To an outsider, it may seem as if the once proud Indian national carrier – Air India – is on the brink of bankruptcy. And there now is a real issue about the airline’s future. Will Air India go bankrupt? What made it to fall to this situation? And how could it be saved from this situation? We’re going to find out.

The airline’s present issues came to light when a report by the Indian Auditor General was released criticising then Minister Praful Patel’s decision to buy 68 aircraft from Boeing. ”The entire acquisition was to be funded through debt ..  [and was a] recipe for disaster” said the report, adding that the assumption that an increase in capacity would lead to a rise in market share was “unduly optimistic”.

 What really caused the problems?

While the report mainly centers around the former minister’s decision to renew the airlines’ ( Air India and Indian merged shortly after ) fleet, this is far from the root of the airline’s problems. While the order might have become too large in Air India’s present situation, it was the poor execution of the fleet renewal and the airline’s overall strategy which has made it so. In fact, in my opinion there was nothing wrong with the order. Air India’s fleet was ageing and it was falling behind the competitors on service levels. What should Air India have ( AI ) done was to create a long-term strategy for its network and to assign the new deliveries accordingly. If it had any difficulty in payments, it could have deffered the deliveries. Unfortunately, Air India hardly seemed to have a strategy. This lack of strategy was a key issue that I pointed to, when I wrote about what could eventually happen to AI, and how to save it, back in 2009.

Instead of implementing the new capacity under a proper plan, AI seemed to simply assign the aircraft without any strategy in place. This inefficient use of capacity was evident by the moves such as using narrow-bodied Airbus A320 series aircraft on major trunk routes out of Delhi to Bangkok and Singapore. And the airline opted to the 1960s strategy of creating a hub in Europe in order to fly to the US. This led to a dilution of revenue and dragged down the long haul fleet’s utilization.

A merger went wrong

The decision to merge AI and Indian Airlines, in fact was a necessary step at the time. The two airlines had conflicting market interests and there was a host of cost savings that could be achieved by the synergies of a merger. But it was never executed properly. The fact that the merger took four years to be comleted explains it well.

The lack of strategy and inefficiency

In an ideal world, the two airlines should have carefully constructed a plan and defined the future strategy for the now merged single airline. Without wasting time, they should have taken a thorough review on the performance of its routes and taken steps to curtail the losses and improve the performance. They should have aligned their fleets and the crew resources, and utilized them far better. They should have deferred the new aircraft deliveries when they felt that the demand was decreasing. They should have expanded Air India Express’ ( the low-cost arm of AI ) operations and used it to fight the competition.  And they should have launched a proper marketing campaign aimed at uplifting the airline’s image. Instead, Air India worked at the snail pace.

And as a result, AI today is saddled with a huge debt and a considerably overstaffed workforce. But it is still not too late to solve the issues, and make Air India a proud national airline again. Here’s how.

The solution

While partly privatizing the airline will be a great move forward, it is unlikely that the Government of India will agree to a such measure anytime soon. Hence it is of utmost importance that the airline be properly restructured.

Air India, over the years, has always been lead by an industry outsider with little to no industry knowledge. The airline industry is unique in the sense that it has very little profit margins compared to other industries and a management with a sound knowledge on how the industry performs is essential – specially when you’re trying to bring back a debt-ridden airline into stability. So that it is very important right now that AI appoints a management team with very good industry knowledge and the ability to steer the airline forward. While there are many suitable executives from overseas, it is also likely that there are more than enough talented Indian nationals if the government prefers to have a local management team.

 The network

Rationalizing AI’s network is critically important at this stage. The following measures can be suggested to improve the network’s performance.

Long-haul network

• Cut loss making routes (as obvious!)
• Define the long-haul network’s hub strategy to exclusively focus on Mumbai and Delhi
• Instead of routing the majority of flights via both Delhi and Mumbai, create a shuttle between Delhi and Mumbai airports
• Use smaller sized aircraft ( this is where the 787 would help) to operate frequent nonstop services out of both Delhi and Mumbai to key business destinations
• Cut services to U.S till the rest of the network’s performance improves
• Avoid any kind of scissor-hub activity at any cost, and make the flights to U.S destinations go nonstop

