as 73 per cent of the total last minute cancellations.
IndiGo cancelled 40 flights, while Simplifly Deccan cut 50. Normally, there are no more than 15-20 cancellations a week.
Even though some flights were cancelled due to technical faults, fewer passengers was the sole reason for many of the others, said airport executives.
According to sources, Mumbai airport also saw around 25-30 ad-hoc cancellations on a daily basis.
Ad-hoc cancellations have meant more problems for passengers. For instance, if an aircraft is doing a Delhi-Ahmedabad-Mumbai-Delhi flight, the airline will decide to do a direct Delhi-Mumbai-Delhi flight and transfer the Ahmedabad passengers to the next flight to that destination, which means that the passenger has to wait.
“If the passengers cannot be shifted to other flights, we try to ensure that they are not stranded by informing them beforehand that their flight has been cancelled. Also, we try to rejig our flight schedules at the last minute so that no aircraft is idled too much,” said the executive.
The ad hoc cancellations come over and above the airlines’ actually reducing capacity.
In the last couple of months, airlines have reworked the remaining portion of their summer schedule ending in September by cutting 10 per cent of their capacity.
Around 160 of 1600 daily flights have been cancelled for the next two to three months.
Besides, no airline other than Kingfisher and Jet Airways, have increased the fuel surcharge for this month because of the lean season.
Travel portals were of the view that unlike past low seasons, airlines are focusing more on value-added offers than rock-bottom fares.
“In a change from the last low season, airlines are not touching the fares, but giving value-added offers such as a discount voucher or a transfer from the airport,” said Bhavna Aggarwal, co-founder and head of aviation business for travel portal Yatra.com.
Boeing, in its 2008 market outlook on the Indian aviation industry released last week, estimated that despite the fares having nearly doubled over the past year, the airlines still can’t realise their total costs.
For instance, the total fare on the Mumbai-Delhi sector for July is estimated to reach $121 (about Rs 5000) this season, but this will still be around 22 per cent lower than the breakeven fare of $154 (about Rs 6400).
http://www.business-standard.com/india/images/1pixTrasparnt.gif

[Holycow]

Looks like all the import duties and states taxes on jet-fuel are behind this extremely expensive fuel in India. Archaic ATC with their procedures does it even much worse.
If the state / government just sucks the money from airlines and doesnt help them by any other way, then India will just ride on the aviation roller coaster as it always did.
They have to learn many things about aviation. Hopefully the "aviation" doctors here will graduate sooner than the patients die.

[speedtwoten]

100% agree with Holycow :ok:and they never ever know how to handle
and I didn't understand why many expat comes to the INCREDIBLE INDIA last year :confused: are they didn't knew "what goes UP must comes DOWN" (faster in India) :{

[rspilot]

Why shouldn't expats come to India?? Depending on the aircraft they fly, maybe it was the only decent contract.

[Nevrekar]

Everyone has their reason and/or motivation to come to India, China or points beyond. It really has little to do with the geography for most expat contract pilots. It has to do with getting the right offer and good terms and conditions. Anyone who goes anywhere on a contract and expects to stay on for years is not being realistic. It can happen but it is a rarity. You are a stop gap filling a need for that airline or country. Once the need is no more, so are you. It's pretty straightforward. No one is tricking you into thinking otherwise. As far as incredible India, it is not for everyone. Ok so you go to Korea instead. Are you necessarily better off? Read the posts on Korea and China and you might get a better picture. Folks, make the best of the situation you are in. If you just can't bear it then leave for your own well being. If you want longer term employment look at Emirates, Cathay, Singapore etc which techinically are not contract jobs. But ppruners have lots of say about those places as well. And hey, how great have the airlines in the States been to you lately?

[powerstall]

it seems that the bubble in india is ready to burst..... :eek:

[flying_monkey99]

The bubble's already burst :uhoh:

[rspilot]

It has??? 320s 747s 737s and ATRs on climb to 350 everyday. Does anyone overthere know the real story? I think that its a lot of speculation about the bubble gonna burst but it seems to be far from the truth.

[NG ExPat]

Believe me, the bubble has burst. On a previous post, I talked about a friend who was informed not to come back from his leave due to a reduction in force. Those ads on Climb to 350 are nothing more than bait. The agencies are scrambling for pilots to list with them, for future openings. Not any of a current nature. If there is anyone who really is not up to speed on the actual happens in India, it is the Agencies!!

