Indian Aviation deals of July 2021 - A Timeline

Admin

29 Jul 2021

29 July, 2021Air India seeks to bid highIndia’s state civil aviation minister V K Singh said that bids for Air India are likely to be seen by September 15. The two big bidders for this Indian airline are Tata Group and Spicejet. For years now, Air India has been sinking into debt and loss. In early 2020, the Modi government planned for Air India’s privatisation and sell Air India’s stakes to rise above loss. Recently, the Indian government revealed that Air India has sold 115 properties worth Rs 738 crore since 2015.GMR, Groupe ADP shake hands over the joint deal The Indian aviation conglomerate, GMR Group announced its ‘industrial partnership’ with the Paris- based company Groupe ADP through a press release. This partnership will help both the companies to outsource each other’s services and improve passenger experience and airlines. The partnership will also focus to strengthen synergies, engineering, information technology, operations, project management, design.27 July, 202126 July, 2021Investor tycoon seeks opportunity in aviationBig bull Rakesh Jhunjhunwala bets on a new low-cost airline, Akasa, in partnership with Aditya Ghosh, former president of IndiGo. Jhunjhunwala seeks to launch 70 aircraft in India in the next 4 years. In a Bloomberg interview, Jhunjhunwala revealed an investment of $35 million behind the airline and would own a 40% stake in the carrier’s stake.SpiceJet, Boeing in clash overcompensationSpice Jet wants the American aircraft manufacturer to compensate for the loss of revenue it incurred in its yearly earning result. The inconvenience was caused due to delay and grounding disruptions. After Boeing’s two fatal crashes - Ethiopian Airlines and Lion Air flight - the company faced a global grounding of its aircraft. Indian budget-carrier claimed an amount of Rs12.3 billion from Boeing for not being able to fly its 13 MAX aircraft. Interesting fact, SpiceJet is the only Indian airline operating the MAX.25 July, 202122 July, 2021Baby steps by Indian MoCATo address the matters arising due to pandemic, Jyotiraditya Scindia formed three advisory groups to assess the concerns in Indian aviation. The three advisory groups are - Airlines, Airport operators and MRO (Maintenance, Repair and Operations), Cargo carriers, FTOs and ground handling companies. These groups will meet regularly and look upon the challenges faced by each sector.SpiceJet promoter to raise $1 billion for Air India bidIndia’s low-cost airline Spice Jet’s promoter, Ajay Singh, kept $1million aside to use it in the war of bids for Air India. This bid will be made by a Special Purpose Vehicle (SVP), including two US-based funds. In addition, Singh will gather the stakes of his cargo business to raising $300 million for the bid.21 July, 202113 July, 2021Adani takes over from GVKThe flagship holding company Adani Airport Holdings Limited (AAHL), backed by Adani Group, in a press release revealed that it has taken over the management of Chhatrapati Shivaji International Airport. Adani Group will have a 74% stake in the Mumbai international airport. GVK is said to buy 50.5% of the stock."Our airport expansion strategy is intended to help converge our nation’s Tier 1 cities with the Tier 2 and Tier 3 cities in a hub and spoke model”, said Gautam Adani, Chairman of Adani Group.Jet Airways owes each employee in bulkIndia-based defunct airline Jet Airways owes each employee a bulk amount of nearly 3 lakhs to 85 lakhs, as per the insolvency resolution policy. The revival plan suggested by Kalrock-Jalan, new owners of the airline, proposed a sum of Rs 23,000 to each employee. Prior, the National Company Law Tribunal (NCLT) cleared the resolution plan. The resolution plan states that only if 95% of Jet employees agree to the plan in the next three months.11 July, 20218 July, 2021Adani’s plan to raise offshore loans for MIALAdani Group plans to raise more than $1 billion through offshore loans to refinance Mumbai International Airport Ltd (MIAL). Group is in talks with international firms like Deutsche Bank, JP Morgan, Barclays.Do it quickly in a year, or go homeFor Jet Airways to be back in the game and start flights, London’s Kalrock and UAE’s Murari Lal Jalan will need to deposit an amount of Rs 600 crore within a year. The amount is to be deposited in two instalments: in the first six months, the two new entries are required to pay a sum of Rs 350 crore and another Rs 250 crore within the last six months.1 July, 2021

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Akasa Air plans to launch domestically by July end and internationally by 2023 end

Radhika Bansal

23 Jun 2022

Billionaire investor Rakesh Jhunjhunwala-promoted Akasa Air on Tuesday, June 21 received its first plane from American aerospace company Boeing.

