,
4.
"To be 100 metres away from three jets flying in formation – I defy anyone not to find that exciting," Wings over Wairarapa event manager Liz Pollock enthuses.
More than 50,000 people are expected to attend the event, at Masterton's Hood Aerodrome today, tomorrow and Sunday.
One of the biggest airshows in New Zealand and Australia, held every two years, it includes displays from the Red Checkers, air force Hercules and Iroquois helicopters, and three Czech Albatross jets among the Tiger Moths, topdresser planes, helicopters and model aircraft.
One of the largest privately owned collections of World War I planes will also be on display, and 75 trade stores will be showing their wares.
Since it first began 12 years ago, the show had continued to grow in popularity, Mrs Pollock said.
"An airshow is a serious full day of entertainment, and you don't even have to know about aeroplanes. The proximity to all the aircraft, that's what really makes it."
Last night, 90 Cessnas were flying in from across New Zealand for the 50th anniversary of the Cessna 180 aircraft.
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1. T N Ninan: Nehru's grandchildren
Vayalar Ravi, the new minister for civil aviation, declared on assuming office that his priority would be “to improve the services on Air India and to make it a profitable airline”. He allayed the fears of Air India employees’ unions about a wage freeze and re-deployment to the airline’s subsidiaries. For good measure, he added that he would look into the de-registration of two of the airline’s 14 unions.
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Mr Ravi’s predecessor, Praful Patel, had declared that he was the minister for civil aviation, not the minister for Air India. His critics would charge that he was actually the minister against Air India, given how the airline was destroyed on his watch. Indeed, Capt Gopinath of the erstwhile Deccan Aviation once charged that Mr Patel was the minister for Jet Airways — drawing a sharp riposte from the minister. Irrespective of whom you believe, there were sounds of relief from Air India when Mr Patel was moved out. The problem, though, is that the country once again seems to have a minister for Air India, more than a minister for civil aviation.
It so happens that Air India is now only the fourth-largest airline in the country. It is in danger of becoming the fifth largest, because SpiceJet too may overtake it. So the “national carrier” is no longer a critical factor in the market. In any case, reviving it is the job of the airline management. Trade union recognition, wage bills and staff deployment are all within the management’s purview — with due clearance from the airline’s board, which includes government nominees.
Besides, how exactly would a minister improve Air India’s services? Everyone knows that Air India cannot be salvaged if it does not cut costs and attract more passengers. But if the minister signals that he is on the side of the unions on key staff issues, he reduces the management’s scope of action as well as the likelihood of better service. The prospects for the airline are already dim; Mr Ravi, with all the goodwill that he has for Air India, has just made its future bleaker.
The bald fact is that, given its one-sixth share of the aviation market, Air India’s demise would not make much difference to anyone who is not its employee. Privatisation would be a softer option than closure, but many people like Mr Ravi, including the majority of politicians, would consider even that unthinkable. In any case, the employees would go on strike, and that might make potential buyers stay away. If someone did come forward, it would only be because the airline was going cheap. But a cheap sell would make privatisation even less palatable (“Family jewels being sold for a song!”). So the government (i.e. the taxpayer) will have to pick up the bill. The question is, why should we? So that Mr Ravi can be nice to the unions?
The truth is that the majority of elderly Indian politicians (among them the 73-year-old Mr Ravi) cut their milk-teeth in the heyday of Jawaharlal Nehru, who dreamt of the public sector occupying the commanding heights of the economy. Many of the rest were schooled in Indira Gandhi’s populism. The first has been dead for nearly a half-century, the second for a quarter-century. But their approaches to public policy have proved resilient to an unusual degree, even as the reality has changed (public sector Plan investment, for instance, has shrunk from over a half of the total to less than a fifth). But while the private sector now occupies the heights, the pity is that our pro-market politicians are all too often in bed with crony capitalists.
2.Flyers can now get refund on all tickets
CHENNAI: Passengers used to lose money if they booked a non-refundable ticket online and then did not fly. Not anymore. Passengers can now cancel their non-refundable ticket till two hours before departure and get a refund of taxes, fuel surcharge, passenger service fee and user development fee.
