Jet Airways

Kingfisher cuts international network to staunch losses, Virgin Atlantic to return to Mumbai

Amid continued turbulence in the aviation sector and considerable financial pressures, Kingfisher Airlines this week announced plans to end international services by 10-Apr-2012, with services to Dubai, Colombo, Kathmandu and Bangkok to be suspended on 25-Mar-2012, and services to its remaining four international destinations to be cancelled by 10-Apr-2012. Meanwhile, Virgin Atlantic has announced it will return to Mumbai, with daily service from London Heathrow from 28-Oct-2012.

Jet Airways to consolidate and rebrand its low-fare products, JetLite brand to disappear

Jet Airways, India’s largest carrier by market share, plans to merge its two low-fare brands under the JetKonnect brand from 25-Mar-2012, as part of a strategic rebranding and rationalisation exercise and efforts to simplify the group’s service proposition and enhance brand recall. Under the restructure, JetKonnect will be the dedicated low-fare service with a mixed fleet of Boeing and ATR aircraft operating on metro, tier II and III routes, with Jet Airways to continue offering a full service product across domestic and international markets.

The restructure was initially flagged by CAPA in Mar-2011, which was confirmed by the carrier in Jul-2011 when it revealed plans to merge the three Jet-branded units into two groupings amid an increased focus on the low-cost segment by the carrier.

Jet Airways-Jetstar interline positions carriers for growth in India, Southeast Asia and Australasia

A new interline agreement between India's Jet Airways and low-cost carrier Jetstar is a significant development for the two carriers and their respective markets. Jet Airways on a single ticket will be able to sell across Jetstar's network from Singapore, which predominantly includes points in Southeast and East Asia (where Jet Airways' network is thin) as well as Australia and New Zealand, where traffic flows to India may shift in the short/medium-term as Air India looks to commence direct flights and Virgin Australia works with new alliance partner Singapore Airlines.

The agreement further evolves Jetstar's hybrid model as Jet Airways passengers, like those of select oneworld carriers, will receive checked luggage and, on long-haul flights, meals and comfort kits on Jetstar flights as part of their ticket whereas other passengers have to pay separately. While this adds complexity and some are sceptical of LCCs moving away from a stripped-down model, blurring the lines and adding complexity is rational when yields and network enhancements outweigh the additional cost.

Heavy losses for Kingfisher Airlines, Jet Airways and SpiceJet in challenged Indian aviation sector

The challenges continue in India’s aviation sector with the country’s three-listed carriers – Kingfisher Airlines, Jet Airways and SpiceJet – posting losses in the three months ended 31-Dec-2011 (3QFY2012), traditionally the strongest quarter for Indian carriers, marking four consecutive quarters in the red.

Kingfisher Airlines, as expected, posted the heaviest loss among the listed carriers in what was a tough quarter for India’s aviation sector as a whole.

Government-owned Air India is also heavily loss-making. SpiceJet, while also feeling the pain, is better placed than some of its rivals, while unlisted IndiGo is likely to be the sole profitable carrier in the current fiscal year.

India domestic passenger growth slows to 8% in Dec-2011; 2012 growth to slow from 16.6% in 2011

India’s domestic air passenger growth slowed to 8% in Dec-2011 to less than half the pace of growth experienced in calendar 2011 and down from the 17-22% growth rates seen between Jun-2011 and Oct-2011. While passenger numbers in India’s domestic market have seen growth now for 31 consecutive months, the result for Dec-2011 marks the end of 16 consecutive months of double-digit growth. This single-digit growth in the peak month of Dec-2011 (to 5.63 million passengers) is a sign that slowing economic growth is affecting air travel and reflects impending capacity caution by some of the nation’s largest players.

India’s domestic passenger numbers increased 16.6% to 60.7 million passengers in 2011, averaging out at 5.1 million passengers per month, and up 74% from 2006 levels. The largest stand-alone carrier was IndiGo with a 19.5% market share, with IndiGo also the fastest growing carrier in 2011.

Non-stop US-India market continues to shrink with American Airlines ending Chicago-Delhi service

The number of carriers operating direct service between the US and India will decline to two – Air India and United – from 01-Mar-2012 when American Airlines ends its sole service to India, a daily service between Chicago O'Hare-New Delhi. The cancellation of the unprofitable routes comes as American rationalises its network as part of its bankruptcy filing. The carrier stated that the service is being cancelled due to the “historical financial performance of the route and its future outlook given the global economic climate and high oil prices.” The poor financial performance on the route, American's longest at 7484 miles, relates to the impact on yields of competitive pricing as American was able to consistently report high load factors on the route over the past 12 months.