Boeing’s 737 Max aircraft, which flew from Seattle, touched down at Indira Gandhi International Airport in New Delhi on June 21.

“The delivery of Akasa Air’s first aircraft brings the airline closer to obtaining its Air Operator’s Permit (AOP), which is required for it to launch commercial operations in the country,” Akasa Air said in a statement.

https://twitter.com/AkasaAir/status/1539870392453857280

Akasa Air, which is also backed by aviation veterans Vinay Dube and Aditya Ghosh, had signed a deal with aerospace giant Boeing to purchase 72 MAX planes in November 2021. The low-cost carrier is expecting the delivery of 18 aircraft by March next year and the remaining 54 aeroplanes by 2026.

ALSO READ - Rakesh Jhunjhunwala’s Akasa Air signs deal for 72 Boeing 737 Max planes

The external environment concerning rising oil prices and rupee depreciation has not changed "anything" in the plans for Akasa Air and the airline is confident of commencing flights next month with two aircraft.

ALSO READ - Flight operations of Akasa Air pushed to July

https://twitter.com/AkasaAir/status/1539184701721546752

The airline, in August 2021, received a no-objection certificate from the Ministry of Civil Aviation in August 2021 to launch commercial flight operations.

Akasa has earlier announced the launch of its operations from the mid of 2022 onwards. However, no official date has been set so far.

The company is eying the world’s third-largest aviation market that is rapidly growing with several airlines offering low-fare tickets and air connectivity increasing with new routes and airports.

The airline, in August 2021, received a no-objection certificate from the Ministry of Civil Aviation in August 2021 to launch commercial flight operations.

For Boeing, a USD 9 billion deal with Akasa Air means regaining lost ground in India as its European rival  Airbus will be delivering hundreds of aircraft to budget carriers IndiGo and GoAir, in addition to Vistara.

The company suffered huge losses after its 737 Max — the newest member of Boeing’s 737 narrow-body family — was grounded in several countries, including China and India.  

In October 2018, the 737 Max crashed in the Java Sea shortly after takeoff from Jakarta. Later, in March 2019, another aircraft of the same model crashed in Ethiopia. Both these accidents killed a total of 346 people.

Co-Founder, CEO and MD of the airline, Vinay Dube believes aviation is a straightforward business.

Co-Founder, CEO and MD of the airline, Vinay Dube believes aviation is a straightforward business. He has spent most of his three-decade-long career steering airline companies as Senior VP – APac for Delta Air Lines or CEO of Jet Airways and GoAir (previously known as Go First). 

In an interview with Outlook, Vinay Dube says, "We have not entered this market because we think that getting passengers from other brands is the key to success. India will get over 1,000 planes in the next 15 to 20 years. We hope that over 100 of those can be Akasa's over a while."

Akasa Air on June 21 received its first plane from American aerospace company Boeing.

He further adds, "We have generally identified a superset of routes, flying from the metro to tier-II and III cities. We can't zoom in on the routes because the airports must give us permission to land, park, office space and slots. This will be possible only after we get our operator's permit which we hope to get by this month-end."

As required by Indian aviation guidelines, to begin with, we will be a domestic carrier. We hope to launch our own international services in the second half of 2023.

Akasa Air is going through a very rigorous process to get the air operator's permit. The airline, which plans to start commercial operations by the end of July, is currently expecting to get an air operator's permit which will allow them to publish its schedule and open up for sale.

Akasa Air is looking to serve sectors between metro cities and tier 2 and tier 3 cities.

Akasa needs the aircraft to land and goes through proving flights before we can get an air operator’s permit. It all happens under the direct supervision of our regulator, the Director General of Civil Aviation. Hopefully, by early July, Akasa will be able to get its Air Operator's Permit.

Akasa Air is looking to serve sectors between metro cities and tier 2 and tier 3 cities. With the 737 Max aircraft, a mid-sized narrow-bodied aircraft, they won't be able to fly to an extremely small city maybe with a population of four hundred or five hundred thousand (equating the size of the population with runway).

ALSO READ - Akasa Air signs sale and leaseback contract of 5 B737 MAX with Griffin

Cover Image - Shrey Chopra (Twitter)

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Government in no rush to restart scheduled International Flights

Admin

30 Jul 2021

The Director-General of Civil Aviation (DGCA) has further extended the ban on international flights. As per the earlier announcement, the ban on international commercial flights to and from India was ending on July 31. The ban is now extended till August 31.

