Newsletter #10

This week’s aviation news in India was dominated by the government finally approving the building of a new airport near New Delhi and SpiceJet’s order of 50 Q400 planes to give a fillip to its regional connectivity plans. We have for you what these two developments mean. We also have a bunch of good reads that you will find useful. Happy reading:

The Big Airport Mess
The government has okayed, after years of dilly-dallying, the construction of a new airport at Jewar in Greater Noida, about 90 kms away from the Indira Gandhi International Airport in New Delhi.  The airport is expected to be operational in about six years and will handle about 30-50 million a year, according to the aviation minister.

Why it matters: The new airport will take the load off the Delhi airport, which even with three runways (a fourth is being built), is saturated. As we have pointed out before, the prospect of an airport capacity crisis in India is real: key metros such as Mumbai and Chennai  have all reached a point of saturation with acute slot constraints and congestion.       

But not enough: The government is aware of the problem no doubt, but it remains to be seen how serious are its efforts to ramp up capacity and improve infrastructure. Problem is it will take 3-4 years at least to build new airports while passenger growth continues unabated. Aviation is growing rapidly in India, the world’s second fastest growing aviation market, where passenger numbers this decade increased 3 times than in the previous 50 years.

Some good news: The government is planning to change laws to ensure that those who bid to build and run airports must have a pre-determined tariffs. Under existing laws, bidders develop airports and approach the Airports Economic Regulatory Authority (AERA) to levy tariffs. This method is steeped in uncertainty and is costly for both passengers and airlines (airline lobby group IATA has long been complaining about exorbitant airports charges in India).

SpiceJet's Shopping Spree

Ajay Singh’s SpiceJet is on a shopping spree for new planes. It has signed two agreements with Bombardier for 50 Q400s and with Boeing for 40 737 Max 10 planes at the Paris Air Show.  

Why it matters: The Q400s, provided it firms up the orders, means SpiceJet is serious about its regional play. SpiceJet will launch flights under the Udan scheme to Porbandar and Kandla in Gujarat next month.

 It also means it is aware that it needs more planes to compete with IndiGo.  

SpiceJet currently has a fleet of only 55 planes -- 35 Boeing B 737s and 20 Q400s. IndiGo has 135 A320s and has ordered for 50 ATRs for regional routes.

But wait: SpiceJet earlier this year said it will purchase up to 205 new aircraft, including 100 new 737-8 MAX aircraft, but it remains to be seen how many of these will be firmed up. We have our doubts because SpiceJet chairman Ajay Singh has a penchant for making tall statements without actually following them up with actions (examples: long-haul flights and Esops for employees).

Who Let The Pilots Out?   
The aviation industry needs 255,000 more pilots by 2027 to keep up with its rapid growth and is not doing enough to fill those vacancies, according to a new study.

"Rapid fleet expansion and high pilot retirement rates create a further need to develop 180,000 first officers into new airline captains, more than in any previous decade," said the report by CAE, which trains pilots for airlines around the world.

Nowhere is this trait more visible than in India, where we have been facing a severe deficit of pilots for years. Only a few airlines like IndiGo is addressing this problem by investing in training while others such as SpiceJet are resorting to short-sighted measures such as enforcing one-year notice periods for commanders looking to quit.

Bon In-Flight Appetit
Airline food, especially in economy, has long been synonymous with terrible food. But that is changing.

You should read this NYT article about airlines that are attempting to make their economy food on long-haul flights tempting. This is largely due to competition.

We have seen how some airlines with excellnt on board services and punctuality can actually charge more than competitors. Passengers don’t mind paying extra for those tickets. They would also not mind paying extra if the food is something to look forward to.