[Nevrekar]

:(Cadets in lurch as airline issues sack notices
5 Aug 2008, 0203 hrs IST, Shobha John,TNN

NEW DELHI: Aspiring pilots who feel that cadet pilot programmes of airlines are a surefire way of getting a job may need to do a rethink.

Recently, SpiceJet issued termination notices to all cadets training in the US for a Commercial Pilot's License (CPL). Those undergoing training after selection have also been given a week's notice to look elsewhere. This, after each cadet forked out a hefty Rs 25 lakh. Some even took loans to pay for the training. Admits Capt Jati Dhillon, EVP, Flight Operations, SpiceJet, "Yes, we've issued termination notices to the cadets and a week's notice to trainees. We'll try to get them positions in other airlines. Anyway, the cadets were given no guarantee that they would be absorbed."

This cadet programme by SpiceJet was started in November 2006 and suspended one-and-a-half years later. Some 120 cadets were chosen, but only six or seven have been absorbed by the airline. The airline tied up with United Aviation Training (UAT), a Gurgaon-based pilot training academy, to give them ground classes and flying training in Sabena Airline Training Centre in Arizona and in Canada.

Though cadet pilot programmes were started with the intention of churning out a regular stream of pilots for the airline, with a glut of co-pilots, many airlines have been forced to rethink. The hike in fuel prices and its subsequent impact on expansion plans added to their woes.

Sources say SpiceJet's cadet programme was ill-timed. "The company should have foreseen how many pilots it needed," says a source who didn't want to be identified. It initially had a projection of 23 planes by March 2008 which meant it needed 138 co-pilots (six per plane). But as luck would have it, it's flying only 15 planes now.

Also, why start a cadet programme when the best could have been selected from a market teeming with co-pilots, asks another source. "Anyway, the immediate needs of the airline haven't been met with this programme. On top of that, it's paying these cadets a stipend of Rs 10,500 monthly."

SpiceJet's Cadet Pilot Programme on the net clearly shows the airline's relationship with cadets. "At SpiceJet we believe in investing in our pilots...The trainee is appointed with us to obtain his CPL to seamlessly integrate into our flight operations team as a first officer on the B737."

After aptitude tests, "the successful aspirants will then undergo a final interview with SpiceJet after which they'll be appointed with SpiceJet as cadet pilots." It also says that during the training period, they will receive a stipend of Rs 10,500 from SpiceJet. If that's not a clear indication of SpiceJet’s involvement, what is?

When asked about UAT's tie-up with SpiceJet, Maj Gen I S Kahai, CEO, says, "The cadet programme is in abeyance now. I don’t know when it’ll start again.’’ Further questions, says Kahai, should be directed to SpiceJet. "A cadet programme ensures there’s a relationship between an airline and the cadet." Events proved otherwise. Kingfisher too had started a cadet programme but it was disbanded, admits its spokesman. Further questions elicited no reply.

Surprisingly, IndiGo too has started a cadet programme. "It'll begin generating graduates in 2009-summer," says Bruce Ashby, CEO. Asked if there was a job guarantee, Ashby says no. ‘‘Candidates need to successfully complete the training. After that, they're evaluated by IndiGo, and if they pass our stringent checks and tests, they become IndiGo pilots." It's obvious aspiring pilots need to think carefully before parking their money in these programmes.

[Nevrekar]

SpiceJet plans to freeze fleet size
6 Aug 2008, 0001 hrs IST, Saurabh Sinha,TNN

No more addition
NEW DELHI: Low-cost carrier SpiceJet, which recently got an $80-million bailout from a US distress fund, has now decided to virtually freeze its fleet size for some time.

At present, the airline has 15 aircraft in operation and just one plane will be added next February. The fleet size of 16 is likely to be retained next year, said sources. Had the aviation success story not slipped on oil prices, the airline’s fleet size next year was supposed to be 23.

With the addition of only one aircraft next year, the airline is even looking for takers for some of its existing ones. It has leased out a plane to a European carrier. It is also providing consultancy to a startup airline in Nepal, Air Nepal, to help set up its shop. The LCC is in talks to lease out two planes to Nepal Air on which the startup would begin operations.

With the fleet size frozen for over a year unless some dramatic development revives the great aviation growth story, SpiceJet is likely to get rid of as many as 20 “expensive” expat pilots.

Given a requirement of six pilots and a fleet of 15 planes, the airline needs a maximum of over 100 pilots as the entire staff is not available at any given time.

