SpiceJet Continues International Expansion

Continuing its rapid growth in the international market, SpiceJet has announced service to Sharjah from Pune. Commencing on September 21st, SpiceJet will fly Pune-Sharjah-Pune 4 times weekly on its 189-seat 737-800 aircraft.

Flight No. Departure Arrival Aircraft Days
SG 051 PNQ 22:30 SHJ 00:25 +1 737-800 Mo/We/Th/Sa
SG 052 SHJ 01:25 PNQ 06:00 737-800 Tu/Th/Fr/Su

 

While the timings aren’t particularly appealing, they allow SpiceJet to utilize an aircraft which otherwise would be unutilized overnight. In addition, Pune’s Indian Air Force controlled airport is notoriously difficult to get slots at, so it is an achievement in many ways that SpiceJet is able to operate this flight at all.

SpiceJet Route Map Aug 2013Pune is the latest inclusion in SpiceJet’s interesting international strategy of connecting secondary cities with big city destinations. SpiceJet has been experimenting with this niche – it has already connected Sharjah with Varanasi and Lucknow, cities which previously were lacking sufficient nonstop Gulf connections despite large migrant worker populations. SpiceJet also flies from Madurai to Columbo, and it will be commencing a flight from Ahmedabad to Muscat next month.

SpiceJet has also been working on connecting major Indian cities with smaller destinations – SpiceJet’s flights to Kabul, Afghanistan and Guangzhou, China from Delhi have been hugely successful. The out-of-the-box thinking displayed by SpiceJet’s market route planning team is very impressive.

SpiceJet has also stated intention to connect Pune with Bangkok, either via nonstop or direct flight. A formal announcement of this route is expected in the coming weeks.

SpiceJet To Import Fuel From Singapore

SpiceJet will be the first Indian carrier to directly import aviation turbine fuel (ATF) after import rules were liberalized earlier this year. India has some of the highest ATF taxes in the world, and airlines hope to cut their fuel bills by importing fuel.

The airline will bring in ATF from Singapore by sea, before transporting the fuel domestically to airports by truck or rail. With the average tax on ATF at almost 25%, SpiceJet expects to avail of significant savings through this move. SpiceJet hopes to initially cover almost 1/3 of its fuel usage with imported fuel.

High fuel costs have been cited as one of the biggest reasons for the struggles of Indian carriers today.

SpiceJet Defers Deliveries of 3 Q400s

The last 3 deliveries of SpiceJet’s 15-strong order of Bombardier Dash-8 Q400s have been deferred. SpiceJet has blamed the increase in fees at Delhi International Airport for this decision. The sharp hike in fees at DIAL has caused SpiceJet to require less capacity than expected for its Delhi regional hub.

SpiceJet’s order also allows has 15 options for more aircraft – these options are unlikely to be used in the near future.

 

SpiceJet’s International Expansion Plans Continue

In the month and a half since I discussed Spicejet’s Rapid Expansion Plans, the carrier has steadily continued planning international routes.

SpiceJet brought its 4th international destination online when it commenced nonstop service from Delhi to Kabul on 737 aircraft this month. In addition, the flights to Guangzhou and Riyadh from Delhi are expected to come online by October.

SpiceJet has also expressed interest to fly from Delhi to Dhaka, continuing on to Yangon. This would make SpiceJet the only Indian LCC serving Bangladesh, and the only private carrier serving Burma. Ministry approval is still awaited on this route.

Finally, SpiceJet has clarified that the service to Male it proposed would be from Trivandrum, and would be on the carrier’s short range Q400 aircraft. Trivandrum-Male-Trivandrum is served by the flag carriers of both India and the Maldives (Air India and Maldivian respectively). It features on the list of most profitable routes for Air India as well.

With international expansion to unusual destinations continuing at a brisk pace, SpiceJet seems to have its strategy laid out clearly. Hopefully, it will work out well for the carrier.

 

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.

 

SpiceJet Plans Rapid Expansion

India’s second largest LCC, SpiceJet, has announced plans to expand rapidly over the next 3.5 months.

SpiceJet has very successfully operated Q400 turboprops in South India, connecting smaller cities with metro cities like Hyderabad and Chennai. With the delivery of 5 more Q400s at the beginning of this month, SpiceJet has announced a new Q400 base at Delhi.

Beginning tomorrow, SpiceJet will launch Q400 service to Amritsar, Chandirgarh, and Indore from Delhi. Srinagar will also gain additional service.

From next Thursday, Dehradun will be connected to Delhi.

Other destinations are also planned in the near future using Q400s. Dharamsala, Pantnagar, Bikaner, Jabalpur, Khajuraho, Udaipur, Jaipur, and Kanpur are among the destinations being considered.

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Internationally, SpiceJet is also growing rapidly. At the beginning of July end of June, SpiceJet inaugurated service to Dubai, its 3rd international destination after Kathmandu and Colombo. Dubai is connected to both Mumbai and Delhi. SpiceJet also plans to connect Dubai to Hyderabad, Kochi, and Chennai this year.

In the next 3.5 months, flights to Riyadh, Guangzhou, Hong Kong, Bangkok, Male and Kabul are planned. All cities will be served by SpiceJet’s Boeing 737 fleet. In order to support this rapid growth, SpiceJet will add an additional 8 aircraft this year, taking the total fleet strength over 50.

More Airlines Introduce ₹50 Charge For E-Ticket Printout

A few weeks ago, Jet Airways introduced a ₹50 charge for getting an e-ticket printout at the airport.

