India has three airline groups which are listed on the stock market and therefore regularly release information on their quarterly and annual financial and operating performance.
Jet Airways group comprising of full service carrier Jet Airways and its low cost subsidiary JetLite, (the low fare service Jet Airways Konnect’s numbers are rolled in to those of Jet Airways), fellow full service carrier Kingfisher which includes its low fare Kingfisher Red service, and low fare carrier SpiceJet.
Instead of the usual droll numerical comparisons, we thought about experimenting by presenting a comparison of operating parameters of these airlines. Vinay is working on comparing the financial numbers and should have his analysis soon.
We request and welcome your feedbackon this method. Please click on any of the slides for a larger view.
Slide 1 compares the basic numbers — totals, domestic and international, in terms of numbers of departures, the total block hours the aircraft in the fleet flew, the capacity measured in Available Seat Kilometres (ASKs), and performance measured in Revenue Passenger Kilometres (RPKs), from the first quarter of this Fiscal year 2011~2012, and the first quarter from the last fiscal i.e. 2010~2011.
|Slide 1 – Operating parameters – capacity and performance|
Slide 2 compares the domestic and international performance of Jet Airways and Kingfisher. JetLite and SpiceJet are not included as JetLite does not have international operations and SpiceJet’s international operations are extremely limited. While Jet has remained fairly steady, it is clearly observed how much the international operations of Kingfisher have improved in terms of RPKs from last fiscal to this fiscal and its resultant effects on the percentage shares.
|Slide 2 – International and domestic operations comparisons|
Slide 3 goes towards the financial angles of operating parameters. Cost and revenue per ASK (available seat kilometer) is measured. The costs of fuel which airlines have little control over and the non-fuel costs, over which they have complete control are compared. For ready reference the cost of fuel as a percentage of total cost is indicated.
Thanks to absurdly high fuel taxes, Indian carriers are forced to pay as much as 59% of their total costs towards fuel. Compare this to a global norm of 20%~30%. This norm is also reflected on the costs and revenues per ASK for domestic operations compared to international.
|Slide 3 – Financial aspects of operating parameters|
In a nation which constantly seeks value, forcing such high costs on Indian carriers only disadvantages them in their quest to grow the markets. Indian airlines are further disadvantaged as they are unable to reap efficiency advantages over much of their cost — i.e. a 10% improvement in efficiency will only produce at best a 5% impact on total cost compared to 7%~8% for a non-Indian carrier.
It is also observed that Kingfisher managed to retain its operational profits in the black despite surging fuel costs, by improving its R/ASKs (revenue per available seat kilometer), while every other airline lost money for every ASK it flew. However, the international operations are still a huge money drain on the beleaugered airline. While Kingfisher has the best premium cabin of any Indian carrier, Dr. Mallya should question whether his airline can afford these flights of fancy. Kingfisher is also let down by its astronomical debt servicing costs which eats up an astounding 16.25% of its revenues.