This means a passenger stands to get back Rs 1,300 to Rs 3,800, depending on the distance and the ticket price. Fuel surcharge varies from Rs 1,000 for a short-haul domestic flight to Rs 3,500 for a long-haul flight. Low-cost carriers like Indigo, SpiceJet, Jet Konnect and Go Air charge Rs 229 passenger service fee and Rs 103 service tax.
Airlines decided to make the refund after discussions at the Civil Aviation Economic Advisory Council last month. Air Passengers Association of India has been demanding this. "This is a big relief for passengers, especially for those buying round trip tickets" said passengers association president D Sudhakara Reddy. "Those taking round trip tickets were losing money even if they missed only one leg of the journey."
Travel agents said that full service airlines have reduced the cancellation fee. "Air India now charges Rs 150 for cancellation of a domestic ticket. Jet Airways charges a flat rate of Rs 750 for the lowest fare," said Prema Radhakrishan of Emerald Airways.
Reddy said a working group on regulatory framework and the Civil Aviation Economic Advisory Council were able to address the long-pending issues such as lack of transparency in fares printed on ticket, high spot fares and appointment of ombudsman.
The working group also discussed the need to address high aviation turbine fuel taxes, airport charges, aeronautical navigational service charges and other costs that would increase fare levels.
3. Top Aviation news of the week
IndiGo Airline has become the India's No. 2 airline equaling Kingfisher Airlines in December, and Air India-domestic to take the No. 3 spot, according to a report.
Top Stories
IndiGo rises to joint No. 2 with Kingfisher
IndiGo Airline has become the India's No. 2 airline equaling Kingfisher Airlines in December, and Air India-domestic to take the No. 3 spot, according to a report. The report stated that Kingfisher and IndiGo had a market share of 18.6%, the Jet-JetLite combine was ahead with 25.4%. Indigo flew 9.71 lakh passengers in December 2010 compared with Kingfisher’s 9.72 lakh, adds report.
Air India mandates ICICI to refinance loans for buying A-320 aircraft: report
National Carrier Air India Board has given a mandate to ICICI Bank to refinance Rs55bn loans to purchase 21 A-320 aircraft, according to a report.The report stated that board has approved delivery financing of three B-777-300ER aircraft and one GE-90 spare engines with US Exim support worth US$475-million
The board also gave its nod to Air India to dispose off four A 310 passenger aircraft along with the simulator, adds report.There are reports that the most important decision of Pawan Arora as CEO of Air India Express in the company, did not come up for discussion.
In Focus Stories
Indian airlines break 5mn barrier in December
Indian airlines carried more than 50 lakh domestic passengers in December, setting a new landmark in the aviation industry, the latest data released by the Directorate General of Civil Aviation (DGCA) showed.Airlines carried 52.13 lakh passengers in December, up from 44.87 lakh passengers carried in the same period of the previous year, reporting a growth of almost 16%.
The total domestic passengers carried by the Scheduled Airlines of India in November was 48.75 lakhs as against 46.17 lakhs in October 2010. During January-December 2010, domestic airlines carried 520.21 lakh passengers compared to 438.40 lakhs in 2009.
The total domestic passengers carried by the Scheduled Airlines in the fourth quarter of 2010 (October to December) were 147.05 lakhs.The total domestic passengers carried by the Scheduled Airlines in the third quarter of 2010 (July to September) were 119.84 lakhs.
The total domestic passengers carried by the Scheduled Airlines in the second quarter of 2010 (April to June 2010) were 134.78 lakhs.The total domestic passengers carried by the Scheduled Airlines in the first quarter of 2010 (January to March 2010) were 118.54 lakhs.
Low-cost carrier IndiGo became the third largest domestic passenger airline in the country for the fourth quarter of 2010.IndiGo carried 25.89 lakh passengers, followed by Air India's domestic arm at 25.42 lakh passengers. They were followed by Spice Jet (20.01 lakh), Jet Lite (10.85 lakh) and Go Air (9.79 lakh).