This, like any other devaluation, caused a lot of cribbing from frequent flyers. And while the arguments were weak, nobody can deny that picking up your e-ticket printout is very convenient. For some people, it’s the only option. As with any other rate increase, I expected this charge to stick if other carriers matched it, but be repealed if nobody else did. India is a unique market where the ancillary fees that work well in other parts of the world (baggage fees most notably) simply kill load factor. So, monitoring the public response was important to ensure that this fee would be accepted.

It appears that IndiGo and SpiceJet have watched that response and decided that this fee is safe to match. Effective today, e-ticket printouts at IndiGo and SpiceJet counters will carry a ₹50 charge.

I expect the other low cost carrier, GoAir, to match this quickly. However, I expect Air India and Kingfisher Airlines to hold out on this fee, to differentiate their products from the LCCs. Overall, this move by Jet just shows that they are turning into more of a high-cost, LCC-service carrier every day.

SpiceJet Will Recieve Another Cash Injection Soon

Source: SpiceJet

This is very, very good news for SpiceJet. Right now, 5 of 6 Indian carriers are losing money. They are having difficulty finding new investors. Air India and Kingfisher both are not eligible for additional loans from banks until more investment is made in the companies from a private source. Vijay Mallya has been very unwilling to support the airline, worrying (quite rightfully) that he will be throwing good money after bad.

 

SpiceJet 737-800; Source: Wikimedia

Unlike Mallya, this move by Maran shows that what he is saying is not just talk. By spending more money on the airline, Maran is showing his confidence in the airline, and helping it out through tough times.

SpiceJet is adding 3 Boeing 737s and 8 Bombardier Dash-8 Q400s this year. This expansion is very expensive, and Maran is helping fund it. In order for SpiceJet to see larger profits, the airline must expand further into it’s regional niches that it has created. Having monetary support for this expansion is very helpful for SpiceJet.

 

SpiceJet Q400; Source; Wikimedia

In addition, SpiceJet has been losing money recently. Vinay Bhaskara did a great job analyzing the financial results in detail, which you can read here

. The new injection will allow SpiceJet to fund these losses. Maran funding the losses is a very clear way of saying that he is committed to SpiceJet and confident that the airline’s results will improve in the long run. This gives management, labor, lenders, the government, and pretty much everyone else great confidence that SpiceJet will not be going anywhere soon. At a time when everyone is anxiously waiting for Kingfisher to announce that they are suspending operations, this confidence is important. Hopefully, SpiceJet will continue to see success in the future.

 

DGCA’s Financial Surveillance Report Full Of Controversy

Last Thursday, the DGCA (India’s aviation regulator) finalized their 2011 financial surveillance report. The findings of the report are making waves throughout the industry. The report focused on the financial state of airlines in India, finding that financial issues are endemic in the sector, and that this financial sickness is affecting safety standards.

The most controversial part of the report said: “A reasonable case exists for withdrawal of [Kingfisher Airlines] airline operator permit as their financial stress is likely to impinge on safety.” The report also had similar findings about Air India Express (AIX), a surprise considering that AIX was relatively profitable compared to the rest of Air India and was being hailed as a success story by many aviation analysts. I must admit that I belong to that category myself, considering AIX to be a great step for Air India.

Audits of Jet Airways, JetLite, SpiceJet, and GoAir also yielded poor results. The DGCA found “major financial distress issues” that could lead to safety issues. The reports also talks of “some rapid growth issues” about IndiGo Airlines. The audit of Air India is not yet finished.

 

Source: Kingfisher Airlines

When I look at that list, I’m not really shocked. The report seems to list every single Indian airline as under “financial distress.” It’s great that the DGCA is finally figuring this out. The Indian aviation market is structurally challenged. Despite being one of the fastest growing economies in the world, Indian airlines are unable to make profits. This is due to high fuel prices, extremely high taxes, and poorly negotiated bilateral treaties, among other issues. It is excellent that the DGCA is actually investigating these issues before it becomes too late and safety standards crash.

What may seem really surprising is that the DGCA is considering taking the extreme step of revoking operating permits. However, after looking closely at the financial issues that Kingfisher is facing, it may not seem that drastic of a step at all. A post tomorrow will go into more detail about Kingfisher’s financial woes.

 

Source: Wikimedia

With regards to Air India Express, it is surprising how scathing the report is. 2 years ago, the airline was involved in the Mangalore air crash which claimed 158 lives. However, it wasn’t clear to me how poor the safety culture at the airline is until today when I did some more poking around during research. There is shortage of pilots, check airmen, instructors, examiners and cabin crew… The airline is not able to operate its entire fleet due to shortage of pilots. Flight duty time limitation monitoring is carried out manually (unlike most airlines, including its parent Air India, which use computerized systems). Training of pilots is carried out on Jet Airways’ simulator as AI Express simulator remains unserviceable most of the time.”  This is a bad situation to be in for any airline.

Other airlines have been having similar issues as well. Jet Airways, JetLite, IndiGo, SpiceJet, IndiGo, Air India Regional, and GoAir all were found to be experiencing “financial difficulties” and “growing pains” in their operations. Crew shortages, poor quality training programs for pilots and cabin crew, and a lack of important software that can improve safety were found in some of these airlines, among other problems.

Any safety issues are always extremely worrying. However, despite all these concerns, the airlines of India are still some of the safest in the world. The fact that the regulator is being vigilant enough to ensure that these problems don’t become too severe is an extremely good sign.

Tune in tomorrow for a closer analysis of Kingfisher Airlines’ financial problems.