Nine months on, SpiceJet loves its Bombardier Q400 aircraft

Just a little over nine months ago, Indian low fare carrier SpiceJet took delivery of its first Bombardier Q400 turbo-prop on August 26th last year, and commenced commercial flights with the aircraft on September 21st.

In a recent internal publication, aircraft manufacturer Bombardier, claimed a 99.8% despatch reliability for the Q400 at SpiceJet, an enviable number considering the high and hot conditions the aircraft operates in.
Bombardier and SpiceJet officials at Toronto see off the carrier's first Q400, VT-SUA, on its ferry flight to India
In a follow-up, we asked the airline to comment about their experience with the Q400. The airline was unwilling to go on the record, citing commercial confidentiality, but we did obtain some off the record answers, from both administrators and pilots at the airline, who are, on the whole, happy with the aircraft.

Q. How satisfied is SpiceJet with the Q400? Are there any open issues which SpiceJet feels Bombardier must solve on priority?
A. The airline is pretty much satisfied. There are no open issues from the commercial side, but one or two very small issues on the technical side which are being resolved. Everyone from pilots to administrators to commercial staff, raved about the aircraft saying Its a great aircraft and suited for Indian conditions

Q. What were the top reasons for SpiceJet to select the Q400?
A. Firstly why did SpiceJet even choose a turbo-prop? It was to gain increased access to Tier II and Tier III markets which have airports with short runways not capable of handling jets, and to benefit from lower cost of operations to dictate lower fares. [Editor's note: Aircraft less than 80 seats are given fuel at only 4% tax and very low, almost free, landing and parking fees at airports.]

Further more the Q400 is significantly faster than its competitor the ATR-72-500 which allows us to operate more flights each day.

The 78 seats also allows for economies of scale while the noise and vibration reduction features of the aircraft provides our passengers more comfort, and the aircraft is a rugged machine which has proven reliability.

With great pride, a SpiceJet Q400 captain told us, how he takes off from Bangalore, ten minutes after a competitor's flight, operated by an ATR72, out-climbs and over-takes the ATR, and lands at Hyderabad more than ten minutes ahead of his competitor.

Q. SpiceJet has committed for 15 Q400s and has another 15 on option. How likely is SpiceJet (a) to exercise the 15 options (b) order / take options on additional Q400s?
A. SpiceJet has seven Q400s in its fleet, and will be adding an aircraft a month. We cannot predict beyond the ordered 15 aircraft at this point. We will see the success of these markets and new initiatives first, before committing any further. As with any other airline options were placed to secure slots and pricing.

Q. What does SpiceJet see as the market potential for turbo-prop aircraft?
We feel there is a market out there for about 40~50 aircraft in the 60~80 seater segment.

Q. Does the Q400 benefit from the lower airport charges scheme at Indian airports? Can SpiceJet share some financial comparisons on highlighting these benefits on the Q400 vs. the Boeing 737.
For sure it does, but we cannot disclose these financials which are company confidential.

Q. Bombardier is discussing a bigger Q400 called the Q400X. What are SpiceJet's thoughts on this? 
A. The Indian market is for the 60~80 seater aircraft. The Q400X is 100+. This aircraft may also require longer runways, which are not available in most smaller cities in India, [short runways is why SpiceJet chose the Q400 for in the first place]. We don't see a demand for this aircraft in our near to medium term plans.

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Introducing the BAASA Index - The World's First Airline Stock Index

As the post title indicates, we'd like to introduce the Bangalore Aviation Airline Stock Average (BAASA), by our count, the first officially defined Airline Stock Index. The goal of this creation is to provide a measure of global airline financial performance, and investor sentiment about the global airline industry.

In creating the index, we first picked a representative sample of 30 airlines from around the world, which are shown below broken down by region.