Kingfisher Airlines carried 27.81 lakh passengers, closely followed by Jet Airways with 27.28 lakh passengers
Domestic News
Air India plans to lease 40 Airbus, Bombardier Planes: report
Air India Ltd has sought bids to lease as many as 40 Airbus SAS and Bombardier Inc. aircraft, according to a report.
The report stated that the airline wants to lease 10 Airbus A320s, 10 A330s and as many as 20 CRJ-700 planes.
Air India has a fleet of 135 planes and is expecting 30 more aircraft deliveries in the next few years, adds report.
Indian airlines break 5mn barrier in December
Kingfisher flight makes emergency landing in Bangalore: report
IndiGo to operate international flights from August: report
Jet Airways registers 8.5% growth in domestic operations in December 2010
Security scare for Kingfisher Mumbai-Bhubaneshwar flight
Pratt & Whitney, Air India showcases cutting edge Eco Power Engine Wash Technology
International News
Meggitt buys Danaher unit for US$685mn
Meggitt Plc has agreed to buy Pacific Scientific Aerospace from Danaher Corp. for US$685mn to expand its range of fire-fighting products. According to reports, the purchase of PSA, which also makes generators, electric motors and other safety gear for aircraft, will be funded by selling as many as 69.8 mn shares, equal to about 9.09% of the company, to new and current institutional investors.
Adding the Danaher unit will allow Meggitt to bundle together more products for aircraft including Boeing’s 787 Dreamliner and the Airbus A380 superjumbo as production accelerates. Meggitt paid 8.7 times earnings before interest, tax, depreciation and amortization and it estimated savings of about $5 million in 2011, rising to about $18 million by 2014, said a financial daily.
Boeing 787s resume test Flights for Certification: report
Boeing Co has reportedly said that its delayed 787 aircraft had resumed the test flights required by government regulators before it can make its first customer delivery. The report stated that Boeing restarted 787 test flights a month ago after finding a "fix" for the problem that led to an onboard fire during a flight on Nov. 9. Another two planes would restart certification flights in a week or so, adds report.
Embraer closes out 2010 with 246 jets delivered
Fly thru with AirAsia
British Airways lists Top Five Indian destinations for 2011
Air New Zealand plans to acquire up to 14.99% of Virgin Blue .
4. InterGlobe General Aviation announces delivery to India of 2000th King Air C90
Entering into the market more than 45 years ago, the C90 has long been considered as the entry-level business and personal aircraft of choice.
InterGlobe General Aviation Pvt. Limited, a subsidiary of InterGlobe Enterprises and the exclusive representative for Hawker Beechcraft Corporation, the world’s leading manufacturer of business and special mission aircraft, has announced the delivery of the 2000th King Air C90 to an Indian customer based in Delhi.
Entering into the market more than 45 years ago, the C90 has long been considered as the entry-level business and personal aircraft of choice. The King Air C90 Series aircraft is defined by all aircraft with LJ serial numbers, including the 90, A90, B90 and all C90 models. The milestone aircraft, a King Air C90GTx, represents the latest advancement in this most successful turbine aircraft lineup in general aviation today.
The C90GTx offers higher fuel efficiency, greater performance and efficiency and provides absolute consumer delight. The upgraded aircraft includes an in-flight accessible, heated and pressurized baggage storage area along with a private lavatory as standard. It also boasts a cabin 50 percent larger than some very light jets, which seats up to six passengers in its famed squared-oval design, allowing greater passenger comfort.
Mr. Nigel Harwood, President and CEO, InterGlobe General Aviation said, “We are delighted to deliver the 2000th aircraft here to India and the very first advanced C90GTx in the country. This series of aircraft has been an immensely popular choice in India for many years and we are confident of its future success.”