Medium Haul network

• Increase the flying activity to key regional destinations
• Focus on the trunk routes by using larger capacity aircraft
• Create focus cities with two to three based narrow-body aircraft to operate services to major regional points, this will enable AI to counter the competitors better
• Increase Air India Express’ flying on key routes with intensified competition
• Expand services into Southeast Asia and try to attract as many new tourism opportunities as possible
• Focus on improving connecting traffic

Short haul and domestic network

• Rationalize the ex- Indian Airlines’ network and cut services on routes where operating is no longer sustainable profitably
• Create shuttle schedules between major cities
• Create connections into Delhi and Mumbai’s hub flows
• Introduce Air India Express services on routes that are presently loss making for AI

( Expect a more detailed piece on how AI’s network should be shaped, soon)

Fleet

The airline should aim to increase the utilization of its fleet. The surplus aircraft after the route rationalization should be leased out or returned to the lessor, depending on what turns out to be the least costly.

The long-term fleet of Air India should be rationalized as below

• Airbus A320 series
• Boeing 787-8
• Boeing 777 series

Other areas

AI should focus on more stringent revenue management coupled with better marketing to position itself as a reliable, friendly and vibrant carrier among the travelling public. The airline should take advantage of Air India Express in a way similar to Qantas – jetStar to explore new opportunities and to keep the bottom line healthy. The airline must take bold steps to reduce its excess overstaffing level. All the related stakeholders need to realise the urgency of the situation and understand that half measures won’t do. The Indian government needs to persistently support Air India through this restructuring mission, including regarding possible lay-offs, if it wants Air India to emerge as a successful national asset, and one that it can be proud of, in the future.

Originally posted on Airline Industry Review

SriLankan Airlines, from 1DEC is introducing all Economy Class service on selected flights operated by its fourth Airbus A320 aircraft.
The aircraft, 4R-ABK ( MSN 2584 ) ex Jazeera Airways ( 9K-CAB ) is currently undergoing pre-delivery overhaul work.
The aircraft will retain Jazeera’s seating configuration of Y165 and is currently scheduled to operate on the following flights

UL131/2 Tiruchirapalli – ALL ( Daily )
UL133/4 Tiruchirapalli – ALL ( 3 weekly )
UL127/8 Chennai – ALL ( 1 weekly )
UL171/2 Bangalore – Select
UL105/6 Malé – Select ( All Y on day 3567 )
UL107/8 Malé – Select ( on day 71 )
UL109/10 Malé – Select ( on day 3 )

Please note that this is a newly incorporated schedule change. The airline had previously planned to offer two class service on these routes.

Photos of 4R-ABK ( Courtesy unknown author,Sri Lanka Aviation Pictures Thread user rajasinghe )

The aircraft is powered by CFM56 engines, and UL’s next two A320s ( MSN2569 and MSN4694 ) too are powered by the same, suggesting a change from UL’s two decade long alignment to IAE engines.

UL’s existing A320s are configured in 12J/138Y and ABK too was planned to get this configuration. However this appears to have changed now.

The flights are available for reservation.
UPDATE: The airline has now confirmed this news.

The information above is subject to change.

Originally posted on Airline Industry Review

MANGALORE, ( AIRLINE INDUSTRY REVIEW ) – An Air India Express flight from Dubai to Mangalore, overshot the runway at Mangalore International Airport ( IATA :IXE ) and caught fire. The flight, IX812, was being operated by a Boeing 737-800. The aircraft involved was VT-AXV, cn 36333/2481, a 2007 December built example.
It was bearing the ‘Victoria Memorial’ tailart. The flight was due to arrive in Mangalore at 6.30a.m local time.
The flight was carrying 163 passengers ( some reports state this at 137 adults + 19 children, at 156 passengers ) and six crew. The aircraft has mostly burnt, with nose and tail remaining ( the only ) recognizable parts. NDTV, an Indian TV channel, reported six survivors, while a majority are presumed to have perished.

Photos of the crash scene. Copyrighted to original photographers.

Mangalore has two runways 09/27 5,300 ft. and 06/24 9,515ft. long and has a steep valley in the end of runway 24, leaving no space for correction.

