Maldivian Adds Additional Service to India

Last week, Maldivian, the state-owned flag carrier of the Maldives, announced that it will add service from its hub in Male to Mumbai and Chennai. The flights will operate 3 times weekly.

The flights will commence along with Maldivian’s new Dhaka route in November, when Maldivian’s leased A320 enters revenue service. The aircraft will be configured in a 14 business class/138 economy class seating configuration.

The flights to Mumbai will operate on Wednesday, Friday, and Sunday, while the flights to Chennai will operate on Tuesday, Thursday, and Saturday.

Mumbai and Chennai will be Maldivian’s second and third gateways into India – the carrier already serves Trivandrum twice daily from Male with its existing fleet of Bombardier Dash 8 Q200/Q300 turboprops. These aircraft do not have the necessary range to fly to a destination further than Trivandrum in India, prompting the order of the larger aircraft.

The only other carrier which serves India-Maldives sector nonstop is Air India, which serves Male from Bangalore and Trivandrum. Significant competition also comes from SriLankan Airlines, which handles a lot of connecting traffic on this route through its Colombo hub.

Service to Male is also expected by Spicejet in the near future – it is unclear whether SG plans to use its 737s or its Q400s on these upcoming services.

 

Implementation of Dharmadhikari Report Begins; Management Integration Lists Posted

The implementation of the Dharmadhikari Report has finally begun, with the release of the integrated seniority lists of Middle Management, Lower level Management, and Grade I and II workers. Upper level management integration already was carried out earlier in the merger process.

Seniority lists of almost 4,500 officers of non-technical cadres in various departments have been uploaded onto AI’s internal website. Employees have the next ten days to voice complaints about anomalies in the list.

The merged seniority lists of pilots and engineers have not been completed yet due to “technical issues.”

It’s a testament to the sad state of affairs at the company that this step is only being taken five years after the merger. The human resources mess has led to strikes by the ex-Indian Airlines pilot union ICPA, the ex-Air India pilot union IPG, and sparked widespread protest throughout the company.

Information can be found on the IPG’s position and the ICPA’s position. Even in management, similar trends can be found – Air India was very tight fisted with seniority promotions, while Indian Airlines was very generous. The Dharmadhikari Report does not take this into account when suggesting how to integrate human resources, leading to friction over seniority issues.

How Air India Can Better be Utilized to Fulfill Strategic Objectives

Air India is much maligned for its poor state of affairs. It loses a staggering amount of money each year, due to political interference, a bloated and inefficient workforce, corruption, and incompetence/mismanagement.

Political interference manifests itself in many ways. Firstly, Air India deals with incredible inefficiency because of the procedures it must deal with as a PSU. A timeless read on this topic is Jitender Bhargava’s “The Cost of Being a PSU.” A good example of this cost is the recent Boeing 787 fiasco. Delays due to various ministries are not acceptable. If the government expects Air India to be run as a business, it must be permitted to act as a business. Once the board has approved compensation and delivery, the matter should be finished.

Political interference can also be found in Air India’s route choices, Air India’s lack of freedom in hiring/firing employees (hence bloated and inefficient workforce), and corruption throughout the system. A recent audit report on the corruption in the Ministry of Civil Aviation can be found here. It is really mind numbing to see how much Air India is hurt by government corruption.

However, Air India is unlikely to be privatized in the near future for a few reasons. Firstly, it’s unlikely that a private investor would want to touch AI in the condition it is in. And secondly, it’s unlikely that the government mantris will want to give up one of their playthings. So, with the reality of state-ownership set in, the government should look at how the Maharaja can be better utilized to fulfill State objectives.

Air India already does carry out many functions for the government. Air India is extensively used for armed forces and government charters. The president of India flies exclusively on Air India, and AI does not get compensated properly for such flights. Government estimates show that current president Pratibha Patil’s travels have costed Air India almost 170 crores. Air India is also required to keep slack in the schedule for last minute government routing changes, a significant cost to AI.

However, there are ways in which the government can take advantage of Air India’s capabilities without destroying AI’s profitability. In order to better understand some of these possibilities, we can look at 2 better-run flag carriers – Air China, and Turkish Airlines.

Air China is the official flag carrier and one of many state-owned carriers in China. The airline is, according to the Chinese government, the largest airline in the world by market capitalization, and the most profitable carrier in the world. It is extremely difficult to believe the latter, since Air China is rather inefficient, and it doesn’t command very high yields. Regardless, Air China is doing far better than our own Air India, and there are some lessons that can be learned from it.

Any airline’s biggest asset is its route network. Commercial air service has a variety of positive benefits – it increases both economic and political ties between the cities served, and can be of great strategic value.

