After 7 quarters of losses, IndiGo reported a profit of INR 130 crore

Airline major InterGlobe Aviation, which operates IndiGo, on Friday, February 4 reported a standalone net profit of INR 130 crore for the quarter ending December 31, 2021, due to a rebound in travel demand during the holiday season, though fuel costs surged.

It reported a net loss of INR 620 crore in the year-ago period. Revenue from operations rose 90% to INR 9,295 crore as against INR 4,910 crore in Q3FY21.

The company said its fuel cost in Q3FY22 was at INR 3,269 crore, up 64% on a sequential basis and a 184% jump on an annual basis.

Revenue from operations rose 90% to INR 9,295 crore as against INR 4,910 crore in Q3FY21.

Total debt as of Q3-end was at INR 35,153 crore, up 27% on an annual basis, said the company, which expects Q4FY22 capacity to reduce by around 10%-15% as against Q3FY22.

Indigo's yields grew 19.2% to Rs 4.41 per kilometre at the end of December. Passenger load factor rose to 79.7% from 72% a year ago.

At the end of December 31, Indigo had 283 aircraft on its feet. This consisted of 56 A320 CEOs, 140 A320 NEOs, 52 A321 NEOs and 35 ATRs; a net increase of 4 aircraft during the quarter. It operated a peak of 1,574 daily flights during the quarter including non-scheduled flights.

At the end of December 31, Indigo had 283 aircraft on its feet.

It also provided scheduled services to 71 domestic destinations and various international locations through passenger charters and air bubble flights.

Aircraft fuel expenses surged 186% to Rs 3,269.30 crore while aircraft and engine rentals advanced 98% to Rs 127.30 crore. Total expenses increased 62% to Rs 9346.40 crore. EBITDA margin improved to 21.5% from 20.1% a year ago.

"I am pleased that we were able to report a profit for the third quarter. It demonstrates that our business model is fundamentally strong.Our employees have remained a pillar of strength throughout this health crisis and have steadfastly provided superior service to our customers."Ronojoy Dutta, CEO, IndiGo

On Friday, February 4, the company's scrip on BSE closed 1.5% higher at INR 1,969.

InterGlobe Aviation's new Managing Director

The company also announced the appointment of its co-founder Rahul Bhatia as the company's Managing Director with immediate effect. The company is the parent of the country’s largest airline IndiGo. Bhatia is the Co-founder and Promoter of InterGlobe Aviation.

"The Board of Directors have unanimously approved the appointment of Rahul Bhatia, currently a Non-Executive Director, as the Managing Director of the Company effective 4 February 2022," said InterGlobe Aviation in a stock exchange filing.

Rahul Bhatia, Managing Director, InterGlobe Aviation

Bhatia said his agenda would be transformational and would focus on expanding the airline's presence in India and international markets and building for the long term.

IndiGo Chairman Meleveetil Damodaran said the move will further strengthen the airline in the years ahead. Bhatia would oversee all aspects of the airline, and actively lead the management team, he added.

Bhatia, who holds an electrical engineering degree from the University of Waterloo in Ontario, Canada, is the vice-chairman and promoter of InterGlobe Enterprises Ltd. He has over three decades of experience in the travel industry.

The appointment marks the next phase for the carrier that saw Bhatia feud with the other founder, Rakesh Gangwal, over share-transfer restrictions and governance issues.

In 2011, Bhatia was awarded as the ‘Entrepreneur of the Year’ by Ernst & Young. In 2016, he was featured on the Forbes’ Global Game Changers List.

The appointment marks the next phase for the carrier that saw Bhatia feud with the other founder, Rakesh Gangwal, over share-transfer restrictions and governance issues.

The legal battle ended with an international arbitrator asking Gangwal to pay Bhatia USD 50,000 claim, and allowing his counterclaim seeking removal of restrictions of a share sale by founders. The two own 74.44% of the airline bet

In an interview with CNBC-TV18, Union Minister for Civil Aviation Jyotiraditya Scindia said the Air India sale was a win-win deal for all stakeholders.

The minister said Air India was running a loss of INR 20 crore a day -- that's INR 7.5 thousand crores a year and said that over INR 2.5 lakh crore had been infused just to keep the airline afloat.