He further added, “The aircraft opportunity in India is very large. The booming markets and evolving lifestyle aspirations has resulted in a surge in demand for aircraft in the last few years. InterGlobe General Aviation is committed to providing solutions to its customers, addressing their lifestyle and business needs seamlessly.”
http://indianairlinenews.blogspot.com
1 . IndiGo becomes third largest domestic airline
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New Delhi, Jan 18 (IANS) Low-cost carrier (LCC) IndiGo became the third largest domestic passenger airline in the country for the fourth quarter of 2010.
The sector was led by full-fledged carriers Kingfisher and Jet.
Aviation ministry figures showed that in the last calendar year quarter, IndiGo carried 25.89 lakh (2.589 million) passengers, followed by Air India's domestic arm (formerly Indian Airlines) at 25.42 lakh passengers and LCCs like Spice Jet (20.01 lakh), Jet Lite (10.85 lakh) and Go Air (9.79 lakh), a ministry statement said Tuesday.
The market leader in the last calender year quarter Kingfisher carried 27.81 lakh passengers, closely followed by Jet Airways with 27.28 lakh passengers. The entire domestic airline industry carried 14.70 million passengers in the fourth quarter of the last calender year.
'Total domestic passengers carried by the scheduled airlines of India in the fourth quarter of 2010 - October to December, 2010 - was 147.05 lakh,' the ministry said.
The figures also show an upbeat domestic passenger trend with the total domestic passengers carried in the fourth quarter growing by 22.70 percent over the third quarter of July to September, 2010, which stood at 119.84 lakh passengers.
Market share for the last quarter was led by Kingfisher Airlines at 18.9 percent, followed by Jet Airways at 18.6 percent and IndiGo at 17.6 percent.
2.IC-814 hijack: Trio acquitted of looting bank
A sessions court on Wednesday acquitted three men charged with looting a bank and using a part of the loot to fund the December 1999 hijack of Indian Airlines flight IC-814.
The court acquitted Abdul Latif, Bhopalman Yusuf Khan and Mushtaq Ahmed who had been arrested for looting Rs 7 lakh from the Maharashtra State Co-operative Bank in suburban Borivali on October 6, 1999. In 2008, Latif and Khan were sentenced to life imprisonment for their role in the hijack by a CBI court in New Delhi and will hence stay in jail. But Ahmed will walk free based on the acquittal as he was not charged in the CBI’s investigation.
The court pointed out that it took over a year for the prosecution to seek sanction from the Collector as required under the Arms Act. The charges under the Indian Explosive Substances Act, 1908, also could not be proved as a key panch witness failed to identify the location from where AK-56 rifles, hand grenades and rocket launchers were recovered.
3.3.Indian Airlines Show Vitality
NEW DELHI—Just two years ago, India's airline industry was a mess: Its biggest carriers were strapped for cash, crushed by high fuel prices and running empty planes. Now, an historic IndiGo order for 180 Airbus A320 jetliners is a sign that the industry is taking off again.
IndiGo, part of travel conglomerate InterGlobe Enterprises Ltd. and India's largest low-fare carrier, unveiled the order Wednesday with a list price of $15.6 billion. Airbus says the deal is the commercial aviation industry's largest jet order to date in terms of number of planes and one of the biggest by value. It includes 150 A320 NEO planes, an upgraded, fuel-saving variant of the A320 aircraft that competes with Boeing Co.'s 737 family of jets.
"This order is not only a reflection of India's appetite but it is also a reflection of India's growth story," said Kapil Kaul, chief executive for the Indian subcontinent at the Centre for Asia Pacific Aviation, a Sydney-based consultancy. "The order shows IndiGo's long-term commitment to the Indian market and confidence in their business plans."
Aditya Ghosh, IndiGo's president, said the planes were ordered because the company is bullish regarding the Indian market's potential, citing estimates of overall air-traffic growth of about 15% this year compared with 2010. He added that the order will allow IndiGo to offer lower fares and more destinations to travelers. The airline is exploring various financing options for the new orders, which are to be delivered starting in 2016.
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IndiGo is ordering 180 Airbus A320 aircraft with a list price of $15.6 billion. Above, an IndiGo A320 jet lands at New Delhi's international airport.
