Fly Big connects Dehradun, Pithoragarh to Delhi

Preet Palash

31 Jan 2024

Regional airline Fly Big has commenced flights connecting Delhi to Dehradun and Pithoragarh cutting down the 11-hour travel time to just one hour.

Aviation minister Jyotiraditya M. Scindia virtually inaugurated the flight jointly with Chief Minister of Uttarakhand Pushkar Singh Dhami on Tuesday,

The RCS flight between Dehradun and Pithoragarh was awarded under UDAN 4.2. Fly Big will be operating a 19-seater Twinotter DHC6-400 aircraft for ferrying the passengers. The flight will operate initially 3 days a week.

“As a result of its commencement, the road distance of about 11 hours will be covered in just 1 hour. This flight service will expand the tourism potential of Pithoragarh and neighbouring areas and connect the eastern regions of Uttarakhand to the capital city of Dehradun," Scindia said.



Pithoragarh Airport has been developed under the UDAN-RCS scheme, with a cost of Rs 6.68 Crore into a 2B VFR Airport.  

On other infrastructure development carried out under the UDAN scheme, Scindia said, “We have also identified 5 other heliports under UDAN 5.1 Round, which include Bageshwar, Champawat, Lansdowne, Munsiyari and Triyogi Narayan Heliports. Soon development work will be started on these 5 other heliports as well.”

Dehradun Airport is also being expanded further.

“So far, 76 routes have been awarded for the state of Uttarakhand under UDAN, out of which 40 routes including Dehradun-Pithoragarh have been operationalized. It is our endeavor that the remaining other routes will also be made operational soon. Apart from this, we had recently inaugurated the Interim Terminal Building of Dehradun, the work of the full-fledged building will be completed soon,” he said adding, “Developed for Rs 457 crore, the total area of the New Terminal building is 42,776 square meters and this terminal building can handle 1800 passengers in peak hours and 36.5 lakh passengers annually.”

In 2014, only 86 flights were being operated from Dehradun per week, while today 210 flights are being operated from here, i.e. an increase of 144%.”

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Zooom Returns to Indian Skies with the Launch of Services to Ayodhya

Preet Palash

31 Jan 2024

Domestic carrier Zooom is all to revive its operations with flight services from Delhi to Ayodhya on Wednesday.

The airline’s first flight will deploy its fleet of Bombardier CRJ200ER aircraft for services on the New Delhi - Ayodhya route, which has already emerged as one of India's most sought-after spiritual tourism hotspots.

“We are delighted to announce the relaunch of Zooom, with services connecting Ayodhya and Delhi. Zooom is dedicated to enhancing regional connectivity in India. The new flight services aim to connect people, cultures, and regions to this spiritual hub,” says Zooom’s CEO Atul Gambhir.



“We are witnessing a significant increase in domestic air travel passengers in India. The proliferation of low-cost airline flights, streamlined booking systems, improved customer experience, and flexible airline schedules are key factors contributing to this growth. Zooom will align with these growth elements, enhancing the travel experience and making it more appealing for individuals with a focus on quality improvement,” adds Gambhir.

He said that the airline will also persist in its support role, promoting the Government's Regional Connectivity Scheme (RCS-UDAN) by launching additional services focused on the UDAN routes as part of its service revival.

“We are also considering the exploration of new routes and expanding our network to include more tier-2 cities. This will provide passengers with additional travel options, contributing further to the growth of the domestic aviation sector,” say Gambhir.

Zoom Air was established in April 2013 by Zexus Air Services Pvt Ltd. In July 2018, the operating license of the airline was suspended by the Directorate General of Civil Aviation (DGCA) of India due to safety concerns.

In September 2023 it again received its air operator certificate from DGCA to commence commercial passenger operations in India.