Air China serves many routes which serve a strategic purpose. The most notable is service on the Beijing-Pyongyang sector – Air China is the only non-DPRK carrier to fly to DPRK. This service strengthens ties between the Chinese and North Korean governments and economies, and helps China keep its neighbors close. Air China also serves Ulaan Bator, the capital of Mongolia. This destination keeps the Mongols close to the Chinese.

However, destinations don’t need to make less commercial sense to have strategic importance. Air China’s services to neighbors like South Korea, Japan, Taiwan, and Vietnam all are very profitable in addition to their strategic importance.

The Chinese state-owned carriers not only keep their own neighbors close, but they also project China’s diplomatic power throughout the world. Apart from Bhutan (which only Bhutanese carriers serve), every neighbor of India has service by a Chinese carrier, an important part of China’s strategy to surround India with allies.

Strategic interests aren’t just important internationally – Air China’s destinations domestically also work to facilitate rapid and comprehensive domestic connectivity, and to bring prosperity to less developed areas. Tibet and Xinjiang, the two areas of China which are seperatist, have lots of air service, helping integrate the areas with the rest of the country.

The route network which Air China and the Chinese state-owned carriers have built helps fulfill strategic foreign policy and domestic objectives, and demonstrates how state-owned carriers can be utilized well by their governments.

Another example of a carrier which is utilized by its government well is Turkish Airlines. Unlike Air China or Air India, Turkish is only partly state-owned – 51% of the airline is in private hands. This partial privatization helps cut down on inefficiency and corruption, but still allows the government to utilize the carrier in an effective way.

Turkish’s route network contains a variety of routes of strategic importance. The airline serves every Middle Eastern country, bringing Turkey closer to other Arabic countries. Turkish also serves quite a few EU destinations, notably in Germany. This brings Turkey closer to the European countries which Turkey wants to partner with.

However, what is most remarkable about Turkish’s route network is how they have linked with countries which Turkey has declared of national strategic importance. Turkey has been working to import raw materials and develop infrastructure in Africa. Turkish not only serves all the major African destinations, like Accra, Addis Ababa, Johannesburg, Cairo, Dakar, Lagos, Khartoum, Tunis, Casablanca, Dar es Salaam, and Tripoli, but it also serves second tier cities too. Turkish serves Sabha, Benghazi, and Misrata (Libya), Abidjan (Ivory Coast), Kinshasa (Congo), Kigali (Rwanda), Mogadishu (Somalia), and Entebbe (Uganda) from its hub in Istanbul, strengthening business and political ties and increasing cultural diffusion (improving soft power).

Turkish also has a very impressive Central Asian route network, a region which India has been working on developing stronger ties with. Almaty and Astana (Kazakhstan), Baku, Ganja, and Nakhchivan (Azerbaijan), Batumi and Tbilisi (Georgia), Bishkek and Osh (Kyrgyztan), Dushanbe (Tajikistan), Tashkent (Uzbekistan), Ashgabat (Turkmenistan), and Ulanbator (Mongolia) are all destinations in the Turkish Airlines network.

After seeing how well other countries use their flag carriers as a tool, we can come back home and compare to Air India. Commercial air service can be used to further India’s “Look East” and other international development policies.

Air India already attempts to tailor its route network to serve the government’s wishes. Its low cost subsidiary, Air India Express, serves migrant gulf traffic returning home. The carrier has been very successful with the goal, with high load factors. Air India also serves 2 cities of significant strategic interest from its legacy Indian Airlines network – Kabul and Yangon. However, even these cities are underserved (Yangon is only served twice weekly).

In contrast to the limited routes of strategic value, Air India wastes lots of money on politically mandated prestige routes. A loss of $60 million each year is posted on Air India’s route to Toronto, yet the route is continued due to political pressure. Politicians want service to Chicago, not Congo, despite the fact that the latter would be a far more useful destination.

It’s time that Air India takes a look at the fundamentals of how it crafts its route network. There is no dearth of carriers who can take you from Toronto to Delhi, and the traffic which flies that route is likely to fly regardless of whether Air India is there or not. Where the opportunity for Air India to shine is in routes which require patience and a government cash backstop to develop. Routes which further India’s foreign policy aims and bring new economic partnerships.

Alas, the babus and mantris will likely never realize the golden opportunity which they are missing out on.

Air India Changes Tentative Australia Schedule

AI has changed the schedule once again in recent tenders.