The order comes at a time when other Indian carriers, such as Kingfisher Airlines Ltd., Jet Airways (India) Ltd., SpiceJet Ltd. and even beleaguered state-run Air India Ltd., are seeing some upswing in fortunes as Indian travelers, after crimping during the economic slowdown of the past few years, are flying in large numbers again.
SpiceJet, another low-cost domestic airline, recently placed an order for 30 Boeing jets and 30 turboprop aircraft from Bombardier Inc.
Domestic air travel from January to November 2010 totaled 46.8 million passengers, up 19% from a year earlier and a sharper rise than in 2009, which followed a 10% drop in traffic in 2008.
Some carriers, such as Kingfisher, still have high levels of debt. But reductions in fuel taxes by some state governments and incentives from the national government also have helped. Jet, for instance, posted a net profit of 124 million rupees ($2.8 million) for the July-September period, from a year-earlier loss of 4.07 billion rupees. Investors have shown their confidence, driving up Jet Airways' shares 37% and SpiceJet's 39% in 2010. Kingfisher's increased 3.3%.
As the industry gathers speed, it is likely to prove a lucrative market for airline makers. Boeing said in its 2010 market outlook that it expects India will need 1,150 commercial jets at a price of as much as $130 billion over the next 20 years—a total that represents more than 4% of the company's world-wide commercial-airplanes forecast. Airbus, a unit of European Aeronautic Defence & Space Co., expects demand for 1,032 commercial aircraft in India in the next two decades.
"Continued success will depend on a judicious balance of supply and demand in the market," said Boeing India President Dinesh Keskar. "Two years ago, there were too many seats chasing too few passengers. Now, fares are at a level where airlines can make a profit."
Indian carriers can add roughly 40 airliners per year for the next five years without flooding the market again, assuming fuel prices don't jump, Mr. Keskar said.
Airbus has aggressively pursued the Indian market, and says that 70% of new airliners currently being delivered to Indian carriers are its planes. "Airbus has been working very closely with Indian customers for a long time," said Kiran Rao, Airbus India's president.
China starts trading the yuan in the U.S., and a low-cost Indian carrier orders 180 jetliners from Airbus in a $15.6 billion deal. WSJ's Andrew LaVallee speaks to Heard on the Street Asia Editor Mohammed Hadi about these stories.
Mr. Rao said the A320 NEO aircraft leads to 15% savings in fuel costs, benefiting airlines and the environment.
India's giant population and fast-growing economy—gross domestic product is estimated to expand about 8.8% in the year ending March 31—offer rosy prospects for domestic and international airlines seeking to expand here. The country's domestic air traffic is projected to grow to 160 million to 180 million passengers a year by 2020, while international traffic is expected to exceed 80 million passengers. Domestic passengers totaled 45 million for the year ended in March, while international traffic totaled 12 million passengers during the same period.
IndiGo, founded in August 2006, has been something of an outlier in Indian aviation circles. Even as its larger rivals were suffering during the past few years, it managed to maintain its profitability.
Founded by Rahul Bhatia, managing director of InterGlobe, and Rakesh Gangwal, former president of US Airways, IndiGo has dominated low-cost air travel and sought to distinguish itself from others with a high on-time performance record, cost efficiency and a marketing campaign that tries to put some pizzazz in air travel.
The efforts helped IndiGo fill 82.7% of its seats from April to November, ranking third by passengers carried in India, behind Jet Airways and Kingfisher. IndiGo now ranks third in India based on on-time performance as well, also trailing Jet and Kingfisher.
Wednesday's order is a follow-up to the 100 Airbus A320 planes that IndiGo ordered in 2005. Airbus has delivered 34 of those planes, according to the IndiGo website. Airbus's Mr. Rao said the remaining 66 planes from the first order will be delivered to IndiGo by 2014 or in early 2015
FRIDAY, JANUARY 21, 2011
THURSDAY, JANUARY 20, 2011
http://www.hindustantimes.com/Up-up-and-away/Article1-650886.aspx
1 .Up, up and away :
A decade ago, they were just another bunch of travel agents in a sea of similar commission brokers. But Rahul Bhatia apparently knew how to make sense of the decades that his family-run business, InterGlobe Enterprises had put in, doing the stuff and turning it into something bigger. Barely
five years after it started off as a humble budget airline that people hardly noticed, Gurgaon-based IndiGo Airlines has emerged as a big challenger in India’s aviation industry, taking on deep-pocketed industry leaders Jet Airways and Kingfisher Airlines.