The airline has 130 pilots. An Indian pilot gets about Rs 4.5 lakh per month and an expat costs about 40% more. SpiceJet is planning to send back over 20 expats.

Kingfisher is also trying to find takers for its fleet. The company is going to take deliveries of A-340s that were to be used for non-stop India-US flights. But given the high cost of fuel that make a non-stop flight by uplifting tonnes of expensive jet fuel from India, the airline is now looking for someone interested in this long haul planes.

[apachelongbow]

@nevreker: Any news on Indigo? It too has a cadetship with the first batch out from Q1 2009. Also it has about 85 expats i believe. Do you think Indigo is equipped to ride out this storm and honor its commitments? Do reply, coz I know someone who has a cadetship offer, and is now sitting on the fence waiting for inputs.

[flightknight]

The Cadet Programs run by the airlines in India need to be closely scrutinised. A legal Cadet Program is sponsored by the airline financially. The course is run airline specific. None of the so called "Cadet Programs" will hold up in a court of law.
KFA had a cadet program with American School Of Aviation run by a bunch of crooks. The students are out in the cold and KFA has conveniently washed their hands off these so called Cadet Pilots.
The Hindu : Karnataka / Bangalore News : American aviation school lands in Bangalore (http://www.hindu.com/2007/03/09/stories/2007030915900500.htm)

So, Dear cadet pilot, you are not guaranteed a job with the airline upon completion of your pilot training. You are just another pawn in this vicious game of corruption and opportunism.
Do your flight training after you complete a professional college degree, so you are not left with a begging bowl and a $50,000 debt when you return back to the Uncle who promised you a job in India.
All the best !!!!!!!!

[av8r76]

About a dozen FO's let go....

20 expats on the way out......

120 odd cadets shown the door.

SG is on a roll.:\

Are they the only Indian airline in purge mode or are the others going to follow suit? Not looking forward to the ensuing bloodbath.

[NGFellow]

Aviation downturn: Pilots feel the heat
7 Aug 2008, 0129 hrs IST, Manju V,TNN Print (http://timesofindia.indiatimes.com/articleshow/msid-3335233,prtpage-1.cms) EMail (javascript:openWindowmail('/mail/3335233.cms');) Discuss New
Bookmark/Share (javascript:void(0)) Save (javascript:showdivlayer('3335233','t','close');) Write to Editor (http://timesofindia.indiatimes.com/Business/India_Business/Aviation_downturn_Pilots_feel_the_heat/articleshow/3335233.cms#write)
MUMBAI: The recurring nightmare that haunts pilots around the world every decade when the cyclic airline industry goes through a downturn has come back to hit the Indian shores.

It started two months ago with airlines (http://timesofindia.indiatimes.com/Business/India_Business/Aviation_downturn_Pilots_feel_the_heat/articleshow/3335233.cms#) in US effecting a wave of pilot job cuts. This week, keeping in tune with this global trend brought about by rise in fuel prices, Indian low-cost carrier SpiceJet asked about 30 of its pilots to leave.

"Out of these, 14 are first officers and the rest expatriate commanders with thousands of hours on Boeing 737," said a source. SpiceJet confirmed that it had brought about pilot job cuts. Sources said that another low-cost airline (http://timesofindia.indiatimes.com/Business/India_Business/Aviation_downturn_Pilots_feel_the_heat/articleshow/3335233.cms#) will also be issuing termination notices to a section of its pilots in the coming days. The scale is much smaller in India. Last month, United Airlines decided to cut 950 pilots job and recently it was American Airlines which announced that it would be laying off 200 of its pilots.

"We have revised our current schedule which requires less manpower in the cockpit. Based on this we have initiated talks with trainee first officers to guide and facilitate suitable employment in an alternative organization," said Surajit Banerjee, vice-president, HR, SpiceJet adding that they will not recover the training cost from these pilots. He said that while 14 trainee first officers have been told to leave, a number cannot be put for expat pilots.

"Unlike India pilots, expat pilots have their own individual contracts. Some work for a month, others for three months etc and so we cannot give a number. What I can say though is that we have the same number of expatriates that we had in the end of July. But we won't be adding more," Banerjee said. Whether the number of expatriates will be reduced in the coming weeks would also depend on the contract conditions. "Some have accumulated leave, others contracts would be expiring," he said. SpiceJet employs about 65-70 expat pilots. Sources said that the expat pilots who were on leave have been asked not to return. Pilots salary accounts for 60% of airlines total wage bill, with expats paid a notch more than their Indian counterparts.