Asia-Pacific: Jet Airways, Korean Air, Singapore Airlines, China Southern, ANA, Korean Air, AirAsia, Qantas, Cathay Pacific

North America: United, Delta, Southwest, US Airways, jetBlue, WestJet, Air Canada, Allegiant

Europe: International Airlines Group (British Airways/Iberia), Lufthansa, Air France-KLM, Ryanair, EasyJet, Turkish Airlines, AirBerlin, Norwegian Air Shuttle

Middle East: Air Arabia

Africa: Kenya Airways

Latin America: Copa Airlines, LAN Airlines (will be replaced with LATAM once the merger is completed), Aeromexico.

The breakdown of carriers by region were taken from IATA's breakdown of global ASKs (i.e if 30% of global ASKs occur in Asia, then Asia would be represented by 9 airlines in the index)

The BAASA Index will have a starting value of 3,000 points - the stock price of each airline on May 28th is initialized to 100 points (to normalize the different values of different currencies. Each week, we will review the change in the stock price, and then recalculate the new BAASA point value (i.e if the stock price increases 12% over a week, the new value of that airline's stock in the BAASA index becomes 112).

That being said, here are the initial values used for the BAASA index.


Asia-Pacific 5/28/2012 Lookup
Jet Airways 317.55 JET.NS
Singapore Airlines 7.99 SINGF.PK
China Southern 21.09 ZNH.N
ANA 208 9202.T
Korean Air 45,300 003490.KS
AirAsia 3.54 AIRA.KL
Qantas 1.5 QAN.AX
Cathay Pacific 11.98 0293.HK
North America

United 23.57 UAL
Delta 11.37 DAL
Southwest 8.76 LUV
US Airways 12.3 LCC
jetBlue 4.75 JBLU
WestJet 15.47 WJA.TO
Air Canada 0.86 ACA.TO
Allegiant 64.04 ALGT
Europe

IAG(British Airways/Iberia) 137.1 IAG.L 
Lufthansa Group 10.53 DLAKF.PK
Air France- KLM 3.48 AIRF.PA
Ryanair  30.62 RYAAY.O
EasyJet 495 EZJ.L
Turkish Airlines 2.56 THYAO.IS
AirBerlin 1.8 AB1.DE
Norwegian Air Shuttle 92 NWC.OL
Middle East

Air Arabia 0.583 AIRARABI.DFM
Africa

Kenya Airways 15 KQNA.NR
Latin America

Copa Airlines 83.85 CPA
LAN Airlines 23.97 LFL
Aeromexico 20.42 AEROMEX.MX
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Income tax department re-freezes Kingfisher Airline's bank accounts

The income tax department has frozen two of Kingfisher Airline's bank accounts for alleged non-payment of dues.

However the airline has clarified in a statement
The IT department attached two of our bank accounts on May 24th which was not in accordance with the speaking order of the Hon'ble IT Appelate tribunal during the hearing.

Subsequently, in a written order of May 25th the tribunal set aside the entire demand made by the IT assessing officer. As such there are no tax dues to be currently paid and the attachment orders on two bank accounts have to be lifted.
So the financially strapped carrier will face a few days of trouble till the income tax department will send a release instruction to the banks, something it is loathe to do.

The airline had an income tax outstanding of about Rs. 370 Crore which is essentially the taxes it withheld from employee salaries as TDS (tax deduction at source), but has not remitted to the department.

In March this year, Kingfisher had withdrawn from the international airline body IATA and took back its deposits of around $8 million. It used these funds to deposit Rs. 44 Crore (approx. $8.8 million at March exchange rates) with the income tax department which caused the Income Tax Tribunal to un-freeze its bank accounts. The airline had also promised to make weekly payment in instalments of Rs. 9 crore.

The airline is now operating on a highly truncated schedule using only 16 aircraft and has dropped from being the second largest domestic carrier in India to the smallest.

The airline also has estimated outstandings of Rs. 40 Crore payable to the service tax department.

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Photo: Malaysia Airlines takes delivery of its first Airbus A380 super-jumbo

Airbus has delivered to national carrier Malaysia Airlines (MAS) the first of its ordered six Airbus A380 superjumbos. Malaysia Airlines becomes the eighth A380 carrier.