"So, from the point of view of millions of taxpayers, I think this money can now be spent much more judiciously in infrastructure," Scindia said.

Air India's operating costs are now available for infrastructural spending.

He said the government has stopped throwing good money after bad just to keep the airline afloat. He said it was extremely important in a hugely growing market like India, which has close to about 144 million fliers per annum, that you see multiple players with a value proposition.

"The airline sector in India, a space that is extremely fragmented, will see the rise of another player with considerable market share, an industry which had a dominant market leader will now see a lot of competition," Scindia said.

InterGlobe Aviation runs India's largest airline, IndiGo. He said the Tatas had the marketing plan in place.

Jyotiraditya Scindia, Union Minister of Civil Aviation

"I have seen and heard through multiple print and electronic media over the last couple of weeks that they (Tatas) have a financial plan in place, a strategic plan in place, a human resource element to their strategy, as well as a marketing element. I think all of that together is a clarion call for a new product to be out," he said.

Scindia said the sector already has five or six players and for the first time after almost about a decade, two new players will enter.

"One is a rebirth in the form of Jet and the second is an Akasa. I wish them all the very best. I am hopeful that by the upcoming second and third quarters, you will see both the entrance, unveiling their product and their value proposition in this market," he added.

The Air India deal was a win-win transaction for the government

Indicating there would be a huge upside in the aviation sector in days to come, Scindia said the government was working on the next tranche of airports under the public-private partnership. He reiterated the Air India deal was a win-win transaction for the government because it gets reimbursed for the investments it has put into airports to date.

"For example, for the six airports that have been leased out in the past round we have received INR 2,249 crore upfront, in addition to per pax royalty that will be paid for each airport going forward," he said.

(With Inputs from CNBC TV18)

Having been proposed as a French counterpart to the American Boeing 737 and Douglas’ DC-9, the "Dassault Mercure" was developed and manufactured by French aircraft firm Dassault Aviation.

Developed at a time when France was stepping up its game as global aviation power, it was Dassault's first venture into the commercial jet airliner market. Introduced at the beginning of the jet age, the "Sud Aviation Caravelle" - a twin-engine short and medium-haul airliner and the "Nord-262 propjet" were France's give-away to aviation.

Sud Aviation Caravelle | Wikipedia

Touted to be the next big thing, and despite being a favourite among pilots and passengers alike, the "Mercure" programme failed to take off successfully and soon faded into oblivion.

The beginning and the end

The programme "Mercure" was officially launched in April 1969. Manufacturing to be carried out under the main contractors of Dassault was shared between Fiat (Italy), CASA (Spain), ADAP (Belgium), the federal aircraft builder FW of Emmen (Switzerland) and Canadair (Canada). This was the first large-scale European cooperation programme in civil aeronautics.

The Dassault Mercure was a twin-engine narrow-body powered by two wing-mounted Pratt&Whitney JT 8 D 15 double-flow engines, very much similar to the contemporary Boeing 737-200 although slightly bigger and heavier.

Dassault Mercure | Dassault Aviation

I wanted to name it for a mythological figure and I could only think of one who had wings on his helmet and ailerons on his feet – hence the name Mercure (Mercury).Marcel Dassault, Founder and Owner, Dassault Aviation

Marcel Dassault | Dassault Aviation

The prototype of the Mercure 100 made its maiden flight from Mérignac (Gironde, France) on 28th May 1971 with a crew including Jean Coureau, chief pilot, Jérôme Résal, pilot, and Gérard Joyeuse, test engineer.

On 2nd June, the aircraft arrived at the Paris Air Show for its 6th flight and with only 9 hours of test flights.

At the time, the largest 737 could seat 136 passengers, while the DC-9 was even smaller, with a limit at just 125. Therefore, the Mercure decided to be marketed as a large aircraft for high-demand short-haul routes, something the two American giants hadn’t yet developed.

However, despite the new airliner’s excellent pedigree and its manufacturer’s high hopes, the biggest difference between the Mercure and the Boeing 737-200 was the range. The aircraft could travel just 1,700 kilometres - thereby allowing the Mercure to operate brilliantly in western Europe.

However, it failed to flourish in its ultimate target market-the United States which wasn’t compatible with the short-range jet.