Earlier SpiceJet had issued termination notices to its cadets training in the US for a Commercial Pilot Licence under its cadet program carried out in association with United Aviation (http://timesofindia.indiatimes.com/Business/India_Business/Aviation_downturn_Pilots_feel_the_heat/articleshow/3335233.cms#) Training. The cut in pilot jobs is a fall out of airlines decision to cut down on the number of flights. All airlines, including SpiceJet, had brought about a 10-15% cut in the number of flights they operate to keep up with the rising fuel prices.

Aviation analysts said the good news is that Indian pilots’ job market won't see the kind of bloodshed that is on in the US.

[NGFellow]

On the topic related to the article above it will be interesting to see how the furloughs are administered for expat pilots. Since everyone is on a contract, what will determine who stays and who goes? Date of hire may not mean much here in India. I guess when you go on leave take all your stuff as you may not be coming back any time soon:{
The load factors lately have been dismal!

[rdr]

Yes there is a downturn in the industry, but isn't that whats happening the world over?
There is a rush to lump all airlines under the banner of Indian aviation, and paint a doomsday scenario. However, welcome to the concept of market forces. Every airline has its own unique culture and management ethos, which will make or break the outfit when the times are bad. Just as Spice is laying off guys and Fisher is selling a/c, Jet is hiring as we speak with a firm eye on the future. Even Air India is trying to shake off a 30 year stupor.

It certainly does'nt help when we have the "experts" from the newspapers writing up stories to make a buck. Especially infantile are the ones which tend to alarm the public. (5 billion crore losses, pilots falling asleep, failing sobriety tests etc. etc.)

Aviation in India, will go on inspite of the current situation. Its just too big an industry serving over 300 million people. A shake up perhaps, just like everything else in the world at the moment. See what happens by the end of the year. Meanwhile, keep your knickers on and hope.

[Al Fakhem]

I can recall the euphoria in Indian aviation about 18 months ago. It seemed certain entrepreneurs had discovered a way to defy gravity and that fundamental economic principles did not apply to them.

This, of course, alongside a stockmarket frenzy fuelled by totally ignorant investors who truly believed stocks can only go up - and if and when they come down the government should step in and compensate them for their losses.

Why, why, do people in Country X not learn from the mistakes made earlier by others in Country Y. Why repeat the same mistakes again and again?

[getsetgo]

'India is the last choice of expats for a long haul'-India-The Times of India (http://timesofindia.indiatimes.com/India/India_is_the_last_choice_of_expats_for_a_long_haul/articleshow/3337805.cms)

some learn from others mistake
some learn from the mistakes
some continue doing mistakes and contiue learning.

[flightknight]

Did not see anything about "Expat pilots" in that article. Surveys are not the final say on any issue, except for media hype. living as an expat in any country is usually by choice and sometimes career needs.
Most expats don't make lifelong commitments in other countries unless they are retired.

[getsetgo]

forget about spdrotten
one dead fish can spoil the pond.....
or you all looking to start DNA tests/culture tests.
it will put extra burden on the airlines...
they are taking loads of loans to survive....interest on loan not acounted so far.....
even if fuel cost comes down its hard for airlines and very hard for pilots.not easy no good situation.

[getsetgo]

flightnight
Expats ??????????
Did not see anything about "Expat pilots" in that article. Surveys are not the final say on any issue, except for media hype. living as an expat in any country is usually by choice and sometimes career needs.
Most expats don't make lifelong commitments in other countries unless they are retired.
http://www.pprune.org/forums/images/statusicon/user_offline.gif http://www.pprune.org/forums/images/buttons/report.gif (http://www.pprune.org/forums/report.php?p=4315872)

you are right
this article is not about pilots
you are the first one to identify.
its abt expats who were in the tea coffee/starsburg/kfc bussiness and so on....
fact is ....tea stalls are selling more coke arround DGCA SINCE LAST 5 YEARS.
earnig more than .....a pilot

[getsetgo]

spd trotten

India doesnt know how to handle aviation
100% agree with Holycow :ok:and they never ever know how to handle
and I didn't understand why many expat comes to the INCREDIBLE INDIA last year :confused: are they didn't knew "what goes UP must comes DOWN" (faster in India) :{
............................................................ .................................
http://www.pprune.org/forums/images/statusicon/user_offline.gif http://www.pprune.org/forums/images/buttons/report.gif (http://www.pprune.org/forums/report.php?p=4296532)

how to to handle aviation in india?

share your ideas....
welcomed

you know there are 1 billion people
and you said one a/c is ok.....
thx to some one like ... red5 wo has given some summery. about ur posts...

you must knw if there are one billion people
they will have 2 billion + legs.....
and.......

getsetgo

[PPRuNe Pop]

OK guys, take a breather.

