Indian Aviation FDI
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Indian Aviation FDI
So theres a lot of buzz about this 49% FDI approval from the GOI.
Last week it seemed a confirmed deal and yet the recent articles in the newspapers suggest that it could be on hold indefinitely.
With KF in such a precarious position, AI bailout and 9W with its undecided stance.. wheres is this all headed to?
This FDI could really change the Indian Aviation scenario and a lot of us freshers are waiting for that Indian Aviation boom again. This could create a lot of jobs, stability and expansion in this sector right?
So newspaper articles apart.. what is really going on?
I am sure that you experienced guys know a bit more than the rest of us.. care to reveal?
Last week it seemed a confirmed deal and yet the recent articles in the newspapers suggest that it could be on hold indefinitely.
With KF in such a precarious position, AI bailout and 9W with its undecided stance.. wheres is this all headed to?
This FDI could really change the Indian Aviation scenario and a lot of us freshers are waiting for that Indian Aviation boom again. This could create a lot of jobs, stability and expansion in this sector right?
So newspaper articles apart.. what is really going on?
I am sure that you experienced guys know a bit more than the rest of us.. care to reveal?
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FDI
Although a welcome policy change for KFA, I don't think FDI is going to solve our problems. Sure, there'll be some interest due to the hype generated but if a foreign airline decides to invest, it is only logical that they must have an incentive to invest without a controlling stake.
Why will they do this?
The GOI instead has to take other steps to let aviation make make some money so that it is a profitable industry to invest in. There are already several expert opinions on what steps are required so not going to go into that.
In any case, aviation is a golden goose for the GOI with almost no policy framework, so they can pretty much eat all the cash they want without being obligated to re-invest it into the industry infrastructure.
Why will they do this?
The GOI instead has to take other steps to let aviation make make some money so that it is a profitable industry to invest in. There are already several expert opinions on what steps are required so not going to go into that.
In any case, aviation is a golden goose for the GOI with almost no policy framework, so they can pretty much eat all the cash they want without being obligated to re-invest it into the industry infrastructure.
Last edited by radical_100; 7th May 2012 at 02:31. Reason: grammatical changes
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No FDI
If our government is seriously thinking to do some thing concrete for the industry then they should declare ATF as "declared goods" this will attract uniform tax across the country. This demand is dated ages back even before some sane even thought about 49% FDI.
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A mere policy change wouldn't directly result in more jobs in the short term. Meanwhile, stocks of Spicejet was down 10% today as it declared its results. KFA also hit an all time low, losses of Rs.1100 crore for Q4 were reported by KFA.
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Others?
What about the other operators here, Indigo, GoAir, Air India, Jet Airways etc? Are those results available publicly anywhere?
Also there are new airlines in the coming apparently, I hope they do well.
Also there are new airlines in the coming apparently, I hope they do well.
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These Losses are absolute Market Tactics guys...Government in india is already so hard on airline business, not supporting them in any matter what so ever. hence the MDs and CEOs of these airlines are not dumb. they will always announce the negative results(in reality they are positive) only to get some soft outputs of Government. lets just use some common sense here...if all of theses airlines including Jet, Spice jet and Go air are not making any profit then why the hell those guys would sign such huge deals with Boeing and Airbus as a plan of their expansion?
Go Air places 52 Airbus order
spicejet already has a 15 Q400 confirm and 15 on options(not to mention 737 NGs)
Jet airways thinking about 100 A320 Neo....
So Guys again...its not what we hear or we see...and what actually is (we dont see it and perhaps we wont see it as well)....
Go Air places 52 Airbus order
spicejet already has a 15 Q400 confirm and 15 on options(not to mention 737 NGs)
Jet airways thinking about 100 A320 Neo....
So Guys again...its not what we hear or we see...and what actually is (we dont see it and perhaps we wont see it as well)....
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These Losses are absolute Market Tactics guys...
Anyways, regardless of losses or profits, fact is that the Indian aviation is growing at a rapid rate. That the growth isnt exactly healthy and accompanied by profits is a matter of debate.
So, the FDI is bound to attract investors just for the expansion. The number of Indian fliers is expanding rapidly and its not just limited to the domestic markets.
The main incentive could be to use the Indian carriers as feeders for their main international operations. If they can nurture and turn around their Indian investments, great for them.
From what I hear, Jet and Indigo dont stand to profit a lot from the FDI.