Crash photos ( copyrighted )

Runway 24 location ( copyrighted to original poster Threeifbyair on Airliners.net )

Runway 24 steep hill ( original poster TBYO787 )

Air India Express operates flights to seven Middle Eastern airports from Mangalore, and is the largest operator at the airport.
This was Air India Express’ first major incident and is the worst aircraft accident in India since 2000. This event, currently, is also the deadliest air crash in year 2010, so far.
A cause for the incident was not immediately clear. Although it is too early to make any conclusions, the high-energy falldown into the slope could have increased the damage.
Runway 24 has ILS and the ILS24 approach is valid for ICAO Cat A,B&C aircraft.However, AIP does state that there are no runway end lights for either 06 or 24 end. The runway obstacles/limitations chart also specifies “DEEP VALLEY” beyond the 06 threshold. The runway was completed in 2006 and is fully concrete, as opposed to the other shorter Asphalt runway.

After the accident, the ILS locator antenna of runway 06 has been hit, and is currently NOTAMed unavailable.
According to AvHerald.com, this collision with the antenna, tore the aircraft’s belly open and threw 8 people out of the aircraft – whom are the survivors reported.
The air traffic control and airport authority reported that the aircraft arrived for approbabi without any incident, but a loud bang – possibly a tyre burst – was heard upon touchdown.
Air India Helpline
Mumbai +912222796161
Dubai +971-4-2165828/9

May all those perished rest in peace.

Originally posted on Airline Industry Review

FlyDubai will be launching flights to Lucknow ( LKO ), India from 2 June. The airline will operate thrice weekly on the route, competing with Air India Express which also operates thrice weekly.
FlyDubai previously announced flights to Lucknow, Coimbatore and Chandigarh, but had to cancel these due to bilateral agreement issues.

FZ433 2030 DXB – LKO 0150+1 246 738
FZ434 0235 LKO – DXB 0520 357 738

Originally posted on Airline Industry Review

South Asia is poised for the highest growth of any air market in next 20 years, have you set your foot here still ?

South Asia is home to well over one fifth of the world’s population, and houses the world’s second most populated nation. It is the most populous geographical region in the world. Often disregarded, but fast becoming popular, South Asia is surely one very important region to your international airline .

Air traffic within South Asia is expected to grow at an astonishing 8.7 percent annually over the next 20 years, a higher rate of growth than any other region, including China.

How to Crack South Asia

This tutorial series is designed to take an innovative approach on how to launch and run a successful airline operation into South Asia and reveal often unexplored facts on aviation in South Asia .

I will be covering demand, revenue, marketing, distribution and network contribution and many other related facts on this subject, and the whole series is totally free.

This page will list the table of content to the tutorial series.
Feel free bookmark this page for future reference.

Table of Contents
i. The 6 South Asian Markets You should Focus On

ii. The Secret to getting Great Demand for Your South Asian Flights

iii. The Value of Service for South Asians

iv. The Ultimate Airline Marketing Guide

v. Challenges to Operations

vi. The Big Picture

Subscribe to Airline Industry Review today and stay updated.

Originally posted on Airline Industry Review

SriLankan Airlines has seen its network being reduced dramatically in recent times – but is this exactly the right thing to do ? Airline Industry Review finds out.

The exit of Emirates from SriLankan saw the Chief Executive post being transferred from Peter Hill to Manoj Gunewardena, who is the brother of Presidential Advisor Sajin Vaas that drove the LCC Mihin Lanka to bankruptcy. Manoj however is a 25 year veteran with the airline having served in many positions and his takeover of the CEO post was seen as a natural progression by many. The new CEO launched a refleeting exercise for the narrowbody fleet and embarked a turnaround project for the airline to make the core operations profitable.
SriLankan Airlines Group, which consists of the airline, ground handling and SriLankan Catering, has most of the time being profitable, the core airline operations has not always been so and I fully agree with the Mr. Manoj in his belief that the airline should break even on its own – but should this come at the cost of cutting operations ?
To make the said operation profitability a reality – SriLankan did one thing majorly – CUTTING . From fleet to frequencies to onboard service and ontime performance, all are now in a lower level than they were while under EK management, however the reports for the last quarter is not out yet.

Indian Operations

© Sean D Silva

While under Peter Hill’s management, the airline was the largest foreign carrier into India, operating in excess of 110 weekly flights to 11 destinations – it is now down to a mere 46 to 6 destinations. Some quote this as a result owing to the fleet renewal – but in my opinion, it is NOT. SriLankan’s A320 fleet is now down to three from the previous five, but the aircraft can be much more utilized and the current fleet is well enough to operate daily flights to two to three more destinations under a 2.5h flying time.

