Newsletter #6

IndiGo Springs A Surprise

IndiGo president Aditya Ghosh has consistently said two things. One, a key reason for the success of India’s largest airline is they use one type of aircraft: the Airbus 320s, which helps keep operations simple and costs low. Two, the potential of growth in India is still vast, which is why the airline made two humongous plane orders from Airbus.     

On the first thing at least, IndiGo made a radical departure by ordering a new type of planes -- more than50 ATR 72-600 aircraft in a deal worth $1.3 billion. IndiGo has signed a term sheet to purchase the planes, which will enter operations by the year end. Nonetheless, the order is consistent with what Ghosh has always said: there is still scope to grow in India.

For the government, this is the best ratification it could have got for its new regional connectivity scheme. But IndiGo’s might could also dampen the enthusiasm of other potential investors. 

Air India Gets Busy

We are happy to note that the government-owned airline is getting aggressive of late. It will launch a Delhi–Los Angeles service on September 1 2017 and flights to Tel Aviv, Dallas and Nairobi later this year.

The airline also plans to launch service from Delhi to the Stockholm Arlanda airport in Sweden on August 15 scrapping for now its previously announced Copenhagen flights. This suggests Air India is doing fine on the Delhi-San Francisco route, on which it doubled the weekly flights to six from November 2016. It is also possible that it is benefiting from the electronic device ban on Gulf carriers for US-bound flights.

That’s not all. From August, Air India will launch direct flights between Colombo and Varanasi. This was announced by Prime Minister Narendra Modi during his two-day visit to Sri Lanka.

One just hopes that this is a business decision based on research after seeing sufficient number of travellers and not just political. India is cozying up to Sri Lanka after seeing Chinese overtures.

Meanwhile, Sri Lankan Airlines continues its expansion in India by adding three more routes, from July 2017. The new services are from Colombo to Coimbatore, Hyderabad and Visakhapatnam, according to Routes Online.

SpiceJet Flirts With Long-Haul Routes

Borrowing a page from the rulebook of AirAsia X, Norwegian and Scoot, SpiceJet could become the latest LCC to enter the long-haul market with widebody aircraft. SpiceJet is “working on the economics” of potential long-haul operations, Chief Financial Officer Kiran Koteshwar told Aviation Daily.

But these are early days to fully commit to the plan, according to Koteshwar. If the plan takes off, SpiceJet would target Eastern Europe and Turkey (you sure, Kiran?) rather than Western Europe, he said.

But SpiceJet does not operate any widebody aircraft. Nor does it have any on firm order. Yet, it does have options for 50 Boeing aircraft that could be exercised as 737 MAX aircraft or widebody aircraft. The 787s are the most likely choice here.

Later this month, SpiceJet will expand service to Bangladesh through a second daily Kolkata–Dhaka flight. SpiceJet uses the Dash8-Q400 planes on this route.

Leadership Lessons From Delta CEO

Ed Bastian was named CEO of US carrier Delta Air Lines a year ago. A 20-year veteran at Delta, he listseight lessons that he says can come only “from sitting at the CEO’s desk”.

We particularly liked two: Bastian’s emphasis on delegating powers to juniors after empowering them, and how it’s okay to stumble as long as you can get up and move on. We hope you guys in Indian aviation will find this useful.

An Aviation Model Under Threat  
The Gulf carriers have been the most successful of their lot in recent years. Now things don’t look so rosy.
Three reasons for this: one, the crash in oil price since 2014, which clipped their customers’ spending power and cut demand for air travel from the region.  Two, terror attacks in the region has dampened travel demand. Three, the Trump administration’s travel restrictions.

Mitsubishi Struggles
Mistubishi Aircraft Corp’s MRJ passenger jet program, which once looked promising, is now floundering. The company has suffered five delays due to poor execution.

Since timing is crucial in the airline business, Mitsubishi might miss the bus, or in this, the plane.  Customers cannot wait forever, and they may flock to rivals like Bombardier or Embraer.