Some of you are being offensive, some bordering on the extreme. Please refrain and stop using language that offends or is abusive.

These forums are for debating not baiting.

It gets closed unless it stops.

I am sure we can rely on you.

PPP

[PPRuNe Radar]

Some of you didn't heed PPRuNe Pop's warning .. so all your hard work composing posts has gone to waste.

This thread is about airlines in India, and how they are coping or not coping in todays economic climate.

It's not about a country, and it's people, and how they live. Or for attacking other countries, races, or religions. There are other forums on the net where that is entertained and you can bitch and complain to your hearts content, but not here.

If you can't comment on the thread topic, then please don't bother. If you read this and still can't get it, we can provide you with your own personal thread ban which will ensure that you get a bit of assistance with overcoming your urges. 100% guaranteed to work :ok:

Just as a final point, those who accuse others of racism need to reflect on their own postings and comments. It seems it takes one to know one.

[getsetgo]

1. high fuel cost, highest in india.
2. fuel waisted in holdings,highest in india
3. falling passengers loads ,loads are dropping. nothing going according to the industry plans/forecasts(5 years back)
4. debt/borrowings, and interest overhead
5.infrastruture woes
6.funding problems
7. unpaid dues to the handling agencies
8.accumulated losses over the years
9. pilots who went on leave told not to come till called
means a very polite bye bye and at the same time option to call them back,
hope they got all money due to them .
next one year or more no good signs for aviation,and india.

[getsetgo]

indian ruppee touching 44 to 1 $
another aspect to look at.
when aviation companies started it was arround 40 to 1$ and fuel 35-50$
big calculations will be ahead

[Glorified Donkey]

I think the airlines in India hurt themselves. Overhyped everything. Mass marketing, ridiculous aircraft orders. then they were short staffed so they took on expat crews and paid them more than they probably wanted. Running the cadet program probably didnt help either and then of course high interest rates and cost of fuel, i mean come on what planet were they living on?

[getsetgo]

with a/c diliveries cancelled/postphoned, dollor touching 44Rs
routes trimmed
fleet size frozen.
no passengers.
only free flying pax available...joy rides....bcz by now they are used to discounted tickets only...prefferably free:}

means jobs are :{
SJ sending pilots on leave(no money) means bye bye.....
licence gets fungus.

espacially for expat pilots even if industry recovers in due course still there won"t be jobs in india.

one year is enough to reorganise the industry which headed aimlessly thinking big time ahead.

[vinayak]

free flights?

[getsetgo]

vinayak
in airline bussiness when a/c takes off with empty seats its loss.
its perishable item so its called free tickets:ok:......empty seat or free seat or free ticket.
all make losses,airline, marketing dept,and so the pilots, when flight is cancelled bcz of uneconomical operation.

[rdr]

GLORIFIED DONKEY

I think the airlines in India hurt themselves. Overhyped everything. Mass marketing, ridiculous aircraft orders. then they were short staffed so they took on expat crews and paid them more than they probably wanted. Running the cadet program probably didnt help either and then of course high interest rates and cost of fuel, i mean come on what planet were they living on?

Amazing hindsight on your part donkey. You must have graduated from the Harvard or Oxford business school. You're obviously not a pilot, maybe an expat hater, but you definitely live up to your name.
Now give us the benefit of your brilliance and tell us whats going to happen next, on this planet.

[Left Wing]

most of airlines were trying to jump the bad wagon !..... in dreams of giving EK,BA, SQ a run for their money...domestic airlines had no clue since day one...IndiGO ordered 100 A320's....:eek::eek:........who would fly them, fix them or even sell seats...shortage is not just pilot or mech, huge shortage of airline managment....

and now there are some 1000+ local CPL holders with no jobs...the 1990's are back ! :{:{:mad:

[thrust clb]

1000+cpl holders with no jobs? someone should tell that to the plane loads of Indian flying students coming over here!