The aircraft was also disadvantaged because of its engines: its Pratt & Whitney engines were relatively old, noisy and fuel inefficient. To remedy the situation, Dassault designed a new version of the Mercure – the Mercure 200 – with two Snecma/General Electric CFM 56 engines.

Tech and Specs

The Mercure was the first airliner to have a Head Up Display (HUD) for pilots, which allowed take-offs with forward visibility (RVR – Runway Visual Range) as low as 100 metres (328 feet).Source

DASSAULT MERCURE 100 2D panel | HUD | HJG Message Boards-Proboards

It intentionally exchanged fuel for passenger capacity to carry a greater passenger load; as such, the Mercure had up to 17 per cent more seats than the competing Boeing 737 while having a shorter range.

Dassault Mercure six-abreast cabin | Flickr

With engines tucked under its wings, its nose and fuselage had a distinctly modern look.

The cockpit was fitted with two instruments that remain unique among civil transports: an Angle Of Attack (AOA) indicator used to illustrate lift generated by the wing, which allowed pilots to fly visual approach speeds accurate to within a single knot, and a G meter to avoid exceeding airframe structural limits (which were +2.5G and -1G).

Air Inter - the only airline to order the Dassault Mercure

On 30 January 1972, Air Inter placed an order for ten Mercures, which had to be delivered between 30 October 1973 and 13 December 1975.

Dassault Mercure 100 | Wikimedia Commons

The Mercure was so carefully tailored to the needs of domestic-only Air Inter that it was crippled by a maximum range of only 2,000 kilometres (1,295 miles), and, with maximum payload, only 1,000 kilometres (621 miles).Source

On 29 April 1995, the last two Mercures in service flew their last commercial flights.

At the time of their retirement, they had an impressive track record- logging in 360,000 flying hours, transporting 44 million passengers in 440,000 flights and with a 98% in-service reliability, with zero accidents.

SOURCE(s)

COVER: AirHistory.net

A Parliamentary panel on Friday, February 4 said the use of the 'GAY' code for Gaya airport is inappropriate for the holy city and asked the government to make all efforts to change the code.

The Committee on Public Undertakings, in its first report tabled in Parliament in January 2021, had recommended changing the code of Gaya airport from 'GAY' and also suggested an alternate code name like 'YAG'.

According to the civil aviation ministry, IATA has expressed its inability to change the code without a "justifiable reason primarily concerning air safety".

The International Air Transport Association (IATA) assigns the code for airports.

The International Air Transport Association (IATA) assigns the code for airports. The committee said the code name appeared inappropriate, unsuitable, offensive and embarrassing considering that Gaya is a holy city.

In an action taken report tabled in Parliament on Friday, February 4, the panel mentioned the issue and has asked the government to "make all effort to take up the matter with the IATA and concerned organisation as the issue involves inappropriate code naming of an airport of a holy city of our country." The ministry, in its action taken to reply, has submitted that the matter was referred to IATA by Air India.

In this regard, IATA stated that as per Resolution 763, the location codes are considered permanent and a strong justification primarily concerning air safety needs to be given.

Gaya Airport's 'GAY' Code is Inappropriate

"Gaya airport IATA code 'GAY' has been in use since operationalisation of Gaya airstrip. Hence, without a justifiable reason primarily concerning air safety, IATA has expressed its inability to change the IATA code of Gaya airport," the ministry told the panel.

The ministry's reply has been mentioned in the panel's report tabled on Friday, February 4.

"The committee appreciates the efforts of Air India being a member airline of IATA taking up the request with the international air transport association but, yet, re-emphasise the government also to make all effort to take up the matter with the IATA...," the report said.

In the first report that was tabled in Parliament in January 2021, the panel had mentioned that it was apprised about a request received by the civil aviation ministry regarding the change of code name of Gaya airport.

The panel had also recommended that the government and Air India complete all the requisite consultations and formalities in a time-bound manner to change the code name of Gaya airport.

A key parliamentary committee has rapped the Ministry of Civil Aviation over the Airports Authority of India (AAI) lagging behind global standards in two critical elements of aviation safety and security measures, according to a report by The Tribune India.

“Out of eight critical elements, AAI is lagging behind ineffective implementation in two critical elements—organisation and licensing, which is 61.54% and 25.26%, respectively, against the world average score of 70.8%,” the Committee on Public Undertakings has stated in its report on AAI tabled in Parliament.

