Article-Big Big Losses for Airlines in India
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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.....
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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.
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.
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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.
Captains must also take a close look to this situation..they´re next...
Incredible India..Treatment to pilots suc*s here.
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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....
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$- Rs
Falling Re delivers a new crude blow to airlines- Airlines / Aviation-Transportation-News By Industry-News-The Economic Times
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
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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
............................................................ ..................................
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
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
............................................................ ..................................
Last edited by getsetgo; 21st Sep 2008 at 23:08. Reason: copy / paste last post
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Article Reprint--Airline losses in India
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]
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]
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The latest move to downsize, albeit with one year's pay to provide a generous cushion - hasn't gone down well.
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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.
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.
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blunders
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 .
............................................................ ..............................
last blunder made was by kingfisher to invest /take over spice jet.
But bigger blunder was spicejet not grabbing that offer from kingfisher .
