Curious Flyer Staring at Problem of Plenty

Airfares have become cheaper because of low fuel prices and competition between domestic airlines.

Intense competition among airlines has now become the flyer’s gain; the customer now has plenty of options to chose from.

Travelers become the big winners as battle for the skies heats up.

In 2015, last minute air tickets were nearly 50% costlier as compared to those in 2016. Today, there is an intense competition amidst airlines, excess capacity and lower fuel prices.

Yatra analysed the fares and came out with a conclusion that average fares for travel on all dates between June 29, 2016 and July 4, 2016, when booked on June 28, 2016, were cheaper by up to 50% as compared to fares booked during the same time last year.

“We are seeing a significant drop in airfares across sectors and this can be attributed to a reduction in oil prices by over 20% on a year-on-year basis, as well as a 7-8% increase in passenger capacity by the airlines. The drop in airfares has resulted in strong passenger demand which is up by 22% this year, resulting in increased passenger load factors and improved financial health of the sector as a whole,” Yatra president Sharat Dhall.

Typically, the monsoon season in India is a lean period for airlines as schools open after summer break. To beat the lean season, June to September, and attract more flyers, Indian budget carriers, including GoAir, IndiGo and AirAsia have come up with attractive discounted airfare offers beginning July to September. They have no other option to fill their excess capacity. It may be noted that the break-even point for an airline requires 70-80% passenger load factor. An aircraft flying with its seats just 70% full becomes a big liability for the airline. Not flying is a bigger liability, since even a grounded aircraft demands maintenance expenditure, lease rentals, and finance costs.

As a result, these airlines are seen competing against each other in offering discount schemes during the lean season. The smile returns on the flyer’s face. His range of choices expands and wonders – which flight, which airline, what price ! 

However, the government has revised the ATF prices by 4.9-5.7%. The revised prices of ATF in Delhi now stand at Rs 49,287/kl from Rs 46,729/kl. With this, ATF price has increased by 23% since January 1, 2016 and is now the highest since July 2015. Low ATF cost helped airlines during most of 2015. Now, this steep increase in 2016 will significantly weigh down their earnings.

This is the time when domestic and international travels are slow and in order to encourage leisure travelers to go on a short vacation, airlines have to offer such fares. The discount normally ranges from 15 to 20%.

Almost all low-cost airlines are presently trying to attract passengers by getting into heavy discounting, and this will most likely continue in the coming few months.

GoAir has announced a monsoon bonanza with ticket prices as low as Rs 849 (base fare plus surcharge). Offer started on June 29 and will last till July 2, 2016, and is applicable for travel between July 1 and September 30, 2016.

India’s biggest airline IndiGo has announced a promotional offer with fares starting as low as Rs 1,106 (all inclusive). Booking period is between July 1 and September 30th and is applicable only on domestic routes.

AirAsia India has also launched a promotional offer. It is the exclusive ‘Fly like a Superstar’ promotion. Booking period June 27 – July 3. Travel period between February 1 and April 30, 2017. Fares starting at Rs 786 (all inclusive) for one-way trip to select domestic locations.

Apart from the promotional fares to all domestic destinations in India, low fares are also available to other international cities such as Auckland, Mauritius, Guangzhou, Krabi, Lombok, Ho Chi Minh City, Siem Reap, Penang and many other cities at Rs 2999 one way.

Amar Abrol, CEO, AirAsia India said, “Now everyone can fly like a superstar in and out of India. The excitement around “Kabali” has enabled us to unveil movie-themed activities and we are pleased to offer special promotional fares that will allow AirAsia guests to ‘Fly like a Superstar’ to their favorite destinations in India & beyond.”

Earlier, IndiGo had launched promotional fares starting at Rs 789, all inclusive. On IndiGo’s website, the lowest fare of Rs 1,106 is for the Srinagar to Jammu route, while Delhi to Mumbai Rs 2,749, tickets on Delhi to Lucknow are available at an all-inclusive fare of Rs 1,500 (all-inclusive), Ticket from Ahmedabad to Mumbai costs Rs 1,200 (all-inclusive). IndiGo has not however disclosed the number of seats on offer under the promotional scheme.

“However, there is also a catch here, the discount is on the basic fare and that at times could be low. Finally, the discounts do get sold out early so it is advisable to book early, John Nair, Head, Business Travel, Cox & Kings Ltd said.

GoAir can now Fly International; May Launch an IPO

Today, GoAir is eligible to operate on International routes || GoAir will soon come up with an IPO.

June 2, 21016.

Wadia-Group promoted Go Airlines (India) Ltd, which runs the low-fare airline GoAir, has taken delivery of the first of its seventy-two A320neo aircraft from Airbus Industrie (AIB, Toulouse Blagnac) following the arrival of VT-WGA at Delhi.  It is the third operator in the world to do so; the other two being IndiGo and Lufthansa.