The original schedule:

Flight No. Departure Arrival Aircraft Days
AI 312 DEL 01:40 SYD 18:15 77L/77W/787 12-4-6-
AI 312 SYD 19:45 MEL 21:20 77L/77W/787 12-4-6-
AI 311 MEL 22:55 DEL 06:35* 77L/77W/787 12-4-6-
AI 316 DEL 23:15 MEL 15:40* 77L/77W/787 -2-4-6-
AI 311 MEL 17:20 SYD 18:50 77L/77W/787 –3-5-7
AI 311 SYD 20:30 DEL 04:25* 77L/77W/787 –3-5-7

However, in recent tenders, AI 316/311 have been cancelled, and AI 312 has been made daily:

Flight No. Departure Arrival Aircraft Days
AI 312 DEL 01:40 SYD 19:15 77L/77W/787 DAILY
AI 312 SYD 20:45 MEL 22:15 77L/77W/787 DAILY
AI 311 MEL 23:45 DEL 06:55+1 77L/77W/787 DAILY

This schedule barely leaves enough time to operate the AI 115/116 rotation to London in between the MEL/SYD flight. AI might choose to operate DEL-LHR-DEL in between the DEL-SYD-MEL-DEL rotation, but I’m not sure where maintenance would be scheduled in…

Regardless, it seems likely that AI 115/116 (morning departure to LHR) will be returning this year, to facilitate Kangaroo traffic connections.

This new schedule also gets rid of the crew scheduling problems which would be created by operating a reverse-triangle type routing schedule.

First class is disappearing, and that’s a good thing!

I’m out of town for the next few weeks, so I’ve lined up some great guest posts. Today’s guest post comes from The Wandering Aramean, a/k/a Seth Miller. Seth is an aerophile and travel addict based in New York City. Seth writes his own travel blog, The Wandering Aramean, is a part of the PointsHoarder podcast focused on maximizing the value of loyalty points and is also a contributor for Fodors.com. He can be reached at @WanderngAramean on Twitter.

First class flying: the ultimate luxury experience in the air. Right? Everyone wants that opportunity and experience and yet the airlines are cutting back on first class services. Why? It turns out that, for many, business class is good enough. In fact, many carriers today are offering a business class product better than the first class of yore.

The Wall Street Journal had a piece out last week discussing the ever shrinking number of first class seats flying around the world. They’re calling it a “long, slow death” and focus on the change from a First/Business/Economy model to a Business/Premium Economy/Economy model among a number of carriers.

For decades, international first class was a symbol of self-indulgence in the sky, several rungs above its domestic cousin, which tends to be closer to economy class, but with free alcohol and bigger, cushier seats.

The top-drawer service, however, has been disappearing from U.S. airlines for decades. Of the more than 500 aircraft U.S. airlines regularly fly to Europe, Asia and South America, just 27% offer first class.

And there is plenty of truth in the story. The number of seats marketed as First Class is definitely decreasing. But from the perspective of “self-indulgence in the sky” things would seem to be a bit different. Business Class today is, by most measures, a more comfortable in-flight experience than First Class was 10 years ago. From that perspective First Class isn’t really dead; it just has a different name.

Within the Indian long-haul market there are still options for first class service. Air India, Jet Airways and Emirates all offer first class cabins. But not all routes offer the first class option on every flight. And tracking that down can create a challenge for passengers. Even more complicated, however, is figuring out if the value of flying in first class is worth it or not.

All three carriers have at least part of their fleet configured with a fully flat bed in their business class cabins, for example. And the multi-course meals are premium beverage options are also available, though not necessarily quite as premium.

Fewer and fewer companies pay for first class, owing in large part to the fact that business class is generally good enough for traveling employees to sleep well and show up ready to work. First class is no longer a necessity to be well-rested and comfortable; it is now an over-the-top luxury. More and more of the customers up front are getting there by redeeming miles rather than paying the cash fare. And while that’s useful to the airlines in reducing their liabilities, it doesn’t really make sense to keep the seats around, especially if they can sell more business class seats instead.

In other words, is there really value to the 3-cabin first class product? Or is the 2-cabin business class product good enough for most folks? First class is very, very nice when it is available. Taking a shower in the Emirates A380 first class lav was a wonderful experience. But business class lets you eat and sleep quite well. Is first worth paying extra for? Or even redeeming points? The answer is generally “no” for me.

Air India Reveals Full Tentative Australia Schedule

A few weeks ago, Air India partially released its tentative Australia schedule. Yesterday, Air India revealed the full summer 2012 schedule for the Australia route:

Flight No. Departure Arrival Aircraft Days
AI 312 DEL 01:40 SYD 18:15 77L/77W/787 12-4-6-
AI 312 SYD 19:45 MEL 21:20 77L/77W/787 12-4-6-
AI 311 MEL 22:55 DEL 06:35* 77L/77W/787 12-4-6-
AI 316 DEL 23:15 MEL 15:40* 77L/77W/787 -2-4-6-
AI 311 MEL 17:20 SYD 18:50 77L/77W/787 –3-5-7
AI 311 SYD 20:30 DEL 04:25* 77L/77W/787 –3-5-7
*arrives next day
**Local time in MEL and SYD to be read 1 hour later from 7th October 2012 through end of schedule

Due to further 787 delivery delays, AI has also included the 777 fleet as possible aircraft to service the route. The route is still expected to be started on September 1st, 2012.