[getsetgo]

RDR glorified donkey is correct
when airlines ordered so many planes also correct.
that time a/c purchase was cheapest bcz of global aviation at all time low.
LLC airlines gave discounted tkts ,below the levels of sustainabilty bcz the were looking at 1 billoin people putting 1rs in the bussiness( 1billion Rs industry)
and small LLC were taken care of by biggies, paid big time to take over.

imagine if 1 billion people put one dollor in the aviation industry:ok:

that time $ was less than 40rs so it was cheaper to hire expats.
now if $ goes above 44rs you see the calculations .
and no new a/cs coming in near future.
give time to this industry to get things in order.

i think 2010 june is too far.

[rdr]

The only point that donkey got right was that the high oil prices did not help. A bit of an understatement though. The high oil prices have forced the carriers to reinvent themselves and try to get rid of bureaucratic slumber, waste, lack of any planning and apply market forces to their operation.

Mass marketing, ridiculous aircraft orders
The current Indian middle class, numbers the ENTIRE population of Europe, OR the US. Count the number of domestic airlines/aircraft in these two continents. Of course there is a market in India, a big big big one. And don't forget the 9-10% annual growth.

International, why do tiny countries like Singapore,UAE, UK, US etc handle 75% of Indian passenger traffic? Now isn't this a great market for Jet, Kingfisher and possibly 2-3 more DISCIPLINED Indian carriers to mass market through huge aircraft orders?
What is left to be seen is if the Indian public support their own carriers instead of donating money to foreign ones in the long run.

short staffed so they took on expat crews and paid them more than they probably wanted

The aviation scenario is here to stay in India, inspite of downturns, closures, layoffs etc. The expats will be needed for many more years until the nation developes the necessary infrastructure, culture and discipline required. The difference in this industry is that there is no second best/haramse. Without them, there is no Jet, Fisher, Spice or any others. On the contrary, you will see many very good Indian widebody pilots leave if their expectations are not met.
Also, name me one person in the world who says he is paid too much. When you convert the expat salary to rupees, it does look a lot for India. But it is not for foreign countries where the cost of living is much much higher. The expats have also been hard hit by the falling dollar value which may question their intentions to sacrifice time away from their families for lesser returns.

Running the cadet program probably didnt help either and then of course high interest rates and cost of fuel

I think every airline should have a cadet programme. This will consolidate the necessary culture and discipline. I do believe that 5000 or so aspiring pilots are doing or finished their CPL. How many of them have the passion for aviation as opposed to those who entered the fray for other reasons?
How many have the political clout to get a job, or the means to reject a hire on the right seat of a BN-3/ATR, prefering a jet or nothing? A cadet programme is a must, to weed out the unsuitable candidates championed daily by the newspapers. The wrong people can cause havoc to a safety first industry.
Interest rates?? I'm no economist, but I have seen a downward slide over the past 3 years.

There will always be hiccups, but things will settle down in the right direction over time. How long?? Anyone care to take a guess??:O

[getsetgo]

International, why do tiny countries like Singapore,UAE, UK, US etc handle 75% of Indian passenger traffic? Now isn't this a great market for Jet, Kingfisher

India is India, no comparison, This 5 years no international flights rule is not at any other place,to protect national carrier.
amazing country, discover india ,as advertised.

[GSMini]

By the way, get ready IndiGo expat FO´s...there´s an agenda for you guys..you know what I mean...

[Sky Dancer]

Yeah I heard that too...feel sorry for them.But it's not just the expat FOs ..Spice has laid off a couple of Indian FOs which does not include the guys they had training under their cadet pilot scheme....but trust me the worst is yet to come...we'll see an airline closure within the next one year...it's a certainty just a question of who's it gonna be.....:ok:

[Al Fakhem]

International, why do tiny countries like Singapore,UAE, UK, US etc handle 75% of Indian passenger traffic? Now isn't this a great market for Jet, Kingfisher

For reasons only know to NACIL, they were asleep at the wheel for 25 years. Despite its favourable geographic location (half-way between Europe and the Far East / Oceania), AI has never managed to capture any sizeable traffic on the major Europe - Far East / Australia route. At the same time, carriers such as SQ, TG, MH built up pax numbers on this very model. More recently, Gulf airlines have done the same. SQ in particular, is an airline that demonstrates you can be successful without a domestic network.

9W are now demonstrating that an India-based airline can come up with a punctual international operation with excellent standards of on-board service. However, the latest news in the media is that they are going to ditch all non-Indian employees, including, it appears, Wolfgang Prock-Schauer, who is very much an architect of 9W's success to date. Let's see how this will work out.

