Home' Asian Aviation : AAV July August 2010 Contents 40 AsianAviation | JULY--AUGUST 2010
Rival Jet Air ways saw a strong recovery in both its
domestic and international operations during the scal
third quarter, ended 31 December 2009. e carrier is
now starting to see some stabilisation of its international
operations, which were initially ramped up faster than
was justi ed by sales and without appropriate marketing
and distribution support.
e carrier's international operations now account
for about 62 percent of revenue and its load factor in
the third quarter of the last business year was over 80
"We expect the international operations to be
consistently pro table during the 2010/11 nancial
year," CAPA says.
In the short- to medium-term, the airline will further
expand its regional international routes around South
Asia and the Gulf, using surplus Boeing 737s from its
domestic eet. However, the carrier is also evaluating
new destinations in the US such as Chicago and Los
Jet Airways' next phase of long-haul expansion is
expected to begin from the summer 2011 schedule,
although it could potentially be brought forward to
winter 2010/11 if tra c recovers faster than expected.
Domestically, about 65 percent of Jet's capacity comes
under the no-frills Jet Konnect brand, which results in
an improved cost structure and higher loads.
CAPA believes that Jet Air ways "may exit the
full ser vice model on most domestic and regional
international routes in 2010/11 ... leaving Jet Air ways
and its full-service model on longer international routes
and a handful of key metro domestic city pairs", while the
rest of the network is operated by Jet Konnect.
" is strategy will allow it to compete more e ectively
against the standalone LCCs such as IndiGo and
SpiceJet," the consultancy says.
Although the airline has withdrawn some aircra
from its domestic eet for deployment on regional
international routes, domestic capacity has been
maintained by increasing seat-density with the adoption
of more all-economy ser vices.
Jet Air ways and JetLite have a combined 47 aircra
on order, comprising : ve A330s, three 777s, ten 787s
and 29 single-aisle 737s, with options for a further ten
737s and ten 787s. Some delivery deferrals have been
negotiated with the manufacturers.
"Jet Airways currently has US$3.5 billion in debt and
desperately needs to de--leverage its balance sheet and
reduce the interest-ser vicing obligations," CAPA says.
"It has received conditional approval to raise US$400
million through uali ed Institutional Placements
(QIPs), for which it is expected to achieve a price of
350--400 rupees per share."
Kingfisher Airlines has seen improvement in its
operational performance over the past two to three
quarters and was poised to break even in the third
quarter of the last business year.
"Right-sizing capacity in line with demand has had
a bene cial impact, however the interest burden on its
debt continues to be a major challenge," CAPA says
in its report. " e fact that a number of aircra are
grounded, especially its A340 eet, is a further nancial
e consultancy stresses the importance of the airline
restructuring its cost base to "a more manageable level",
since yields remain under pressure.
" e increasing transfer of aircra to the low-cost
King sher Red brand is helping , but there may be a need
to go a step further and transform domestic entirely to
a single-class con guration. Further right-sizing of the
capacity deployment in the domestic market is also
possible," CAPA says.
While Kingfisher has always harboured strong
international ambitions, the carrier is more likely to
concentrate on the regional international market using
the single-aisle Airbus A320/A321 eet rather than
further expansion of A330 long-haul ser vices.
"King sher Airlines may need to reconsider its eet
composition, particularly for its long-haul operations
to North America. e A340--500 which it ordered
is unlikely to be competitive and this may lead it to
consider the B777 as an alternative," CAPA says. ●
Kingfisher is likely to concentrate its
international efforts on regional services,
using Airbus A320/A321 aircraft.
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