ICAO requires its member states to establish and implement an effective state oversight system for aviation safety and security.

The other six critical elements, as mandated by the International Civil Aviation Organisation (ICAO), are legislation, operations, airworthiness, accident investigation, air navigation services and aerodromes. ICAO requires its member states to establish and implement an effective state oversight system for aviation safety and security by taking into account the eight elements.

The Committee observed that while AAI’s overall effective implementation score of 70.8% was a notch above the world average of 69.76%, it trailed by a wide margin in the organisation and licensing where the world average was 71.14% and 73.55%, respectively.

The Committee had earlier expressed concern that India, which is one of the major civil aviation markets after the US and China, was lagging far behind in the effective implementation of the two critical elements.

Pointing out that AAI had not been able to keep pace with global standards, the Committee had expressed apprehensions that it may deter foreign investments in the civil aviation sector and thereby adversely affect the sector’s expected growth.

The Ministry of Civil Aviation had stated before the Committee that licensing covered pilots, flight engineers, ground personnel, air traffic controllers and aerodromes.

All AAI airports used for international operations and all AAI domestic airports operating scheduled air transport services are licensed by the Directorate General of Civil Aviation (DGCA) and hence effective implementation in licensing on part of AAI was 100%. Poor percentage of effective implementation in this area may be attributed to other licensing areas, the ministry said.

The Committee however pointed out that the ministry had only elaborated the reasons for poor performance only in respect of licensing and was conspicuously silent on the other critical element of the organisation. Even while talking about licensing, the ministry only referred to aerodromes and left out other components such as personnel.

While seeking elaborate reasons for poor performance in the two critical elements, the committee stressed that the central government should take suitable steps not only to reach world averages but also to be on par with the best in the world.

(With Inputs from The Tribune India)

Akasa, a new Indian airline backed by billionaire Rakesh Jhunjhunwala, plans to offer stock options to attract staff, using a lure more often deployed by technology startups in its bid to gain a foothold in one of the world's most competitive air-travel markets.

The carrier, which is preparing to start flying in late May, is taking the unusual approach of granting company shares to a bigger pool of top employees, rather than a select group of senior executives, as the aviation industry globally suffers from a talent shortfall.

Airlines have retrenched thousands of workers because of the pandemic and many pilots have quit, either taking early retirement or switching careers.

Akasa plans to offer stock options to attract staff.

The degree to which Akasa plans to grant stock options for staff will be "far greater than most airlines in India and hopefully reminiscent of maybe some of the tech startups where they go fairly deep in the way they provide employee stock ownership plans," Dube said. There isn't a suggestion stock option would be given to aircrew or regular pilots, however.

Putting employee satisfaction so squarely front and centre is an interesting strategy in a market that's historically gone after customers by offering cut-throat prices. Rock-bottom airfares have long been a feature in India, which has a suite of no-frills carriers targeting the nation's huge flying public.

"We want to have an organization that's very tight-knit in values, but diverse in experiences, genders, locations within India. We were saddened by the plight of employees through the pandemic, some of the bankruptcies that have taken place in Indian aviation, and we wanted to create homes for them where they are happy.What gives us confidence is the way in which we have purchased our aircraft, established our long-term engine maintenance deals, the way in which we have started leasing our aircraft with the lessors. The leadership team Akasa has attracted is also "hyper-focused on the hundreds of elements that make up an airline's cost structure."Vinay Dube, CEO, Akasa Air

Akasa, backed by some impressive aviation veterans, has hired around 50 employees for back-office functions and is now recruiting pilots, flight attendants and airport staff, said Dube, who is also Akasa's founder and managing director.

The careers page of Akasa's website, decked out in the airline's orange and purple brand identity with a tagline of "It's Your Sky," states that new applications have been paused after an "unprecedented number" of inquiries were received.

Vinay Dube; Founder, CEO, Managing Director; Akasa Air

"It's flattering, overwhelming, but there's also a hint of sadness because I don't want so many people to be either unemployed or unhappy," said Dube, who says 95% of staff call him by his first name. "If we don't treat our employees well, if we don't take care of them, then it's very hard for them to take care of customers, which we want them to do."