However, "international scheduled flights may be allowed on selected routes by the competent authority on a case to case basis," said the circular by the Directorate General of Civil Aviation (DGCA). The restriction doesn't apply to international all-cargo operations and flights specifically approved by DGCA.

https://twitter.com/DGCAIndia/status/1421016706432995333

Scheduled international passenger flights were suspended in India on March 23, 2020 due to the coronavirus pandemic. The aviation authority has extended the ban several times since then. While domestic flights resumed in May last year, scheduled international operations remained suspended as COVID-19 cases remained at high levels.

However, special international flights have been operating under the ‘Vande Bharat Mission’ since May and under bilateral “air bubble” arrangements with selected countries since July. They will continue to be in service, according to the latest developments.

Photo Credit: Shutterstock

India has formed air bubble pacts with 28 countries, including the US, the UK, the UAE, Kenya, Bhutan, France, Japan and others. “Transport Bubbles” or “Air Travel Arrangements” are temporary arrangements between two countries aimed at restarting commercial passenger services when regular international flights are suspended as a result of the COVID-19 pandemic. They are reciprocal in nature, meaning airlines from both countries enjoy similar benefits.

This decision comes days after request from the International Air Transport Association (IATA) wanted India to restart scheduled international flights and end capacity and fare capping in the domestic market as these distort competition and hurt consumers.

IATA DG Willie Walsh wanted India to lift ban from the international flights as the conditions are improving in India. He also said other countries should also lift their ban from Indian travellers now as the cases are lowering.

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World's most powerful jet engines and the aircraft they power

Admin

31 Jul 2021

When it comes to the manufacture of new aircraft, engine design and specifications make it to the top of the priority list, amongst other things. With the world leaning towards a more environment-friendly and carbon-neutral scenario, energy-efficient engines with higher reliability have been the goal for most engine manufactures. Let's take a look at the powerful engines today and what aircraft they power:

GE9X

general electric

The GE9X is a variant of its predecessor, the GE90, and is currently the biggest engine to power a commercial airliner to date. Specifically designed for the B777X, it has a thrust output of 134,500 lbs at maximum, although it is currently certified for only 105,500 lbs. The GE9X has a diameter comparable to that of a B737 fuselage. Designed out of carbon-composite fibres, it is expected to deliver an efficiency of 10% over its predecessor, mainly due to its high bypass ratio of 10:1. Having received its FAA type certification on September 25, 2020, the engine is expected to enter service by 2022.

TYPEDual rotor, axial flow, high bypass turbofanCOMPRESSOR1 fan, 3-stage LP, 11-stage HPTURBINE2-stage HP, 6-stage LPBYPASS RATIO10:1WEIGHT21,230 lb (9,630 kg)THRUST134,500 lbfFAN DIAMETER134 in (340 cm)RPMLP 2355, HP 9561VARIANT- 105B1A

GE90

general electric

The GE90 was the world's largest engine until it was taken over by its successor, the GE9X. This was designed for the older variants of the B777 family- B777-200/300 , B777-200LR/300ER. Although certified for 115,000lbf, it can generate thrusts up to 127,900 lbf. The most powerful ones are the GE90-115B/110B found on the B777-300ER and B777-200LR/B777F respectively.

TYPE Dual rotor, axial flow, high bypass turbofanCOMPRESSOR 1 fan, 4-stage LP, 9-stage HPTURBINE 2-stage HP, 6-stage LPBYPASS RATIO 9THRUST 127,900 lbfFAN DIAMETER 128 in (330 cm)WEIGHT 19,316 lb (8,762 kg)VARIANT--110B1/-113B/-115B

PRATT AND WHITNEY PW4000-112

pratt & whitney

Certified by the FAA in 1986, the PW 4000 series offers between 50,000 to 99,094 lbf of thrust. These dual-spool, axial flow, high bypass turbofan engines are used to power the Airbus A300-600, A310-300, Boeing B747-400, B767-200/300, and also the Macdonell Douglas MD11. The PW4000-112 was re-engineered to fit the Airbus A380, as a part of the Engine Alliance GP7000 engine with GE.

TYPETwo spool high bypass ratio turbofanCOMPRESSOR1 fan, 7 LP, 11 HPTURBINE2 HP, 7 LPFAN112 in (284 cm)THRUST91,790–99,094  lbfBYPASS RATIO5.8-6.4:1WEIGHT16,260 lb , 7,375 kgVARIANT- PW4000-112

ROLLS ROYCE TRENT XWB

rolls royce

Yet another axial flow, high bypass turbofan engine, specifically designed to power the A350 family. XWB-84 and XWB-97 are the two variants currently in service and they power the A350-900 and A350-1000 respectively. The XWB-97 being the more powerful of the two produces a massive 97,000lbs of thrust. The A350-900, powered by the XWB-87 has been able to operate ultra-long-haul routes owing to its unparalleled fuel efficiency and an impeccable dispatch reliance of 99.6%.