The MAS A380 has 494 seats in a three class configuration with 8 seats in first class, 66 in business, and 420 in economy. The first class is in a 1-2-1 configuration and boasts the widest first class seats in the world. Business class is in a 2-2-2 configuration while economy is 3-4-3.

Malaysia Airlines will deploy the A380 on its Kuala Lumpur London Heathrow route from July 2 in thrice a week flight. The service will become a daily once the carrier receives its second A380 in August.

The carrier is due to join the oneworld alliance at the end of this year.
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Air Canada in talks to lease 5 Air India Boeing 777-200LRs... Huh?

Late last week, reports emerged that beleaguered Indian national carrier Air India, which is in the midst of a crippling strike by its international pilots union, was in discussions with Canadian airline Air Canada to lease out 5 of Air India's Boeing 777-200LRs to the Toronto based airline. The news broke as Air India continues to operate less than half of its international network due to the strike by the IPG, but it is actually just the logical extension of continuous Air India efforts since 2009 to lease out 5 777s as well as 2 Boeing 747-400s.

 In the previous instances, it was reported that Air India was looking to lease out these aircraft for 8-10 years. However, given their inability to place these aircraft with any carrier for 3 years, perhaps Air India has realized that it must be more flexible. As Air India continues to take delivery of the all-new Boeing 787s, the necessity for the 777-200LR in Air India's fleet, which has almost been miscast by Air India as a regional widebody to and from Asia, all but evaporates. Air India currently operates 8 777-200LRs, most of which are grounded due to the strike.

Air Canada on the other hand, operates a fleet of 6 777-200LRs, primarily on long range routes between Canada and Asia. The carrier recently moved to convert 5 options for the larger Boeing 777-300ER into firm orders for delivery in 2013 and 2014, ahead of the first delivery of its own Boeing 787s. As Air Canada continues to hemorrhage money on its short haul network in the face of heavy competition from more nimble domestic rivals like low cost carrier WestJet, it appears to be doubling down on its more profitable long haul network; especially important given that Air Canada is having labor struggles of its own.

Even with this rationale, it's hard to see the merits of the deal for Air Canada. The Boeing 777-200LR is a hard aircraft to make money with, though Delta and Emirates appear to have made a go of it. Moreover, while they do need additional international capacity, Air India's 777-200LR might not be the best choice. There are a number of differences between Air India's 777-200LR and Air Canada's that will increase the costs of such a long term acquisition. Firstly, Air India's 777-200LRs are equipped with the General Electric GE-115B engines, which deliver 115,540 pounds of thrust whereas Air Canada's 777-200LRs are equipped with the GE-110B engines that deliver 110,100 pounds of thrust. While this difference might seem irrelevant, having two different engines on the same aircraft increases operational complexity (due to slight differences in operating performance) and makes scheduling more complex. It also increases maintenance costs as an airline's MRO workers must now be trained to handle both types of engines, or separate workers brought in to handle each. These costs are not insignificant; American Airlines famously sold off many of TWA's 757s due to engine incompatibility earlier this decade. Air Canada would also be forced to retrofit Air India's 777-200LRS, which are configured in a 238 seat (8F/35J/195Y), 3-class configuration, into their own 2-class 270 seat (42J/228Y)configuration. The cost of retrofitting 5 aircraft would likely run into the millions of dollars, increasing the true cost of acquisition.

So it makes little sense to me that Air Canada would be actively seeking to lease Air India's 777-200LRs, unless Air India was practically giving these birds away with super-low lease rates. And if that is in fact the case, then even leasing out these 777s would do little good for Air India's abysmal finances.
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Video: Virgin Atlantic's first Boeing 747 with new cabin re-fit G-VROM

Virgin Atlantic shows off the first of its "face-lifted" Boeing 747-400's G-VROM named 'Barbarella'. The aircraft features the new Virgin cabin interiors and new in-flight entertainment (IFE) system.

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Photos: Scoot Boeing 777 livery revealed

Singapore Airline's low cost carrier Scoot revealed its livery painted on its Boeing 777-200 registered 9V-OTA. What are your thoughts? Share your views via a comment.

For more images visit Scoot's Facebook page.




Images courtesy Scoot.

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