Indian Aviation sector to see a loss of INR 25,000-26,000 crore in FY22

Radhika Bansal

23 Dec 2021

The pandemic-hit Indian aviation industry is expected to report a net loss of INR 25,000-26,000 crore while its debt level may increase to Rs 1.2 lakh crore in the ongoing fiscal year, credit rating agency ICRA said.

Also, the industry will be requiring additional funding of INR 45,000-47,000 crore over FY2022 to FY2024, it said.

According to ICRA, in the near term, the balance sheets of Indian carriers will remain stressed until they can reduce their debt burden through a combination of improvement in operating performance and/or through equity infusion.

ICRA has thus maintained its negative credit outlook on the Indian aviation industry.

Most airlines have initiated fund-raising plans to tide over the liquidity crisis stemming from the cash burn due to the impact on demand and increase in jet fuel prices, it said.

The aviation industry is expected to witness strong year-on-year growth of 45-50% in domestic air passenger traffic and 80-85% in international air passenger traffic during 2021-22, according to ICRA.

It will, however, be achieved on a lower base of the previous fiscal year and driven by the faster pace of vaccination and gradual relaxations in restrictions by the regulatory authorities.

"Given the resurgence of the second wave of the pandemic, the recovery in passenger traffic will only be gradual, with the domestic passenger traffic expected to reach pre-COVID levels only by FY2024.Elevated ATF prices (higher by 71% Y-o-Y in the five months of FY2022) and fare caps continue to pose a challenge for the profitability of the airlines.Therefore, the Indian aviation industry is expected to report a net loss of INR 250-260 billion in FY2022. The debt levels will remain high for the industry and are estimated to increase to around INR 1,200 billion (including lease liabilities) in FY2022, with the industry requiring additional funding of INR 450-470 billion over FY2022 to FY2024."Kinjal Shah, Vice President and Co-Group Head, ICRA

However, the growth will still be significantly lower than the 2015-16 and 2012-13 levels, and the industry is expected to report a higher net loss in 2021-22, said ICRA.

The recovery in domestic air passenger traffic is contingent on the pace of vaccination, willingness of consumers to undertake leisure travel, recovery in macroeconomic growth, which in turn impacts consumer sentiments and the ability to travel.

Besides, developments related to central and state government-mandated travel restrictions and quarantine norms, and recovery in business travel will also decide the pace of recovery, ICRA said.

Stating that the impact of the pandemic will be more profound and long-lasting on international travel, compared to domestic travel, it said that in addition to these, the recovery in international travel is also contingent on the opening up of scheduled international operations by the government.

Besides, the macroeconomic shock to the global economy and the government-mandated travel restrictions and quarantine norms of various countries will be the deciding factors for the recovery.

Significantly, the regular commercial international flight services remain suspended from late March 2020. The ban has now been extended till January 31, 2022.

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Gautam Adani looks for $1 billion in bonds to refinance the debt at Mumbai Airport

Radhika Bansal

23 Dec 2021

Billionaire Gautam Adani is mulling to raise around $1 billion via a bond sale in January 2022 to refinance the debt of Mumbai’s international airport, Bloomberg reported on December 22.

According to the report, Barclays Plc, JPMorgan Chase & Co and Deutsche Bank AG are among the banks working to arrange the bond sale to raise funds for Adani Airport Holdings Ltd. The proceeds will be used to refinance a rupee loan taken earlier in 2021.

Earlier on July 13, Adani Airport Holdings Limited (AAHL) -- a wholly-owned subsidiary of Adani Enterprises -- took control of the management of India's second-busiest airport on July 13 after buying out 50.5% from GVK Airport Developers Ltd.

Earlier, it acquired 23.5% from ACSA Global (ACSA) and Bid Services Division (Mauritius), or Bidvest, for INR 1,685.25 crore. Adani Airports will operate, manage and develop eight airports.

Recently, Adani Group had received permission to operate Lucknow, Jaipur, Guwahati, Ahmedabad, Thiruvananthapuram, and Mangaluru airports through the public-private partnership (PPP) model.

"We are delighted to take over management of the world-class Mumbai International Airport. We promise to make Mumbai proud. The Adani Group will build an airport ecosystem of the future for business, leisure, and entertainment. We will create thousands of new local jobs," Gautam Adani said earlier this year after over the management of Mumbai International airport from the GVK Group, following a Mumbai International Airport Limited (MIAL) board meeting.

(With Inputs from Bloomberg)

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Defense Ministry fines MBDA for failing to meet its obligations under the Rafale deal

Radhika Bansal

23 Dec 2021

The defence ministry has imposed a fine of less than 1 million euros on European missile maker MBDA for the delay in fulfilling its offset obligations under the Rafale aircraft deal, sources said on Wednesday, December 22.

French aerospace major Dassault Aviation is the manufacturer of the Rafale jets while MBDA supplies the missile systems for the aircraft.

India had signed an inter-governmental agreement with France in September 2016 to procure 36 Rafale jets for INR 59,000 crore, and the offset obligations were part of the contract. As a part of the deal, 50% of the total contract value has to be reinvested in India as offsets each year between September 2019 and September 2022.