TYPEThree-shaft, high bypass ratio, axial flow, turbofanThree-shaft, high bypass ratio, axial flow, turbofanCOMPRESSOR 8-stage IP, 6-stage HP8-stage IP, 6-stage HPTURBINEsingle stage HP, 2-stage IP, 6-stage LPsingle stage HP, 2-stage IP, 6-stage LPBYPASS RATIO9.6:19.6:1FAN1-stage, 3.00 m / 118" diameter, 22 blades1-stage, 3.00 m / 118" diameter, 22 bladesTHRUST84,200 lbf (375 kN)97,000 lbf (431 kN)VARIANTS: -84 / -97

ROLLS ROYCE TRENT 800

photo credits : curimedia photography

The TRENT 800 was Rolls Royce's offer to the B777 family. With a bypass ratio of 6.4:1,it is one of the lighter options presented to B777 as compared to the GE90 and the PW4000-according to Rolls Royce. Capable of producing 95,000lbf of thrust at maximum, Trent 800 weighs (13,400 lb) while the GE90 is 17,400 lb, and the PW4000 is 16,260 lb.

TYPEThree-shaft high bypass turbofan engineCOMPRESSOR Eight-stage IP axial compressor, six-stage HP axial compressorTURBINESingle-stage HP turbine, single-stage IP turbine, five-stage LP turbineTHRUST76,580-92,940 lbfBYPASS RATIO6.4:1

ROLLS ROYCE ULTRAFAN

rolls royce

Expected to be completed by the end of 2021, the UltraFan prototype includes the world’s largest fan rotor blades, made from composites. ULTRAFAN would be the world's largest aero-engine, expected with a fuel efficiency of an impressive 25% over its Trent predecessors. Work has already commenced at its Derby location, UK-which also happens to be the world's largest facility for engine testing. ULTRAFAN’s efficiency will help improve the economics of an industry transition to more sustainable fuels. In fact, the first engine test run would be made entirely on SAF. (sustainable aviation fuel)

Key engineering features include:

Carbon titanium fan blades and a composite casing that reduce weight by up to 1,500lb per aircraft.Advanced ceramic matrix composite (CMC) components that operate more effectively in high pressure turbine temperatures.A geared design that delivers efficient power for the high-thrust, high bypass ratio engines of the future

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Top 10 busiest domestic air traffic routes of India

Admin

31 Jul 2021

As the COVID-19 cases take a dip in the past few months, the domestic air traffic has started showing signs of growth. People have started travelling again and the air traffic routes have become busy.

According to the Ministry of civil aviation and DGCA, air traffic routes from New Delhi and to New Delhi have been the busiest in the past few months. Let's look at the top 10 busiest air traffic routes of India.

CITY 1CITY 2TOTAL NO. OF PASSENGERSDelhiSrinagar1,63,453BengaluruDelhi1,62,421DelhiKolkata1,39,535DelhiMumbai1,32,875DelhiPatna1,31,670DelhiHyderabad1,11,304BengaluruKolkata1,09,735DelhiGuwahati98,319ChennaiDelhi92,046DabolimDelhi82,378Domestic Air Traffic for April 2021

They're the busiest routes for cargo too. This list includes metro cities of New Delhi, Kolkata, Bengaluru and Chennai along with Srinagar, Hyderabad, Guwahati, Patna and Dabolim (Goa Airport).

Domestic air passenger traffic back to growth in June

Domestic air passenger traffic was back to the growth trajectory in June amid the falling number of COVID-19 cases in the country with around three million passengers flying on local routes in the previous month as against around two million in May, a report said.

Though there is some recovery observed in June, stress on demand continues, driven largely by the second wave of the pandemic, limiting travel to only necessary travel, credit rating agency ICRA said in its report.

On a sequential basis, domestic passenger traffic was up 41-42 per cent in June over May. The domestic passenger volume, however, rose 51 per cent on a year-on-year basis, it stated.

June 2020 was the full month of operations after domestic commercial flights were recommenced on May 25 following a nearly two-month ban amid the nationwide lockdown in late March last year.

DELHI AIRPORT

It has now permitted increasing the capacity to 65 per cent with effect from July 5 and which will remain applicable until further communication.

For June 2021, domestic passenger traffic stood at around 29-30 lakh, implying a sequential growth of around 41-42 per cent as compared with around 19.8 lakh in May 2021, ICRA said in the report.