800x600_1464861487_A320neo_GOAIR_GoAir has said the airline plans to take delivery of 8 more neo planes by end of March 2017 with a total of 26 expected to be delivered by the end of 2017.

The Mumbai based GoAir currently has 153 daily flights. Its present fleet of 19 aircraft has been serving 22 Indian destinations on 53 routes. With the Neo induction, GoAir will like to expand its network and offer fliers better connectivity and continue its growth as one of India’s preferred low-cost airline. The new aircraft will shortly begin revenue operations on the India’s most lucrative trunk route – Delhi-Mumbai.

The A320neo delivered to GoAir is configured in a conformable layout with the innovative Spaceflex cabin concept. It will have use for six more seats compared to the standard 180.  The first seven rows will also have greater space.

images (3)VT-WGA becomes the lucky aircraft for GoAir as it pushed its fleet strength to the magical number 20.

The present government rules currently require airlines to have a domestic flying experience of five years and a fleet of 20 aircraft (or 5/20) to become eligible to fly international. (The 5/20 rule may change when the New Aviation Policy is implemented in near future).

“With the induction of the first of our 72 NEO aircraft on order, we have reached a fleet strength of 20 aircraft. With this expansion we will be able to strengthen our domestic network and will also be available to fly on international routes,” Wolfgang Prock-Schauer, CEO, GoAir said in the (6)

The launch of GoAir’s initial public offer (IPO) timing is directly linked with the induction of A320neo planes into its fleet.

In October-November 2015, the IPO of InterGlobe Aviation Ltd, owner of IndiGo, was subscribed 6.14 times, A320neo being the chief factor.

When IndiGo did not receive the neos by December 2015, its shares nosedived. It recovered partially later when IndiGo took delivery of Asia’s first A320neo aircraft on 10 March from Airbus. IndiGo has said that Airbus had confirmed that it will deliver 24 A320neo aircraft by March 2017.

Inductions of A320neos, its optimum utilisation are critical for both IndiGo and GoAir to survive in India’s aviation market. IndiGo has been consistently profitable since 2009, a feat unrivalled by any other domestic airline.

The A320 is the most popular airliner in the world. One A320 aircraft takes off or lands somewhere in the world every two seconds, according to Airbus. The A320neo family is the world’s best-selling single aisle product line with over 4,500 orders from 82 customers since its launch in 2010 capturing almost 60% share of the market, Airbus said.

download (8)Kiran Rao, Airbus’ executive vice president for marketing and strategy said Airbus now has a total backlog of 526 planes from India and will deliver one plane a week to airlines in the country for the next ten years.  He was speaking on the sidelines of the annual general meeting of lobbying body the International Air Transport Association (IATA) at Dublin. Rao said that back in the 90s when he had been heading Airbus in India, “if we sold one plane in ten years, we were lucky!”

Additionally, AirAsia Berhad will start taking deliveries of its neos later this year. Rao said he expected some of them to come to AirAsia India, the Malaysian carrier’s joint venture with salt-to-software conglomerate Tata sons. AirAsia ordered 200 of the planes in 2011.

20th Aircraft to be Inducted by GoAir Soon

Private budget carrier in India Mumbai-based GoAir is all set to take the delivery of its first fuel-efficient Airbus A320 neo plane this week.images (3)

“Our first A320 neo (new engine option) will be landing at the Indira Gandhi International Airport here on June 2,” a GoAir official said. “The aircraft should be in operations by early next week,” the official added.

The induction of the new aircraft will increase GoAir’s fleet size to 20. As of now, GoAir has a fleet of 19 180-seat A320 and normally operate with a passenger load factor of 83.7%. Passengers carried by all domestic airlines in India during Jan-Apr 2016 were 30,935 million of which GoAir carried 2.54 million. GoAir, thus, has a market share of nearly 8.2%.

Today, an Airbus A320 costs $98 million, while an Airbus A320neo costs $107.30 million. Airbus claims that this new type of aircraft burns 10-15 per cent less fuel than the existing versions.

As of now, another budget airline IndiGo is the only operator of A320 neo in India.

GoAir’s fleet size of 20 makes it eligible to fly international. The existing 5/20 regulation requires an Indian carrier to have a minimum five years of domestic flying experience and a fleet of at least 20 planes to fly overseas.

download (6)The Wadia Group-promoted no-frills carrier had, in June 2011, placed order for 72 new A320 neo aircraft with the European aviation major Airbus.

“GoAir plans to induct a total of eight A320 neo planes this fiscal of the 72 planes on order,” GoAir official said, adding the first A320 neo is expected to be deployed on the Mumbai-route.