The sources said the defence ministry has imposed and collected a fine of less than 1 million euros from MBDA for delaying its offset obligations for the September 2019-September 2020 period.

MBDA has deposited its penalty but has also lodged its protest with the defence ministry, they said. The first batch of Rafale fighter aircraft came to India in July 2020.

The CAG had in September 2020 said that Dassault Aviation and MBDA are yet to fulfil their offset obligations of offering high technology to India under the Rafale aircraft deal, according to the Comptroller and Auditor General's report released on Wednesday, December 22.

(Image Courtesy - Mint)

In its report tabled in Parliament, the national auditor had said that Dassault Aviation and MBDA proposed in September 2015 to discharge 30% of their offset obligations by offering high technology to the Defence Research and Development Organisation (DRDO), but the two firms were yet to do it.

India received the first batch of five Rafale jets, manufactured by French aerospace major Dassault Aviation, on July 29, 2020. The Rafale jets are India's first major acquisition of fighter planes in 23 years after the Sukhoi jets were imported from Russia.

The multi-role Rafale jets are known for air superiority and precision strikes. They are capable of carrying a range of potent weapons. MBDA's Meteor beyond visual range air-to-air missile and a Scalp cruise missile are the mainstay of the weapons package of the Rafale jets. Meteor is a next-generation beyond visual range air-to-air missile (BVRAAM) designed to revolutionise air-to-air combat.

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The Lockheed Martin "A380" that was never built

Prashant-prabhakar

22 Dec 2021

The iconic Airbus A380 may have been phased out now, after 12 years of being in service, but did you know, plans for a similar engineering marvel had been on the cards since the early 90s? Perhaps not!

Boeing has always wanted to build a competitor to rival the mighty A380. At around the same time, the Russians were also reported to have plans of building a double-decker featuring escalators.

A380 | Emirates

Lockheed Martin, as it would turn out, came up with an idea for a double-decker super transport aircraft that would be bigger than a 747, carry more passengers than an A380 and would have dominated the skies.

Airports, unlike today, had a slew of issues back in the 90s. Although air travel was on the rise, acquiring airport slots was getting increasingly difficult. Quite interestingly, airports started selling landing slot pairs for millions of pounds!

B747 | Britannica

Thus, according to Lockheed Martin, if the frequency of planes couldn't be increased, the next logical step would be to create bigger planes. Boeing had already started the trend of manufacturing massive jets like the B747 by then with Airbus trailing with the A340 series.

The company in 1996 thereby came up with the program- "Large Subsonic Transport"-  a series of designs for an aircraft that would be the natural evolution of the Boeing 747. This also came at a time when heavy-lift aircraft for the US military were approaching the end of their operational period thereby putting Lockheed right where it needed to be to win the contract.

The Large Subsonic Transport, officially known as " Lockheed Very Large Aeroplane " was designed to carry around 800 passengers for long haul flights, as well as the possibility for it to be configured as a freighter. Additionally, it was to have a military application as well.

Lockheed Very Large Aeroplane

Wordless Tech

Tech and Specs

Take-off weight1.4 million pounds / 635 metric tonnesWingspan282 feet / 85 mLength262 feet / 79 mfoundandexplained.com

With a passenger capacity of 800-900 passengers, travellers would have ideally found themselves in a cabin around 17 seats across, or 3 – 4 – 3 – 4 – 3 configurations with four aisles and two decks. Aircraft today, have a maximum of 10 seats across and not more.

Additionally, it would also have foldable wingtips, much like the ones we see on the B777X today.

B777X foldable wingtips | Aerotime Hub

Lockheed Martin had also unveiled plans of a cargo version of the touted model. The model would have intermodal containers, very similar to the ones used on trains, boats and trucks. The very fact that this aircraft would still have space for accommodating 450 passengers on the upper deck even after holding 16 of the containers in the lower deck, goes to show the sheer size of the aircraft.

Shipping containers | Representative | Bankrate.com

Despite all the impressive features, the model still lacked drastically in terms of range, especially in comparison to its modern-day rivals. The Lockheed model only had a range of 3,200 nautical miles, and this is shockingly less when compared to the 7,730 nautical miles by B747. The Airbus A380 takes the centre stage again with a maximum range of  8,000 nautical miles. The massive plane by Lockheed was tentatively priced at $200-300 million USD in the 90s, which is equivalent to around half a billion dollars in 2020. (Cheaper than the A380 cost of USD 445 million).

Why did it never see the light of the day despite an impressive portfolio?

It's one thing to talk about it and another to actually implement it. Apparently, the company had neither the resources nor the know-how to build the plane. It became apparent that Lockheed would have to collaborate with other aerospace giants like Boeing and Airbus to bring the project to fruition at a total development cost of $18 billion US.