Air India (Partially) Reveals Tentative Australia Route Schedule

While Air India continues to wait for approval to take delivery of its 787, it has quietly been preparing for its operation to Sydney and Melbourne. Tentative schedules for Sydney and Melbourne have been released, however Delhi schedules have not been released yet. The inaugural flight will take place on September 1st from Delhi.

Flight No. Departure Arrival Aircraft Days
AI 312 DEL (TBA) SYD 18:15 Boeing 787 12-4-6-
AI 312 SYD 19:45 MEL 21:20 Boeing 787 12-4-6-
AI 311 MEL 22:55 DEL (TBA) Boeing 787 12-4-6-
AI 312 DEL (TBA) MEL 15:40 Boeing 787 -2-4-6-
AI 311 MEL 17:20 SYD 18:50 Boeing 787 –3-5-7
AI 311 SYD 20:30 DEL (TBA) Boeing 787 –3-5-7

It is obviously very frustrating to not have the official Delhi timings. Multiple phone calls and an email to Air India (unsurprisingly) went unanswered. The media gag order at AI is one thing I really hate about the airline.

IPG Youtube Videos

The IPG has turned to YouTube to try to tell their point of view.

The latest video is an adaptation of Om Jai Jagdish Hare.

It’s got some inaccuracies/embellishments (notably with regards to upgrade time and training costs on the 787s), but it’s rather catchy.

Before that, there was a video of the Maharaja getting attacked, while displaying some facts about the merger

These facts only told 1 side of the story of course.

Before that, there was a video suggesting that mergers don’t work using a rabbit stuffed animal.

I didn’t really understand the meaning of this video… Perhaps someone could enlighten me in the comments?

And finally, the first video was explaining why training ICPA pilots on the Dreamliner is a bad idea

This video contained similarly inaccurate/embellished data, but was interesting to watch.

This is a very innovative way for the IPG to get their points across. Whether it will actually have any material effect remains to be seen, but it’s interesting watching anyway 🙂

Air India and Boeing Come To Compensation Agreement, Pending Government Approval

After deferring delivery of 787s last week pending a compensation agreement, Air India’s board and Boeing have come to an agreement pending the approval of the Cabinet Committee of Economic Affairs (CCEA).

It is hoped that the CCEA will make a decision to approve the package soon, although it could take over a week for the CCEA to make its decision. A rejection of the CCEA would be devastating, delaying the delivery even more until a new agreement can be agreed to. Boeing also would be under no obligation to come to a more generous agreement, so a rejection could result in the cancellation of the order.

The details of the compensation plan are not clear. The only detail which the Ministry of Civil Aviation has been willing to share is that the compensation will be depending on the day of individual aircraft, instead of being paid out in a lump sum. This means that Boeing would be penalized for future delays as well, enticing Boeing to expedite Air India’s deliveries and ensure no further delays occur. The compensation will be deducted from the cost of the aircraft.

Air India has financing lined up through US Export Import Bank loan guarantees and Indian Government guarantees. The airline plans to fund the expansion through sale-leaseback transactions. Air India has clarified that financial difficulties were in no way responsible for the delay in delivery.

If this compensation agreement gets approved, Air India will likely take delivery of 3 aircraft this month. Boeing will likely deliver 8 787s this month, making it the month with most deliveries so far.

After taking delivery, Air India will initially fly the aircraft on domestic routes for crew familiarization and technical support for any issues with the new aircraft. After that, the aircraft will fly internationally to Europe for a few months, for continued technical support. European routes will also have the advantage of being established stations, who can more easily cope with issues that come up with the aircraft introduction.

Air India is expecting to launch service from Delhi to Australia (via Bangalore) from September.

Air India 787 Delivery Delayed Over Compensation Spat

The delivery of VT-ANH, the first Boeing 787 Dreamliner to be delivered to Air India, has been delayed from an original delivery date of May 25th (last Friday). This delay is due to Air India and Boeing being unable to agree to a compensation package for the 787s, which arrived over 3 years late. The delay had very significant costs for Air India.

Air India’s legal department is looking at how to go about obtaining a fair compensation amount, which Air India’s board has reportedly estimated to be around $800 million.

Air India’s second Boeing 787, VT-AND, is currently scheduled to be delivered on June 12th, although that delivery may also be pushed back if this issue is not resolved.