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Air Astana Sets Stage for Dual Listing to Boost London's IPO Market

Abhishek Nayar

31 Jan 2024

Air Astana, Kazakhstan's flagship airline, has unveiled its plans for a dual listing on the London Stock Exchange (LSE) and its home market, marking a significant move to revitalize London's struggling Initial Public Offering (IPO) market. The company aims to raise $300 million through the offering, with $120 million contributing to its capital. The joint stock exchange listings are expected to provide a market valuation ranging between $770 million and $962 million, positioning Air Astana as an attractive investment opportunity.

Bookrunners Confirm Strong Interest

Bookrunners on the deal confirmed on Monday evening that the books for the offering had been covered, signaling strong interest from investors. This positive response underscores the potential attractiveness of Air Astana's IPO, a sentiment echoed by CEO Peter Foster, who emphasized the company's status as one of the fast-growing airline groups.

Strategic Stake Reductions

The dual listing will facilitate strategic stake reductions for Kazakhstan's sovereign wealth fund and British defense giant BAE Systems, allowing them to divest from the airline. The move aligns with broader trends of sovereign wealth funds optimizing their portfolios and companies adjusting their holdings in response to market dynamics.

Benefiting from Geopolitical Developments

Air Astana's decision to go public comes against the backdrop of geopolitical developments, particularly the closure of Russian airspace. Central Asian airlines, including Air Astana, have capitalized on this situation, experiencing an uptick in passenger numbers and revenues. The airline's robust performance in 2022, with 7 million passengers carried and an operating profit of $149 million, adds to its appeal as an investment proposition.

Offering Details and Valuation

The offering encompasses a mix of new and existing shares, with a price range set between $8.50 to $11.00 per depository receipt and $2.13 to $2.75 per share. The final price will be determined through a bookbuilding process, with the announcement expected around February 9. Trading is scheduled to commence on February 14 in London and February 15 in Kazakhstan.

BAE's Windfall and London's IPO Challenges

For BAE Systems, the IPO represents a potential windfall, depending on the extent of its stake sale. London's IPO market has faced challenges in recent years, attributed to factors such as Brexit and the preference of some companies to list in the United States. Air Astana's decision to list on the LSE is a positive development for London's financial landscape, potentially signaling a turnaround in the IPO market's fortunes.

Conclusion

Air Astana's dual listing is poised to inject vitality into London's IPO market, offering investors an opportunity to engage with a dynamic and growing airline group. The strategic reduction of stakes by Kazakhstan's sovereign wealth fund and BAE Systems adds an additional layer of significance to the listing. As the company moves forward with its IPO plans, the aviation industry, investors, and market analysts will closely watch the developments, anticipating the impact on Air Astana's valuation and London's broader IPO environment.

With Inputs from Reuters

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Gol Secures Initial $350 Million in Bankruptcy Financing

Abhishek Nayar

31 Jan 2024

In a recent development, U.S. bankruptcy judge Martin Glenn has granted approval for Brazilian airline Gol to borrow the first $350 million of its proposed $950 million bankruptcy financing. The decision comes as Gol faces operational challenges, and the initial funding is deemed "desperately" necessary to maintain normal operations, according to Gol attorney Andrew Leblanc.

Concerns Over Financing Costs

While the approval for the initial funding has been granted, Judge Glenn expressed reservations about the high costs associated with the overall $950 million loan. The loan carries an interest rate exceeding 15%, accompanied by additional fees totaling over $235 million. Furthermore, there are potential additional attorneys' fees that could contribute to the overall financial burden.

Operational Imperatives & Market Impact

Leblanc emphasized that the initial funding is crucial for Gol to continue its operations and maintain relationships with aircraft lessors, who own Gol's fleet of 141 Boeing aircraft. Without the funds, lessors could halt maintenance work or seek to reclaim airplanes, posing a significant risk to Gol's operational stability.

The financial uncertainties surrounding Gol have taken a toll on its market value, with the company's Sao Paulo-traded shares plummeting by 33.6% to 3.93 reais – the lowest closing price since December 22, 2016. Gol's shares have fallen nearly 50% since reports emerged earlier this month about the airline considering filing for bankruptcy, bringing its market value to 1.65 billion reais ($333.21 million).