New Destinations
The new management has so far launched one new destination – since they took over on 1st April 2008 – Rome . But not really a new flight though. The airline now uses Rome as a tag on to its Paris route, but on a rather inefficient routing, as CMB-CDG-FCO .
But the number of cancelled destinations outnumbers this single new route launch.

Codeshares

Prior to ceasing of the management contract, Emirates was UL’s biggest codeshare partner with flights to more than a dozen destinations including the US and the ceasing of management contract saw the end to this codeshare deal too. To fill the gaps, SriLankan soon joined with Etihad, which is now one of SriLankan’s biggest codeshare partners.
However, UL was still lacking access to the US and Australia under the Etihad deal and to void this hole, it entered into a codeshare deal with Malaysia Airlines. The deal took a long time to be completed since UPS, the express freight service based in US, fully opposed this deal as they were once not allowed by Malaysia to operate flights to Subang (IIRC). After so many appeals, MAS and UL however finally were allowed and UL now codeshares on MAS’s heavily loss making KUL-TPE-LAX flight. But has this been successful ? Definitely not.
As opposed to quick connections at Dubai with EK, now UL’s passengers have to wait for 7-8 hours at Kuala Lampur in order to connect to MAS’s flights and inspite of direct flights to US, now they have to experience two stops, which is also not on a so comfortable 777-200ER.

Frequent Flyer Programme
Yet another thing that UL lost with EK’s departure was Skywards, the frequent flyer programme the two had built since late 1990s. To replace this, SriLankan created FlySmiLes, a programme with identical tiers but lesser benefits and you have to manually redeem points by providing your boarding pass – long gone are the days of automatic Skywards miles.
The customer response has been very poor, with only 3% of previous Skywards customers signing up.
When asked about this by a local newspaper sometime ago, the management had however responded that “It took Emirates years to make their frequent flyer programme popular”.

CUTS
The highlight of this article – CUTS.

Fleet : From 16 to 12
Freighter services : Fully suspended
Indian flights : From 110 weekly to 46 weekly
SIN flights : From 14 to 7
KUL flights : From 14 to 7
DXB flights : From 14 to 7
KWI flights : From 9 to 7
NRT flights : From 3 to 2
CDG flights : From 5 to 3, and coupled with FCO
TRV flights : From 14 to 7
BLR flights : From 7 to 4
Flights to CCJ, COK, HYD, GOI and GAY fully suspended.

Notice that most of these cuts took place well before the global decline in demand. Nevertheless, most other airlines have increased flights to Colombo, specially following the end of war. A good example is Emirates, where it now operates 18 weekly flights from DXB instead of the previous 8 or 9 weekly flights.

The solution
The point of this article however was not to personally attack on anybody at SriLankan, but instead to discuss what can be and should be improved. SriLankan has a superb workforce which has done some unbelievable stuff – back in 2001, when the Tamil Tiger terrorists destroyed a half of its fleet, the engineers repaired the attacked aircraft in a suprising three months – which Airbus had estimated to take at least nine months and the airline has been through some of the worst crisis of recent times including, but not limited to SARS, the 2004 Tsunami and terrorist attacks. So they truly have the power to overcome all these and succeed . What can be done to can be done to achieve this ?

This is what I propose.
* Taking advantage of the newly dawn peace in Sri Lanka, UL should expand again and reinstate Colombo as a major hub and a gateway to South Asia. Its strategic geographical location and second-to-none tourist attractions will help make this a reality.

Fleet overhaul

©Thomas Ernst

I would suggest UL to add 2 A330-200s, two A321-200s and two DHC 6 Twin Otter aircraft along with an A310 freighter. The A321s will be used for regional travel and the Twin Otters will be used to relaunch its highly popular domestic tourist flights. The favorable lease terms in the market right now will help reap the harvest of this essential investment.
The Business Class on certain A340s and A330s should be refurbished with the installation of 18 flat bed seats.
– SriLankan’s newly added narrowbodies should be good enough for a few more years and their widebody fleet ( of five A340s and four A330s ) should be replaced by either a mix of 787s or A350s, both of which have the capability to replace both A330 and A340 fleets. Since neither A350 nor 787 delivery slots are available till at least 2014, I believe that SriLankan should add more A330-200s to its fleet.
- One might argue that the A340s would be a better fit to SriLankan, but UL simply does not have that many routes to be used by an A340-500 or A340-600 and CMB’s runway is not lengthy enough to permit a fully laden A340-600 departure to LHR at noon hours too. Hence the only suitable aircraft would be A340-300. But since there simply is not much of a difference in terms of performance between A340-300 and A330-200 and because of a better resale value, the A330-200 emerges as the clear winner here.