The airlines' capacity deployment in May, which was reduced to 50 per cent from 80 per cent earlier following a government order, was around 46 per cent higher at around 31,700 departures, than 21,696 departures in June 2020, it stated.

On a sequential basis, the number of departures in June was higher by around 14-15 per cent, as coronavirus infections demonstrated a downward trajectory, ICRA added.

According to ICRA, the government's recent announcement of a scheme providing financial support in the form of working capital/personal loans to around 10,700 recognised regional-level tourist guides is expected to provide the much-needed liquidity support to tourism and travel stakeholders (TTS).

For June, the international passenger traffic for Indian carriers under the VBM was estimated at around 1.47 lakh, a sequential growth of around 4 per cent, as flights to/from India remained suspended in June by many countries, citing the new variant of COVID-19 and high infection levels.

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IndiGo's cash reserves keeps it afloat amid bleak industry outlook

Admin

28 Jul 2021

India’s largest low-cost carrier IndiGo posted its highest ever quarterly loss of INR 3174.17 crore loss during the April-June period as the second wave of the pandemic during April and May forced down the number of air passengers. IndiGo CEO Ronojoy Dutta described the period as one of the most difficult periods in the company’s history but said that with the spread of the virus declining every day, there has been a return of passengers to aircraft and that the airline sees no reason to slow down capacity addition.

“I will have to say in an emphatic way that yes Covid is a big crisis, but it is a short term crisis and the longer-term story is the India story remains strong. So when we look at that, we tell ourselves that let’s run a good airline and the longer-term story is a table-thumping great story,” Dutta said.

indigo

However, he warned that a new wave of the virus can upend the recovery seen. “We will see gradual recovery for the next three quarters and hope to be back to the pre-Covid capacity by the end of this year,” Dutta said adding that forward bookings have seen a slight improvement.

Adding to this, the airline’s condition was worsened by crude oil prices have inched up, which means operating costs increase for airlines. For perspective: average aviation turbine fuel (ATF) prices in Q1FY22 increased by around 97% year-on-year and 12% against the March quarter. The airline’s fuel cost jumped 854% year-on-year to INR 1216 crore in the quarter.

Second wave

The impact of the second wave can be gauged from the following numbers- While in April the airline generated INR 1540 crore of cash, it depleted more than half to INR 670 crore and in June it increased slightly again to INR 970 crore. “We are expecting that in July it will be similar to that in April,” Dutta said.

INDIGO

A prolonged impact of the coronavirus has turned IndiGo’s net worth to negative- the first time in the company’s history, but Dutta said that it will not impact the company’s negotiating power with lenders, lessors or aircraft lessors. “The relationship between IndiGo and vendors is very solid. If anything, IndiGo has become a blue-chip as they see what’s happening elsewhere and then they compare it with IndiGo which has not allowed to build up any kind of pending payment.

The airline’s daily cash burn increased from INR 19 crores in the March quarter to INR 33.4 crores during the June quarter. The impact of the ongoing limitation on operations of the company was felt in the balance sheet with free cash declining 25% on-year, while total debt soared nearly 35%.

The airline raised liquidity of INR 1000 crore during the June quarter. “We will be focusing on countering the situation through cost reduction, liquidity enhancement and capacity addition,” said Jiten Chopra, CFO of IndiGo.

Analysts tracking the company were eager to know if work from home will permanently shave off some corporate travellers. Sanjay Kumar, chief strategy and revenue officer said that it will largely recover. “Pre-covid corporate used to be 20% of our business. So it may not get there but it will hold around 13-14%” he said.

Photo credits: Airbus

The Summary

While the airline had seen almost 50% of business travel back in February, the gains were washed away due to the second wave. “What we are witnessing is industries like manufacturing, infrastructure, pharma, banking are seeing better recovery in terms of corporate travel as compared to IT, consulting services. " What we are hoping that as the infection has gone down, corporate travellers will be back,” he said.

For the quarter, its passenger ticket revenue was INR 2,297.6 crore, up 292.5% from the same period last year, and ancillary revenues were at INR 668.3 crore, an increase of 296.0% compared to the same period last year. All scheduled domestic flights were suspended last year for two months from March 25 to May 24. IndiGo had a total cash balance of INR 17,067.9 crore — comprising INR 5,620.7 crore of free and INR 11,447.2 crore of restricted cash — as of June 30, 2021. The airline’s total debt this June end (including operating lease liability) was INR 31,690.1 crore. IndiGo’s loss in FY 21 was INR 5,806.4 crore — almost INR 16 crore daily — compared to a loss of INR 233.7 crore in FY 20.

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