Its strategy to focus on some routes and maximise the impact of its limited fleet seems to have laid the ground for an ambitious takeoff. Earlier this week, IndiGo moved European stock markets when it announced the biggest commercial aviation deal in history.
Topping up an earlier plan to buy 100 planes with another 180 in the decade from 2015, IndiGo unveiled a shopping bag for $15.6 billion (around R 70,000 crore) to buy Airbus aircraft that would power its ambition to become an international airline.
Much remains to be seen in an industry which has seen many ups and downs, but one thing that could give Bhatia, 48 – an electrical engineer from the University of Ontario, Canada – an edge, is the intimate knowledge of dealing with passengers day in and day out, unlike aviation entrepreneurs who came from unrelated backgrounds.
His father Kapil Bhatia was an early entrant in the travel industry. He began his career as a sales manager and in 1964 founded Delhi Express Travels, which gradually developed into a group of travel-related organisations.
IndiGo’s growth story has many admirers. Kapil Kaul, South Asia chief executive officer of Centre for Asia Pacific Aviation’s rates the IndiGo success story higher than that of Jet Airways. “The competition faced by Jet wasn’t as high as IndiGo, which faced a more competitive environment when it started operations. To make a profit of R 550 crore last year when others were struggling is huge. They will make massive profits this fiscal,” Kaul said.
Headquartered in Gurgaon, InterGlobe has grown from a single enterprise to a formidable travel corporation and has a network of 52 offices across 23 cities in India and abroad and has a significant presence in the fields of aviation management, travel-related services, travel technology, travel distribution services and hotel development and management services.
Airlines have come and gone ever since the skies were opened up nearly two decades ago to private carriers. While East West Airlines and ModiLuft had glamourous starts that gave way to rickety landings, Jet seemed to be only one going steadily forward until Kingfisher arrived.
As it happened, the budget airline that fired the country’s imagination, Air Deccan had bitten off more than it could chew and ended up as an appendage of Bangalore rival Kingfisher, while Jet gobbled up Air Sahara.
IndiGo, the country’s largest low-cost carrier, in contrast, has behaved more like the tortoise in the proverbial race with the hare. From day one, it has behaved as nothing but a no-frills airline, and has focused more on walking than talking its way through the industry. The efforts seemed to make a big mark last month when it edged past the decades-long state monopoly, Air India, to the third spot with a market share of 17.3% in the domestic industry. Jet has a domestic market-share of 26.2 per cent and Kingfisher 19.1 per cent, while Air India stands at 17.1 per cent.
When most airlines were in the red, Indigo announced a R 550 crore profit in 2009-10 on a turnover of R 2,664 crore. With a fleet of 34 Airbus A320 aircraft, it offers 221 daily flights connecting 24 destinations. It has an all-Airbus fleet comprising the 180-seater Airbus A320-200.
Secrets of success
Industry veterans who’ve seen Bhatia’s dizzy rise say he has had a concrete plan from the very beginning. Bhatia, the Group Managing Director for InterGlobe, who has had a two-year stint with IBM, got the Kolkata-born, former CEO of US Airways, Rakesh Gangwal, as a partner. An engineer from IIT Kanpur, Gangwal had previously worked with Air France. “They had a well-structured business plan and got the right team. The first CEO, Bruce Ashby built the right systems, processes and competitive cost structures. Gangwal has vast experience of global aircraft financing acquisition while Bhatia has over 30-years experience of the sector. The ‘game-changing order’ of 100 aircraft in 2005 gave a tremendous leverage to the company in pricing terms,” said Kaul. “We’ve been concentrating on what the customer wants: on-time departures, clean aircraft and good and clean flying experience. We plan to stick to these and not try anything funny,” Aditya Ghosh, President, IndiGo told HT.
