Airline News
India’s airlines in motion
January 27th 2015
A month ago, low-cost carrier, SpiceJet, one of India’s three large private airlines, seemed to be on the same trajectory to Vijay Mallya’s Kingfisher Airlines, the premium full-service carrier brought down by heavy debts in 2012. Read More » At press time, however, SpiceJet was poised for a course correction after Kalanithi Maran, a media magnate in India and the carrier’s controlling shareholder, agreed to hand ownership to Ajay Singh, the founder, as part of a rescue plan. In turn, Singh pledged to inject up to 15 billion rupees ($240 million) into SpiceJet and expressed confidence in its prospects for a turnaround following five consecutive quarters of losses. His optimism reflected the improving climate for India’s airlines amid a sharp drop in oil prices, accelerating economic growth and New Delhi’s new-found interest in the stability of private carriers.
India’s state-owned Air India, last week announced another cost-cutting plan in excess of 14 billion rupees ($227 million), or about 6% of its total outlays, including reviews of temporary workers to identify “surplus staff”, overtime work, the use of costly space at its Delhi and Mumbai hubs and, primarily, the discontinuation of services not meeting cost targets. Restrictions on staff travel were also introduced. The carrier last week also officially requested the government to introduce tax breaks in the MRO sector to avoid having to fly empty jets overseas for overhauls because it was 30% more expensive to service aircraft in India than abroad, the carrier said. Air India received a $5.8 billion government bailout package in 2012.
Meanwhile, competition is bound to intensify on the subcontinent as Vistara, officially launched January 9 with a fleet of three A320s, last week received clearance from India’s Directorate General of Civil Aviation (DGCA) for more domestic destinations to its network. Vistara is the brainchild of a co-operation between Singapore Airlines (SIA) and India’s Tata Group. SIA’s clout in Star Alliance could pave way for a future Vistara membership in the alliance.