Network
- I would suggest the following changes
LHR – up to twice daily from current 12 weekly
SIN & KUL – relaunch of the twice daily triangular flights
CDG – to be delinked from FCO. Two weekly flights to be operated nonstop with one going via MLE. To be operated solely by A330s.
FCO – to be relaunched as UL585/6 with twice weekly flights continuing onwards to MXP. One weekly flight to be operated as UL583/4 on a CMB-MLE-FCO-MLE routing.
PEK – to be increased to five weekly flights with two new flights going via MLE on a CMB-MLE-PEK-MLE-CMB routing.
KWI – to be increased from 7 to 9 weekly with addition of two new nonstop twice weekly flights.
BLR – to be increased from 4 weekly to daily using A321s and A320s.
BKK – to be increased from 7 to 9 weekly with UL424/5 evening flight on days 4 and 6 using A330s.
FRA – to be increased from 4 to 5 weekly flights.

New destinations to be launched
MAN ( Manchester ) – thrice weekly aboard A330s. The demand certainly is there.
SYD ( Sydney ) and MEL ( Melbourne ) – The largest Sri Lankan community outside Sri Lanka resides in Melbourne, but however the bilateral agreement between Sri Lanka and Australia calls for four weekly flights to be in place once an air service is launched between the two countries, since the yield to MEL cannot justify four weekly flights, the flights would be launched in the following manner.
UL678/9 CMB-SYD-CMB 0500-2000-2120-0330+1 1,4 332
UL666/7 CMB-MEL-SYD-CMB 0255-1730-1835-2000-2120-0330+1 2,6 332
All times local
HYD ( Hyderabad ) – Should be relaunched with four weekly A320 flights.
COK ( Cochin ) – Should be relaunched with four weekly A320 flights.
CGK ( Jakarta ) – Twice weekly A321 flights.
KTM ( Kathmandu ) – Thrice weekly A320 flights.
ISB ( Islamabad ) – Twice weekly A320 flights via BOM
ZRH ( Zurich ) – ZRH will be launched with initially twice weekly flights on CMB-MLE-ZRH-MLE-CMB route and once weekly nonstop CMB-ZRH-CMB using A330s.
MXP ( Milan ) – Twice weekly CMB-FCO-MXP-CMB as mentioned above.

SriLankan SkyChain Freighter network.
Although global freight market as a whole is not in a much good climate, the South Asian region appears to be less affected and thanks to CMB being a popular cargo port – UL will be able to make a sizeable presence on regional freight by capitalizing on these advantages. When the market returns to normal, these investments will reap back their harvest.
DXB ( Dubai ) – 2 weekly
TRV ( Trivandrum ) – weekly
MAA ( Chennai ) – 2 weekly
MLE ( Malé ) – 2 weekly
BKK ( Bangkok ) – 2 weekly
BLR ( Bangalore ) – weekly
SHJ ( Sharjah ) – weekly

Marketing
SriLankan needs to take its message to a wider audience and should make the best use of its website and social networks. They should also influence more Sri Lankans to fly by using innovative methods such as mobile advertising and enabling innovative methods to book flights – eg: using a bank centre.

The idea of this business plan is to make investment at the right time and to have become a leading player in the regional market by the time market recovers. This certainly can be done.
SriLankan already has a very high inflight service standard with a great crew which is sure set to make anyone want to fly again with them. But the above mentioned steps are not enough to make SriLankan a leader in the region again – the government shall stay away from the airline and let the management take independent decisions. They should not be afraid to try new things and should make the best use of CMB as a hub, although it is a long way to go – CMB certainly is a far better connecting point to South East Asia and Australia than DXB, AUH and DOH are.
Emirates sure did some good to SriLankan, but in many people’s belief – Emirates was benefited from the deal much more than tiny UL did. It is said that EK took away landing slots of UL at some major airports and it was a popular fact that they did not want UL to resume flights to Australia and some other destinations. It was also said that EK did not allow UL’s plan to purchase A321s for Indian routes. Now that SriLankan is free, they should nomore remain lost in time – SriLankan, now is the time for you to grow !

What do you think ?
Please leave a comment and let me know.

Originally posted on Airline Industry Review