Friday, September 30, 2011

Headwinds or Tailwinds?

This was quite a week for aviation.
ANA took delivery of its first Boeing 787 Dreamliner at Boeing's facilities in Everett, Washington on September 25, 2011 following which the aircraft flew to Narita, Japan to commence scheduled operations shortly.
It is believed that initially, Boeing had planned for the maiden flight by the end of August 2007 following a roll-out ceremony on July 8, 2007, which matches the aircraft's designation, 787, in US-style month-day-year format (7/8/07). That never happened, as there were many many issues - shortage of aerospace-grade fasteners, incomplete software, labour strikes and supply chain issues.

But all's well that ends well. The Boeing 787 Dreamliner is here, definitely. It was nice to see the the Boeing 787 Dreamliner being brought into the launch function by enthusiastic Boeing employees, much like a bride being led to to the altar!

Photos on aviation spotting websites like Airliners.net and other news reports suggest that the 787 production line is now well oiled. A few Air-India Boeing 787 Dreamliners - to be designated as VT-ANA, VT-ANB, VT-ANC and VT-ANG are nearly ready and should be delivered soon. It is a different question whether Air-India would have the financial wherewithal to take their delivery. It would be tragic if the Dreamliner does not fly on Indian skies.
Then came a bombshell. This news did in a sense prove that life does come full circle. On September 28, 2011, it was announced that Kingfisher Airlines would exit its low cost business, Kingfisher Red, and instead would reposition itself as a full service carrier. When Kingfisher Airlines started operations in 2005, it was premium full service carrier, that, as many felt, relied on titillation - stewardesses chosen personally by the Chairman (that's cheesy enough), stewardesses clad in bright red short skirts - that was enough to set testosterones racing. But what started off well, leave aside the gimmickry for a moment - great food, great service on board, soon took a tumble. Air Deccan was acquired and the airline adopted a hybrid full service and low cost model, and then got caught up in economic headwinds and fuel turbulence! Things got bad - finances crippled in light of massive orders with Airbus and fuel costs, refuelling became an issue, punctuality reduced and menus shrunk (and became pathetic). I recently travelled on the full service version of Kingfisher Airlines on a morning flight. I was flabbergasted when the breakfast tray had no butter. Things had gotten so bad! But, this new announcement on recasting the business model proves that managers in India Inc. have become as tentative as those in the West.

A very seasoned senior corporate executive I have known for years now recently quoted Dominic Barton of McKinsey on Twitter - "The most striking difference between East and West is the time frame leaders consider when making decisions. Asians typically think in terms of 10 to 15 years. In US & Europe, nearsightedness is a norm."
That was true for a long time, but now, as the Kingfisher Airlines example proves, we too have started following short-termism. Perhaps, existence for the airline was the paramount consideration for cutting costs atrociously or now moving whole-hog into the full service domain. But is it not true that somewhere, the management neither had the patience or the conviction to stick to one model. Will they stick on, will they sell out? My bet is Virgin Atlantic and Sir Richard Branson which had lobbied with the Government of India for permitting investment in Indian carriers has a good chance - the head honchos are equally flamboyant, the business models would be similar. Let us wait and watch!
One airline, once known as Bloody Awful unveiled a new campaign this week that promised a return to the quality and efficiency that once existed in the aviation business. I am talking about British Airways.


The campaign is slick, impressive and to me, appears honest. But do European airlines stand a decent chance of competing with premium carriers from the Gulf or Asia is a fair question to ask.
Back home Jet Airways introduced a Boeing 737-800 with a new decor - Sky Interiors, with cove lighting and a curved cabin architecture that looks contemporary, gives a sense of openness and space. New flights connecting Bombay and Manila have been announced. I have heard the next announcement would be that of reopening the India-Shanghai-San Francisco sector. Truly they have benefited the most from the decimation of competition notably Air-India and Kingfisher Airlines. Today, this is the only full service Indian carrier that has some kind of brand loyalty to speak of.
But how long is Jet Airways to command that respect is another question. They are withdrawing certain privileges to Jet Privilege members effective October 1, 2011.
Their cabin crew, undoubtedly the better of the lot need a serious dress makeover - their yellow coats look like those of courtiers in the court of the Chinese Emperor, the pants and aprons looks funny. I have also observed a big differential in the basic courtesy extended to Business and Economy class passenger. Some Jet staff treat economy passengers like cattle. It seems they have taken Shashi Tharoor too seriously. That is not good indeed.

The carrier that impressed the most recently was Indigo. I travelled on the Bombay-Hyderabad and Hyderabad-Bhubaneshwar sectors recently. Being a low cost airline, I did not expect much from them. But from the moment I stepped into their A320, I was impressed. The cabin crew seemed to be genuinely welcoming, the cabin spic and span and smelt very fresh. To my surprise I was offered free beverages and snacks on all sectors. I needed cotton for my ears (always get blocked ears while landing), but since they did not have cotton, I was given endless supplies of water. The stewardess then noticed that I had a cold, she got me a big glass of warm water. I was impressed. I never felt like a king at Jet Airways, where I have been a frequent flier for the last 6-7 years, but I sure did at Indigo!

Another airline which impressed me recently was the no-frills Go Air. While the cabin crew had an atrocious artificial accent and looked like over painted mannequins, the flight was on the runway 5 minutes prior to departure time and landed ahead of schedule!
I also came across an interesting comment on Airliners.net - a comment posted on a picture of Air-India's yet-to-be-delivered Boeing 787 Dreamliner VT-ANC which said "Asians have all the money! India buys airliners like we buy candy. Indigo for example orders Airbuses like they grow on trees. Air India is deeply in debt though and is borrowing money from India govt to fund all these fancy new jets like 777 and 787."
That is true, especially when sees Emirates or Qatar Airways expand. Benchmarks in the airline industry will be set by Asian carriers going forward, for this is where the business is, this is where the volume is.

Are these trends in aviation headwinds or tailwinds?

3 comments:

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rodrick rajive lal said...

Yes, we have shrunk distances!The Dreamliner goes a long way from the Boeing 720s and 707s that I used to fly with my parents from Addis Abeba to Mumbai.Then planes had to land in Aden to refuel because they burned a lot of fuel while taking off From Addis, blame the altitude! Then came the 767s, one of which crashed of the Comoros islands after it was hijacked. The moot question is, Do we need aircraft for long distances, or do we need aircraft for shorter hops? The Second question is, in spite of the hype, will the Dream Liner sell? The Airbus A380 is a high capacity aircraft.I wonder whether it will sell in large numbers because it would not be cost effective to fly below its full capacity! The same goes for the Dream Liner, will it be cost effective, will it be a money spinner, would you like to bet your money on it?

Ajay said...

I recently fell in love with Indigo all over again and wrote a post on them! Check it out!

http://boardingarea.com/blogs/livefromalounge/2011/10/24/hello-6e/

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