The airline has an impressive on-time performance record (80.6% for November 2010).
Indigo and its promoters are known to keep a very low profile – again something that makes them very different from their high-profile media savvy competitors – with marginal spending on advertising and marketing. They have instead relied on word of mouth publicity to build a dedicated client base.
“He doesn’t open up easily,” says Rajji Rai, Bhatia’s senior at Modern School, Barakhamba Road.
However, the airline is known to make news with its smart business moves. In 2005, at the Paris air show, the yet-to-be-launched airline placed a $6 billion (R 26,000 crore) order for 100 Airbus planes laying the ground for its grand entry into the aviation sector. Of these, 34 are in service.
“Rahul can identify the best talent in the market and convince people,” said Rai, who is President of the Travel Agents Association of India.
“The office of Delhi Express Travels was right next mine in Connaught Place. From there, the father-son duo launched InterGlobe and in 20 years, Rahul has completely transformed the company. In travel agency business there have been two crazy success stories – InterGlobe and Naresh Goyal of Jet Airways,” he said.
Many believe that behind the success story is a network built over the years. “Indigo managed to get the prestigious hanger number 1 at the Delhi airport, which had for long been with the national carrier. It shows the tremendous clout of the airline,” said Captain Mohan Ranganathan, a Chennai-based aviation expert.
IndiGo completes five years of local operations in August, a key requirement for local airlines to fly overseas. It has already submitted a proposal to the aviation ministry and shortlisted 15 international sectors including Dubai, Bangkok, Singapore, Kathmandu and Jeddah. Kaul believes IndiGo could be one of the leading low-cost carriers of South Asia. “Over the next 10-15 years, they will have 245 new aircraft, which indicates large domestic expansion plans, robust business plans for international operations to South Asia, South-East Asia and West Asia,” said Kaul. “The range of the aircraft is perfect for operations in India, Middle East and other places,” added Ghosh.
With the beginning of international operations, the budget carrier would take on rivals Jet Airways (fleet size 97 aircraft), Kingfisher (66) and Air India, which has over hundred aircraft in its fleet.
What’s the big deal?
IndiGo’s 180 aircraft deal with Airbus has shifted the world's focus on India. “The historic order is a very strong comment on India's overall economic growth, the growth potential of country’s aviation sector and the confidence of IndiGo’s business plan, its ability to execute such a large order and to raise funds for it,” Kaul said.
Ghosh said the deal is a “symbol” of their rising confidence. "This order for industry leading fuel efficient aircraft will allow IndiGo to continue to offer low fares,” Bhatia had said after signing the deal.
How the airline funds the deal would be keenly watched. Sources said it was planning an initial public offer of shares to fund the purchase. “The airline has been profitable for the last two years and is expected to make massive profits this fiscal. In this three-year period, including this fiscal, they should have a cash reserve of $300 million (R 1,300 crore). The economic crisis taught companies to have cash on their books and IndiGo would like to maintain the cash reserve to deal with any unforeseen incident,” said Kaul. “As far as funding for this deal is concerned they still have 4-5 years.
Among the instruments available before them is to raise money through an IPO, which looks like a possibility. They can also go for a private equity investor,” he said.
“We have various financial options available and anyway six years is a long time,” Ghosh said.But some advise the airline to be cautious. “How long can you sustain operations at such high rates is the question. Another crisis in the financial market or a rise in oil prices and the whole thing will fall flat. It will be very difficult for the airline to sustain this kind of growth it has seen in the last few years. The Indian market can, at the most, have 3-4 big players,” Ranganathan said.
Sceptics have their fingers crossed but in the game of big tycoons, Bhatia — who is a keen golfer — has fought a handicap to emerge like a true professional. Last year, Bhatia was chairman of the Delhi Golf Club. If, like a good golfer, he manages to understand the terrain and weather conditions, his airline may keep its place in the list of elite carriers.
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