[GSMini]

Also Bruce Ashby is saying bye bye, and a local is taking "the command". So as soon as the local is "in command" of 6E, initially all expat FO will be laid off. Well, I don´t know if laid off, or their fatas won´t be renewed, or they´ll let their visa expire..or they´ll be offered less money, gust houses instead of hotels etc..so they´ll just have to resign due to the poor working conditions.

Captains must also take a close look to this situation..they´re next...

Incredible India..Treatment to pilots suc*s here.

[Sky Dancer]

Al...very good observations.Unfortunately they were asleep and they still are..They'll never wake up until the govt. says it's had enough...9W is the only airline that will pose a real challenge but I guess the other airlines are working on strategies to counter this...it's a question of holding out....Wolfgang along with Naresh are brilliant..... a great team...wonder what's in store....

[getsetgo]

Falling Re delivers a new crude blow to airlines- Airlines / Aviation-Transportation-News By Industry-News-The Economic Times (http://economictimes.indiatimes.com/Falling_rupee_delivers_a_new_crude_blow_to_airlines/articleshow/3510524.cms)

This was not anticipated by airlines 5 years back
companies projections were based on 40rs to $(now 45+)
FUEL 40$ (now 100$)
And falling passenger loads.(load factors were projected 25% increase every year.)
this caused cancellations/delays on a/c diliveries.
trimmed networks.
consolidations,also trimmed number of a/c and jobs. so on......

last posted ............................................................ ......

getsetgo (http://www.pprune.org/members/180849-getsetgo)

Join Date: Jun 2007
Location: EARTH
Posts: 176


currency
indian ruppee touching 44 to 1 $
another aspect to look at.
when aviation companies started it was arround 40 to 1$ and fuel 35-50$
big calculations will be ahead
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[Nevrekar]

Bad patch for budget airlines
28 Sep 2008, 0103 hrs IST, Shobha John,TNN


It was meant to be an engine of growth. But most low-cost carriers in India have now hit an air pocket. Though the aviation sector as a whole is in decline, it's these airlines that have been hit the hardest by multiple factors such as high fuel prices, difficult acquisitions, downsizing and bad man-management.

The father of India's no-frills airline revolution, Captain GR Gopinath, says the typical low-cost carrier is meant to be "much like a self-service Udipi hotel crammed with customers. No-frills airlines are about innovation and efficiency to bring in more customers." But that can only happen, he says, if the business model is strictly followed, with salaries, manpower, turnaround time and routes properly strategised. Schisms are already showing up in these low-cost carriers.

UNDER PRESSURE: Sushi Shyamal, associate director, Ernst & Young, one of world's largest accounting firms, says, India's no-frills airline model is under pressure from many quarters. "As it is, oil prices, rupee depreciation, tightening of credit environment and economic slowdown have dampened the aviation industry. But these budget airlines have been further affected by lower demand from their target market which is extremely price sensitive." The difference between their fares and that of regular airlines is marginal now (see box), causing people to rethink their travel preferences, he says. "In effect, India's no-frills airlines are now, not only competing among themselves but also with regular carriers. It's not a contest, at all," says Shyamal, "as regular airlines offer add-ons such as meals, inflight entertainment, better connectivity and multiple flight options."

Adds Kapil Kaul, CEO, Indian Subcontinent & Middle East, Centre for Asia Pacific Aviation, "Though the fiscal environment will remain negative for the next 12-18 months, no-frills airlines will be more vulnerable. They're already witnessing load factors just above 50%. Fares have been 30-40% below cost; schedules have suffered and cancellations, a regular reality. Overall, 2008-09 will see negative growth of around 10%."

Today, the big fight is between Jet and Kingfisher. And as Kaul says, these regular carriers don't believe in the low-cost model. Both Jet and Kingfisher, he says, "have global ambitions and were finding these cheaper airlines a big barrier. The acquisition of Air Sahara and Air Deccan has trimmed this space. Jet and Kingfisher now control the dynamics of the market."

Also, Gopinath says Indian no-frills airlines have departed from their global fraternity's first article of faith, namely keeping the brand, model and management system completely separate from that of the regular parent airline. Singapore Airlines, for instance, does this with its no-frills wing, Tiger Airways.

DISILLUSIONED EMPLOYEES: This is a problem for many low-cost airlines, as illustrated last week when some 750 employees of Jetlite were downsized. Even though it's been more than a year since Jet bought Air Sahara, it has not managed to win the hearts of the staff. The latest move to downsize, albeit with one year's pay to provide a generous cushion - hasn't gone down well. In Air Sahara, employees were treated like kings. Naturally, Jet's moves to cut costs have been difficult to digest.

