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To date, Kingfisher is the only Indian airline to order the Airbus A380.
in terms of traffic, yields and profitability, buttressed
by strong , long-term fundamentals will inevitable
stimulate airlines to expand their fleets. Indian Prime
Minister Dr Manmohan Singh says this expansion
could lead to total investment in the Indian civil
aviation sector in excess of US$120 billion in the
Industry analysts say the number of aircraft being
ordered by Indian carriers is a reflection of a buoyant
view of their future. At the Paris Air Show in July,
Indigo confirmed that it would buy 180 single-aisle
Airbus A320 jetliners.
“Our order with Airbus will further establish
Indigo as a leading carrier in the Indian market, and
one that continues to offer low fares and high ser vices,”
says Aditya Ghosh, Indigo’s president. Indigo, which
is planning to launch international operations in
September, will acquire 150 of the re-engined A
320neo model and 30 of the manufacturer’s existing
A320 variants, with a value at list prices of about
Not to be outdone, Mumbai-based LCC Go Air,
which currently has market share of just 6.6 percent,
is g ambling that rapid fleet expansion will help it
grab a bigger slice of the pie. GoAir has ordered 72
A320neos at a list-price value of US$6.6-billion, with
the first delivery expected in December 2016.
“In the next 24 months, GoAir will double its fleet
size to be able to satisfy the market and currently we
are analysing the many opportunities to sustain our
profitable growth,” says Giorgio Roni, the airline’s
chief executive officer. “ We will concentrate our
efforts on on-time performance, offering competitive
fares and an overall pleasant experience on ground
and on board.”
Gurgaon-based LCC SpiceJet, which is planning a
major expansion of its ser vices to smaller cities across
India, has ordered 30 Boeing 737-800 single-aisle
jets and as many as 30 Bombardier Q400 turboprop
a ircraft (including 15 options).
Air India , meanwhile, as part of an order for 111
a ircraft placed in 2006, will acquire 27 of Boeing’s
new 787 ‘Dreamliner ’ twin-a isle twinjets, while Jet
Airways has ordered ten of the super-efficient aircraft.
With all these new aircraft entering the market, the
nationwide average age of Indian carriers’ fleets is now
less than five years.
“If we look at aircraft orders by the Indian airlines
companies, the trend is now towards narrowbody
aircraft that are fuel-efficient and environment
friendly, and this is the direction that is also taken
by aircraft manufacturers,” says Kapil Arora , partner
(aviation) at global consultancy firm E&Y.
Low-cost carriers are expected to be a major driver of
growth in India’s civil aviation sector, as an increasing
number of connections is established between tier-
two and tier-three cities . In recent years, however,
most Indian carriers have been finding international
routes far more lucrative than domestic operations.
Kingfisher is so f ar the only Indian carrier that
has ordered world’s largest commercial aircraft – the
Airbus A380. Deliveries are expected from 2016,
although some reports have suggested that Kingfisher
may cancel its A380 orders.
Significantly, the Indian Government has yet to
give clearance for regular, scheduled A380 operations
at Indian airports. So far, a ll A380 flights into India
have been special cases, while some analysts’ fears of
a slowdown in economic growth and the effe ct of
airport restrictions on Superjumbo operations leave
a question mark over Kingfisher’s commitment to the
Despite passenger load factors, mounting debt has
become an industry-wide problem. The skyrocketing
price of jet fuel , increasing labour costs and the
reluctance of Indian carriers to disturb the price-
sensitive Indian market have all conspired to send
most of the country’s carriers into red.
Kingfisher has not made a profit since it started
operations in 2005 and has debts in excess of 60
billion rupe es (US$1.2 billion), with accumulated
losses to the tune of 53 billion rupees. The airline is
struggling to minimise its losses, even as it focuses on
raising funds to sustain its operations.
Jet Airways, which has a debt of around 130 billion
rupees, posted a loss of 1.26 billion rupees in the
fourth quarter of the 2010/11 business year, after
having been profitable during the preceding three
quarters. The company says fuel prices are continuing
to put pressure on its margins.
Similarly, SpiceJet posted a fourth-quarter net loss
of 590 million rup ees. “One of the main [factors]
which affected our operations was fuel cost, which
accounted for about 52 percent of total costs during
the quarter,” says SpiceJet Chief Executive Officer
Kapil Kaul, CEO of CAPA’s New Delhi branch,
says two developments – “the 50 percent increase in
fuel prices and predatory pricing resorted to by” Air
India – have meant the consultancy has had to revise
its outlook for the country’s industry.
Air India’s woes
Still, the debts and losses of privately owned Indian
carriers look insignificant compared to the dire
financial state of Air India .
Once a proud symbol of Indian aviation and a
“ In the next 24 months, GoAir will double its fleet size to be
able to satisfy the market.” – GoAir CEO Giorgio Roni
28/10/11 8:27 PM
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