Customer service alone isn't going to alleviate the pain wrought by Covid, however. Airlines in India are expected to take a USD 8 billion hit from the pandemic and even before the virus decimated air travel, the landscape was littered with failures. 

Former billionaires like liquor baron Vijay Mallya with Kingfisher Airlines and travel agent-turned-entrepreneur Naresh Goyal with Jet Airways India Ltd. couldn't crack the market, both venturing into cheap, on-time budget business to augment their more premium offerings.

Kingfisher folded in 2012 after failing to clear its dues to banks, staff, lessors and airports.

Kingfisher folded in 2012 after failing to clear its dues to banks, staff, lessors and airports, while Jet Airways has new owners following a court-monitored, insolvency-resolution process.

Even those still in business find it tough. SpiceJet Ltd. almost collapsed before its founders returned to gain control and revive the company in 2015. Air India Ltd. survived on taxpayer bailouts worth billions of dollars before the government sold it to Tata Sons and the local ventures of Singapore Airlines Ltd. and Malaysian tycoon Tony Fernandes's AirAsia Bhd., both of which teamed up with Tata Sons, have never made money.

Coupled with high taxes on aviation fuel, the sector is so riddled with brutal price wars that don't leave carriers any fat to cover costs it's "chronically ill," IndiGo's Chief Executive Officer Ronojoy Dutta said recently.

"Startups have a particularly difficult road ahead," said Robert Mann, the New York-based head of aviation consulting firm R.W. Mann & Co. The challenges before airline upstarts like Akasa include the availability of sufficient capital and the need to stimulate flyer appetite with cheap fares upon launch, which generates good word of mouth leading to positive cash flow and eventual profit, he said. 

Dube is optimistic his airline, with secure financing and a low cost-structure, can succeed where others have failed. 

Indeed Akasa's founding team has a long history of running airlines. Dube is a former Delta Air Lines Inc. veteran who also ran Jet Airways until it went belly up in 2019. He briefly led Wadia Group's no-frills carrier Go Airlines India Ltd. and laid the groundwork for the budget carrier to file for an initial share sale. 

Vinay Dube with Aditya Ghosh during signing the deal with CFM engines for B737 Max.

Akasa, operated by SNV Aviation Pvt., is also backed by Aditya Ghosh, who spearheaded IndiGo for nearly a decade and propelled the once little-known startup to the nation's top spot, eventually capturing more than 50% of the market.

Under Ghosh, IndiGo placed record aircraft orders worth tens of billions of dollars, had a blockbuster IPO and catapulted itself ahead of AirAsia Group Bhd. and Spring Airlines Co. to become the biggest budget airline in Asia by market value.

Akasa plans to follow a similar playbook of growing at a breakneck pace, adding 18 aircraft during the year ending March 2023 -- the first deliveries from a November order for 72 Boeing Co. 737 Max jets, worth USD 9 billion at sticker prices.

A deal for the 737 Max, which was grounded globally after fatal crashes in Indonesia and Ethiopia, probably helped Akasa secure bigger discounts than usual considering it was one of Max's first new customers after the model's recertification.  

Akasa would also have taken advantage of the pandemic to get its aircraft and engine contracts right, which should help it achieve lower costs in the initial years, according to Kapil Kaul, South Asia chief executive officer for Sydney-based CAPA Centre for Aviation.

Akasa is on track to be well-capitalized with a potential ability to raise USD 500 million through sale and leaseback of its aircraft over five years, he said. Jhunjhunwala initially pumped USD 35 million into the airline.

The carrier will begin flying internationally by the summer of 2023.

The carrier will begin flying internationally by the summer of 2023 when it inducts 20 aircraft, the minimum fleet requirement to serve overseas routes according to local regulations, Dube said. Akasa will have an option of flying to the Middle East, Southeast Asia, Nepal, Bangladesh and Sri Lanka, all within the range of a 737 Max.

Akasa also plans to cut down queues at airports and reduce the number of time passengers spend waiting to board by using technology, Dube said, without elaborating.

"If you look at the next 20 years, Indian aviation is going to continue to grow by leaps and bounds," Dube said. "India is geographically a very large country and aviation is under-penetrated, there are many people today who still haven't flown relative to most Western economies. All said and done, we are extremely bullish about the future. 100% -- Akasa will be profitable."

(With Inputs from Bloomberg)