Chapter 11 Protection and Rival Threats

In addition to the financing, Gol plans to leverage the legal protections offered by Chapter 11 bankruptcy to safeguard its leases from external interference. Leblanc revealed that a rival airline has already made efforts to "poach" Gol's aircraft by reaching out to the lessors. This underlines the competitive challenges Gol faces during its restructuring process.

Chapter 11 Filing Details & Latin American Airline Trends

Gol filed for Chapter 11 bankruptcy protection last Thursday, reporting approximately $8 billion in total balance-sheet debt. The company is grappling with $2.7 billion in liabilities set to mature within the next 12 months, including $647 million for future air travel purchased by customers, $359 million owed to aircraft lessors, and $292 million owed to lenders.

Gol's bankruptcy filing aligns with a trend among Latin American airlines seeking bankruptcy protection in the United States. Other carriers, such as LATAM Airlines, Grupo Aeromexico SAB, and Avianca Group International Limited, have recently undergone bankruptcy restructurings, reflecting the broader challenges faced by the industry.

Operational Struggles, Supply-Chain Issues & Ownership Structure

Despite strong post-pandemic demand, Gol has grappled with the lingering impact of the pandemic and supply-chain issues involving Boeing. Challenges include the 2019 grounding of its 737 MAX jet and delays in the delivery of new aircraft intended for fleet expansion in 2023.

Gol is 53% owned by Grupo Abra, which also holds ownership in Colombia-based Avianca, highlighting the interconnectedness of aviation entities in the region.

Conclusion

As Gol navigates the complexities of Chapter 11 bankruptcy proceedings, securing the initial $350 million in financing provides a lifeline for the airline to address immediate operational needs. However, with concerns over the high financing costs and competitive pressures from rivals, Gol faces a challenging path towards financial recovery and maintaining its position in the Brazilian aviation market.

With Inputs from Reuters

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Boeing Withdraws Safety Exemption Request Amidst Growing Crisis

Abhishek Nayar

31 Jan 2024

In a significant development, Boeing announced on Monday its decision to withdraw a key safety exemption request, adding a new layer of complexity to the ongoing crisis surrounding its 737 MAX series. The move comes in the wake of a mid-air incident on January 5, prompting lawmakers to pressure the aerospace giant to address safety and quality control concerns. The withdrawal may further delay the certification of the 737 MAX 7 and MAX 10 models, potentially impacting Boeing's market share and production plans

Safety Concerns Prompt Withdrawal

Boeing's CEO, David Calhoun, withdrew the exemption request following meetings on Capitol Hill last week, where lawmakers expressed concerns about safety after the mid-air cabin blowout on a 737 MAX 9 operated by Alaska Airlines. Although no fatalities occurred, the incident raised alarms about safety protocols, leading to calls for Boeing to withdraw the safety exemption petition.

Impact on Certification Timeline

The withdrawal of the safety exemption request throws into doubt the anticipated timeline for certifying the 737 MAX 7 and MAX 10. This decision may compel Boeing to expedite design changes, potentially deviating from its initial plans. The delay in certification could have broader implications for major carriers, including Southwest Airlines and United Airlines, which were eagerly awaiting the integration of the MAX 7 and MAX 10 into their fleets.

Market Competition and Reputational Crisis

Boeing's decision to withdraw the exemption request reflects the severity of the safety and reputational crisis the company is facing. After the resumption of service for the MAX family following two fatal crashes, Boeing had aimed for approval of the MAX 7 and MAX 10 by the end of 2022. The ongoing delays may provide an opportunity for European rival Airbus to gain a larger share of the narrowbody market, potentially eroding Boeing's standing.