With Jet taking over all departments - commercial, engineering, airport services, operations, ground handling - insecurity runs high with some even wondering if the Jetlite brand would gradually disappear. Even prized personnel such as pilots whom Jet can ill-afford to lose, are feeling the heat. "What's to stop Jet from asking us to fly their planes once they have a single Air Operator's Permit?" asks a worried Jetlite pilot. Many have left for other airlines.

It's the same story in Kingfisher, which took over Air Deccan. It sacked almost 300 employees, most of them from the low-cost airline. Even though it offered a comfortable severance package - two months salary for every completed year of service, staff morale has been hit.

Take 25-year-old Gautam* who joined Jetlite's commercial department a year ago. Today, he's out of a job and waiting for the cheque that is part of the Voluntary Separation Scheme. "This was my first job. My future hangs in balance. Who will offer me another job?" he asks. Shyamal says the downsizing "is driven by the effort to contain losses from operations and align acquired assets with the existing portfolio."

COMMERCIAL FOLLY: The story of struggling SpiceJet is altogether different. It's about bad commercial decisions based on negligible market research and unviable routes. Kaul says, "The gradual decline of SpiceJet is most worrying, especially after a brilliant start. The recent capital injection ($80 million by US billionaire Wilbur Ross) might help, but might not be enough." The airline's troubles began when it decided on flying sluggish routes at unearthly hours. A senior SpiceJet commander describes the ham-handedness as follows: "Our Chennai-Port Blair flight starts at the ungodly hour of 4.30 am and lands at 6.60 am! What would a business or a leisure traveller do at that hour? Coimbatore is another bad route decision as it has poor load."

SpiceJet compounded its problems by changing its schedules faster than the weather. Its September 1 schedule was changed on September 4 and yet again 12 days later. "Ideally, airline schedules are put up at least a month before tickets are sold so that the load is good," says another pilot. If the flight isn't full enough, SpiceJet simply cancels it (eight to 12 per day), thereby alienating loyal passengers.

It could have been very different. SpiceJet was modelled on Southwest Airlines, the hugely successful, no-frills American airline. But sources say it took no lessons from its role model. Southwest's traffic between Dallas and Houston alone is 15 flights a day.

Another blunder was SpiceJet's cadet-training programme which collapsed, leaving behind disillusioned cadets and a sullied reputation.

Clearly, the skies are fairly grey for India's fledgling no-frills airlines and it'll take some sunshine to lift the mood.

* Name changed

[email protected]

[Rotorhead1026]

The latest move to downsize, albeit with one year's pay to provide a generous cushion - hasn't gone down well.

If they're really getting a year's pay they should count their blessings! Many would volunteer for that deal, at least on the surface. Any strings attached?

[Nevrekar]

I agree that anyone offered a severance package that may include a years pay should take it. It may not be on the table down the road.

The article posted earlier with reference to Spicejet paints an accurate picture of some of the happenings here. When I joined in May of 2007 this place was "happening." Now it may be viewed by some as a sinking ship. The airline has definitely lost a lot of momentum and reputation in these past few months. Bills (hotels, landing and handling, fuel fees etc) seem to be mounting. Even with 65M USD pumped in, not sure what the balance sheet will really look like after all(or any) of the debt is paid. Load factors are generally dismal (most airlines) even though we have the occasional "full" flight.

Rumour has it that our Chief Pilot, Jack Ekl will be leaving Spicejet on 30th September. There has been no official word of it but everyone seems certain of it. With his departure, and depending on his replacement many expats will be making a move as well. He was the reason many expats came here to begin with. Most have applied to FlyDubai, OmanAir, Emirates etc. I think we will probably lose quite a few of the expats by the beginning of Jan 2009. It actually will help the airline because they want to downsize anyway, and their costs will reduce significantly if the expats leave on their own accord.

Payroll is still on time, and usually early. I got paid on the 27th of Sept.

[Rotorhead1026]

I got paid on the 27th of Sept.

Me, too!

Still a great place to work. Amazing level of morale, all things considered. :)

[getsetgo]

Another blunder was SpiceJet's cadet-training programme which collapsed, leaving behind disillusioned cadets and a sullied reputation
............................................................ ..............................

last blunder made was by kingfisher to invest /take over spice jet.
But bigger blunder was spicejet not grabbing that offer from kingfisher .