Other major setbacks included:

The massive vortex generated by such a massive aircraft would mean longer waiting times for preceeding and succeeding aircraft to take-off or land.The aircraft would sink immediately in case of ditching eventsThe entire demographic of airports would have to be altered with longer and wider runways and taxiways.The aircraft would be extremely noisyEmergency evacuation procedures would take a hit as the nearest emergency exit would be far away for travellors seated in the middle and worse, it wouldn't be meet today's FAA standards.

Ironically, the company wasn't entirely sure of how the design would work in the air, considering the architecture was entirely different from that of a conventional aircraft. As fate would have it, the project was finally shelved and never made it beyond design papers.

SOURCE(s)

COVER: Wordless Tech

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Hindu Kush route comes to save an hour on Air India flights to and from North America

Radhika Bansal

22 Dec 2021

Thanks to the Hindu Kush route, Air India's popular nonstop flights between Delhi and North America have just become a lot faster, cutting about an hour off the flight time.

AI Boeing 777s flying between India and North America have taken a longer route since the Afghan airspace was closed to non-defence aircraft on August 16, resulting in more flying time and fuel consumption. Instead of taking the shorter Pakistan-Afghanistan-Turkmenistan/Uzbekistan route, they flew through south Pakistan below Afghanistan and then into Iran-Turkey-beyond.

A recent AI Chicago-Delhi flight flew over the mountains. (Image Courtesy - Simple Flying)

Since Thursday, December 16, AI B777s have been flying directly north, over the Hindu Kush range, and then west along the usual route. As a result, the flight time of AI 101 (Delhi-New York JFK) will be less than 16 hours, rather than the over 16.5 hours on the longer route avoiding Afghanistan, resulting in a 7-tonne fuel savings one-way.

Captains Zoya Agarwal, R Someshwar, Sandeep Mukhedkar, and Abhay Agarwal flew AI's first B777 (VT-ALQ named Manipur) from Toronto to Delhi over the Hindu Kush on December 16.

Given the high mountain ranges the aircraft flies over, pilots describe this as a "very critical and challenging sector." Captain Zoya was also one of the pilots who flew AI's first San Francisco-Bengaluru flight, which took the polar route in January and was one of the world's longest nonstops.

“Our management played a critical role in getting this route cleared for the B777s. Cutting flying time means less fuel burn and lower emissions, something we did by taking the polar route and, now, with the Hindu Kush,” said a senior pilot.

As reported by TOI, AI had started flying its Boeing 787 Dreamliners between Delhi and Europe over the Hindukush from this October and, now, the B777s to and North America have also joined them.

“The logistics for B777 and B787 are very different. A fully laden B787 (with passengers, cargo and fuel) can have a maximum altitude of 35,000 feet. But a B777, due to factors like its different wing design and the fact that more fuel has to be carried for the much longer North America nonstops, can have a maximum altitude of 29,000 feet,” said a senior official.

Air India has stated that it will go back to its previous route once the Afghan airspace reopens, and other carriers are likely to do the same.

Taking the Hindu Kush route means flying over the awe-inspiring Tirich Mir (7,780 metres or 25,525 feet) — the world’s highest peak outside the Himalaya-Karakoram range.

It’s abundantly clear how important Pakistani and Afghan airspace is for carriers flying between India and the west. Any political unrest which leads to airspace closure of these two countries severely impacts airlines’ operations.

In 2019, when escalating tensions between India and Pakistan led to the closure of Pakistani airspace, several airlines either had to restrategize their routes or suspend flights altogether. United Airlines decided to wait for airspace to reopen before resuming its Newark flights to Delhi and Mumbai.

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Go First offers a 20% discount to fully vaccinated passengers

Radhika Bansal

22 Dec 2021

Indian airline Go First, founded as GoAir, on Tuesday, December 21 announced a 20% discount for fully-vaccinated passengers. People travelling on GoAir domestic flights will now be able to avail the discount offer by using the GOVACCI scheme.

According to the airlines, the offer is only applicable for passengers located in India and who are double vaccinated at the time of booking of domestic flight tickets. The passengers must carry their COVID-19 vaccination certificate issued by the Ministry of Health & Family Welfare, Government of India, or show their vaccination status on the Aarogya Setu mobile app at the airport check-in counter. 

The airline is calling the new scheme ‘GOVACCI’. It is available to passengers located in India and who are double vaccinated at the time of booking domestic flight tickets. Flights must be at least two weeks ahead in time from the date of booking.

The offer is valid only on the Go First website or mobile app, the company added. The double-vaccination discount is applicable for travel dates till 15 days from the date of booking. 

Potential passengers will have to enter the promo code GOVACCI in the promo code section on the search page.  The announcement comes as India’s Omicron tally crosses 200, with Maharashtra and Delhi recording 54 each. 

Keeping in view the rising infections, the government has made it compulsory for international passengers arriving at the country from "at-risk" nations to pre-book an RT-PCR test amid a surge in COVID-19 new variant 'Omicron.'

Before the pandemic hit, GoAir operated over 330 daily flights to 36 destinations, including nine international. Go First has an all-Airbus fleet, currently consisting of 59 aircraft. Seven of these are A320-200s, and 52 are A320neos. Furthermore, the airline has outstanding orders for as many as 92 of the latter.

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