KF needs it baadly. Rumors suggest an informal deal has already been struck with a European biggie. No matter what the losses, Aviation is potentially one of the most profitable businesses ever. So, keep your fingers crossed.
Spice is very interestingly positioned for this FDI. No doubt about that. GoAir is a small player, but stands to win too. AI isnt interested.
I say FDI is good for the industry and especially for the unemployed ones like us.
Also, I read in the times a few weeks ago that the DGCA is planning to make compulsory a regional service from every airline in India. This will help connect Tier I & II cities by air. This translates to regional turboprop services with ATRs, Q400s, B1900 and the likes.
Thats another move I think should help us unemployed ones..
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FDI is only useful and attractive if the government in the country lets it be. India is quickly losing it's attractiveness as a place to do business, especially regarding aviation. Corruption, infrastructure, regulatory chaos make India very unatractive to businesses from an investment stand point. Even if FDI is passed I think it will be so convoluted and protection positioned that most will stay away even with the potential market India has.
A perfect example is the feeder requirement, which is none of the governments business unless they plan on paying for it. How about the large fuel tax or not letting private companies charge what they want for tickets? These and many other things will make FDI not work in India.
A perfect example is the feeder requirement, which is none of the governments business unless they plan on paying for it. How about the large fuel tax or not letting private companies charge what they want for tickets? These and many other things will make FDI not work in India.
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These Losses are absolute Market Tactics guys...Government in india is already so hard on airline business, not supporting them in any matter what so ever. hence the MDs and CEOs of these airlines are not dumb. they will always announce the negative results(in reality they are positive) only to get some soft outputs of Government. lets just use some common sense here...if all of theses airlines including Jet, Spice jet and Go air are not making any profit then why the hell those guys would sign such huge deals with Boeing and Airbus as a plan of their expansion?
Q. Why airlines make big orders?
Ans. Because they can. Easy availability of money. Soon it will be easier than ever before when airlines go for ECBs & FCCBs.
Ego and fear also play a big part here. Nobody wants another airline to be bigger than theirs. Indigo has done well so far. But it could be the hardest hit in the future if it is unable to fill those seats that it plans to fly after 2016. Spicejet is considered the most pragmatic of all. Their funda is-Market Share doesn't translate into higher profits. Watch out for Spicejet!
What about the other operators here, Indigo, GoAir, Air India, Jet Airways etc? Are those results available publicly anywhere?
Jet and JetLite have increased capacity by 18% in 2012 vs 2011. The pax have grown 16%. Staff has increased by only 354 in 1 yr. Aircraft increased from 97 to 101.2(Avg). Breakeven seat factor 91.3%.
Q4 FY12 Results
Revenues increased 24.4% as compared to Q4 FY11. Loss Rs.298.1cr vs Rs.124.5cr.
Spicejet
Total income for the year up form Rs.2937cr to Rs3997cr. Loss of Rs.605cr. Last year had profit of Rs.101cr.
Non current liabilities(Loans) up from Rs.25cr to Rs.744cr. This could add to their interest costs in the future.
Q4 FY12 Results
Revenues increased 46% as compared to Q4 FY11. Loss Rs.249cr vs Rs.58cr.
Kingfisher too sick to analyse at this stage.
All the listed companies result are available on their website under 'Investor relations'. Also available on BSE/NSE website and other Financial websites. Indigo, GoAir and Air India are not publicly listed. They are not required to make their results public.
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Thanks
Thank you. Those results were helpful. Let me see if I can find a thing or two about the other airlines. So far it looks like Indigo is doing well enough, lots of reports that they're the only airline making profit around here.
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Well this didnt make the headlines.
But the PM promised to look into the FDI for aviation.
Aviation ministry has been asked to make amends with the opposition and see it through.
Three new airports were declared. Thats also when the AI strike was deemed worthless and considered over.
Airline shares all went up by about 5 %.
Actually Kingfisher and Jet shares are being considered prospectively 'hot shares' in the market for now.
But the PM promised to look into the FDI for aviation.
Aviation ministry has been asked to make amends with the opposition and see it through.
Three new airports were declared. Thats also when the AI strike was deemed worthless and considered over.
Airline shares all went up by about 5 %.
Actually Kingfisher and Jet shares are being considered prospectively 'hot shares' in the market for now.
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That is some good news. Let's see what comes of it. Overall I think it is a huge but not an impossible effort by everyone in the industry. The rule makers must be forward thinking even in other aspects, just one thing like an FDI approval cannot solve anything.