Financial Implications and Production Concerns

Boeing's withdrawal of the exemption request precedes its fourth-quarter results, raising questions about the company's financial outlook for 2024 and its operational stability in 2025-26. The uncertainty surrounding the certification of the MAX 7 and MAX 10 models also casts doubt on Boeing's earlier projection of reaching a production rate of 50 jets per month for the 737 series. The FAA's recent decision not to approve further production rate increases further adds to the challenges Boeing faces in maintaining its production targets.

Stakeholder Perspectives

Stakeholders, including U.S. Senator Tammy Duckworth and Dennis Tajer, a spokesperson for the union representing American Airlines pilots, have welcomed Boeing's withdrawal of the exemption request as a positive step. However, questions remain about the ongoing status of the MAX 8 and MAX 9 models, and stakeholders are keenly observing how Boeing and the FAA address existing safety concerns on these aircraft.

Conclusion

Boeing's decision to withdraw the safety exemption request is a pivotal moment in the ongoing crisis surrounding the 737 MAX series. The move reflects the company's acknowledgment of the need to prioritize safety and address concerns raised by lawmakers and industry stakeholders. As Boeing navigates the fallout from the recent incident, the aviation community awaits further developments regarding design changes, certification timelines, and the company's overall strategy for ensuring the safety and reliability of its aircraft.

With Inputs from Reuters

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Uncertain Future for JetBlue-Spirit Merger as Federal Judge Blocks Deal

Abhishek Nayar

31 Jan 2024

In a recent turn of events, JetBlue Airways faces potential setbacks in its bid to acquire Spirit Airlines, with a federal judge's decision to block the proposed USD3.8 billion deal, citing concerns over competition. Despite both carriers expressing their intent to appeal the ruling just a week ago, JetBlue now warns that it may be compelled to abandon the merger. This development adds complexity to an already competitive landscape within the airline industry.

Background & Federal Judge's Decision

The proposed merger between JetBlue Airways and Spirit Airlines was initially announced in July 2022, signaling a strategic move within the aviation sector. This announcement closely followed Spirit's termination of a similar contract with Frontier Airlines, paving the way for JetBlue to enter the scene after a prolonged bidding war.

The latest obstacle for JetBlue's acquisition plans comes in the form of a federal judge's decision to block the deal. The judge cited concerns related to competition, raising questions about the impact of the merger on market dynamics. This decision puts the future of the USD3.8 billion transaction in jeopardy.

JetBlue's Filing & Spirit Airlines' Response

On January 26, 2024, JetBlue filed a disclosure with the U.S. Securities and Exchange Commission, revealing its concerns about meeting certain closing conditions outlined in the merger agreement. The airline informed Spirit that, due to these uncertainties, the merger agreement might become terminable on and after January 28, 2024. JetBlue is now evaluating its options under the planned deal.

In response to JetBlue's filing, Spirit Airlines asserted its belief that there is no basis for terminating the merger agreement. The company emphasized its commitment to fulfilling all obligations outlined in the agreement and expressed expectations for JetBlue to do the same. This sets the stage for potential legal and contractual disputes between the two carriers.

Appeal and Continued Uncertainty

Despite the setback, both JetBlue and Spirit had pledged to appeal the federal judge's decision just a week before. The appeal process introduces an additional layer of uncertainty, as the outcome will significantly impact the feasibility of the merger. The legal battle underscores the complexity of navigating regulatory hurdles in the airline industry.

Market Implications

The uncertainty surrounding the JetBlue-Spirit merger has broader implications for the aviation market. Competitors and industry stakeholders are closely monitoring developments, as the outcome could reshape market dynamics and influence future merger and acquisition strategies within the sector.

Conclusion

As the legal and regulatory challenges mount, the future of the JetBlue-Spirit merger hangs in the balance. The federal judge's decision to block the deal, combined with JetBlue's warning of potential termination, sets the stage for a critical period in the ongoing saga. The aviation industry awaits further developments, with implications not only for the involved airlines but for the broader competitive landscape as well.

With Inputs from ch-aviation

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