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just one thing like an FDI approval cannot solve anything
Also other policies under consideration are compulsory feeder / regional services by every airline.
This might prompt the operators to procure turboprops and might open up more vacancies for us..
A few more here and there.. lets hope..
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For clarity stakes for all 49% FDI has been allowed in Indian Aviation for the longest time. What the restriction is that no foreign carrier can hold 1% even of an Indian airline. The pressure is to allow foreign carriers to hold stakes on the assumption that they will invest in Indian carriers.
Now to analyze why they want foreign carriers to invest in Indian carriers.
Let us assume Emirates buys into KF. KF will not need to invest in larger aircraft and will essentially fill all its aircraft as a feeder for emirates, or so that is the hope. Same is if BA buys into GO then go will feed BA aircraft out of India or so that is the hope. It also gives them access to say sky world or Star.
The govt allowed them all to import fuel to reduce costs. As of now only one carrier has initiated the process.
It is my opinion that even if they open up direct investment into aviation by foreign airlines there will not be too much interest and it will fizzle in the short run.
What needs to be done is a pure rationalization of ops, the guts and the B#$lls to make sure that a good operation is put in place and instead of looking over the competitions shoulder focus on running your own business.
Now to analyze why they want foreign carriers to invest in Indian carriers.
Let us assume Emirates buys into KF. KF will not need to invest in larger aircraft and will essentially fill all its aircraft as a feeder for emirates, or so that is the hope. Same is if BA buys into GO then go will feed BA aircraft out of India or so that is the hope. It also gives them access to say sky world or Star.
The govt allowed them all to import fuel to reduce costs. As of now only one carrier has initiated the process.
It is my opinion that even if they open up direct investment into aviation by foreign airlines there will not be too much interest and it will fizzle in the short run.
What needs to be done is a pure rationalization of ops, the guts and the B#$lls to make sure that a good operation is put in place and instead of looking over the competitions shoulder focus on running your own business.
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some more news on FDI.
the TMC has agreed to back the FDI only if the kolkata airport is modernized before the puja season in October. According to airport officials, modernisation work at Kolkata airport is likely to be completed by July, while it will take another two months to make the new airport operational.
holding the government at ransom seems to be the new game in india at the moment
the TMC has agreed to back the FDI only if the kolkata airport is modernized before the puja season in October. According to airport officials, modernisation work at Kolkata airport is likely to be completed by July, while it will take another two months to make the new airport operational.
holding the government at ransom seems to be the new game in india at the moment
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the TMC has agreed to back the FDI only if the kolkata airport is modernized before the puja season in October
@Wannabe Flyer
What needs to be done is a pure rationalization of ops, the guts and the B#$lls to make sure that a good operation is put in place and instead of looking over the competitions shoulder focus on running your own business.
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Efficiency
Currently, airlines are spending way too much effort *saving* money. Instead, like most businesses, they must be in an environment where they can carry out their operations efficiently and focus on *making* money. This needs to be done in conjunction with government agencies (including those like CISF, ATS etc) so that overall operations are smooth and efficient, and airlines get what they pay for. Some example of impact changes like those will have are
1. Aviation as a whole will grow, thereby paving way for pilots, cabin crew, ground staff etc to progress a natural career progression, have options of working for non-airline ops. Then the airlines probably will not have to *charge* pilots for their own type rating and exploiting employees.
2. Airlines will not have to discourage passengers from getting ticket printouts and charging them Rs. 50, if only someone like CISF accepted e-tickets or were not so security paranoid.
These are just 2 operational examples off the top of my head, but you can see that rationalizing ops will have an impact all over. From what I can see, almost no one wants to do things efficiently around here.
1. Aviation as a whole will grow, thereby paving way for pilots, cabin crew, ground staff etc to progress a natural career progression, have options of working for non-airline ops. Then the airlines probably will not have to *charge* pilots for their own type rating and exploiting employees.
2. Airlines will not have to discourage passengers from getting ticket printouts and charging them Rs. 50, if only someone like CISF accepted e-tickets or were not so security paranoid.
These are just 2 operational examples off the top of my head, but you can see that rationalizing ops will have an impact all over. From what I can see, almost no one wants to do things efficiently around here.
Last edited by radical_100; 9th Jun 2012 at 04:36. Reason: grammatical