Making sense of flying the world’s longest flight

Courtesy Singapore Airlines

Courtesy Singapore Airlines

ONCE upon a time, the honour of flying the world’s longest nonstop commercial flight belonged to Singapore Airlines (SIA). That was in June 2004 when SIA launched its non-stop service from Singapore to New York (Newark), a journey of 19 hours on the Airbus A340-500 jet covering a distance of 9,535 miles. SIA had earlier in February of the same year inaugurated a non-stop service to Los Angeles, flying 8,770 miles in 18 hours.

Both services had been terminated by SIA, to Los Angeles in October 2013 and to New York a month later. Looking back, SIA chief executive officer Goh Choon Phong cited the unsuitability of equipment for such a long flight that contributed to the unprofitability of both routes and their eventual discontinuation. He said: “There isn’t really a commercially viable aircraft that could fly nonstop.” The airline is said to be talking with Airbus Group SE and Boeing Co. on developing a plane with new technology that would make flying non-stop to the US profitable. In Mr Goh’s words, “We, of course, want it as soon as possible.”

With SIA out of the race, the world’s longest flight today is operated by Australian flag carrier Qantas, from Dallas-Fort Worth in the US to Sydney in Australia over a distance of 8,578 miles and taking up to 17 hours. But that record will soon be broken when Emirates Airlines mounts a service from Dubai to Panama City, Panama in February next year. The journey of 8,588 miles will take 17 hours and 35 minutes. And yet again the title will pass on to another carrier when Air India flies from Bangalore in India to San Francisco as planned, a distance of 8,701 miles that would take up to 18 hours of flight time.

Courtesy Airbus

Courtesy Airbus

Surely there is more to the business of flying such a long route than the media hype that comes with it. In truth a flight of more than 15 hours is hardly an exception. Middle East carriers are aggressively connecting US destinations directly with their home bases. Emirates is already operating from Dubai to San Francisco, Los Angeles and Houston. Etihad Airways flies from Abu Dhabi to Los Angeles, San Francisco and Dallas Fort Worth. Saudi Arabian Airlines has a service from Jeddah to Los Angeles. Qatar Airways operates from Doha to Houston and Dallas Fort Worth.

Courtesy Qantas

Courtesy Qantas

Besides Dallas Fort Worth, Qantas also operates from Melbourne to Los Angeles. Air India already flies from Mumbai to New York (Newark). American carriers are not left out of the game. Delta Air Lines operates from Atlanta to Johannesburg. American Airlines has a service from Dallas Fort Worth to Hong Kong. United Airlines also has a non-stop service to Hong Kong from New York (Newark) and from Chicago, and to Mumbai from New York (Newark) as well as to Melbourne from Dallas Fort Worth.

Other carriers that operate similarly long routes nonstop include Cathay Pacific (from Hong Kong to New York, Boston, Chicago in US and Toronto in Canada); China Southern Airlines (from Guangzhou to New York), EVA Air (from Taipei to Houston and New York), South African Airways (from Johannesburg to New York), and Air Canada (from Toronto to Hong Kong).

It is clear that the operations of such a flight have in the past been hampered by the limitations of an aircraft’s range. With advanced technology, gone are the days of the milk run of an airline hopping from port to port, making the n3ecessary technical stops, to reach its final destination. Take, for example, an airline such as SIA flying from Singapore to London in the 70s stopping en route at Bangkok or Mumbai, then Bahrain, and then Rome and Amsterdam to drop but not pick up passengers. The flying time (including time spent in transit) has been cut down drastically today for a non-stop between Singapore and London, taking only 13 hours.

Additionally what has opened the windows for long distance non-stop flights is the onset of a more liberal open skies aviation policy adopted by like-minded nations around the world. A major problem facing many airlines that are operating services over a long distance with stopovers is the hurdle of the absence of fifth freedom rights. SIA’s Goh recognised this in the case of SIA. He said, with specific reference to SIA’s interest in the US: “There is a lack of viable intermediate points. That’s largely because the countries concerned are not really giving us the rights to operate what we call the fifth freedom from those points to the U.S.” This may be pushing SIA to consider not only putting back its nonstop services to New York and Los Angeles but also adding other points. SIA’s withdrawal is largely seen to have benefitted rival Cathay Pacific which introduced a nonstop service between Hong Kong and New York on the heels of SIA’s termination of its service between Singapore and New York.

Ultimately it is all about filling up the plane. Nonstop services thrive on demand for seats point to point. In an earlier piece that I wrote, a reader commented on how American carriers are losing out by not operating nonstop services from the US to Singapore. The same “how” question may be asked of them as of SIA: Is there enough traffic to justify SIA’s nonstop services to the US? Presently SIA operates from Singapore to New York via Frankfurt, and to San Francisco or Los Angeles via Hong Kong, Taipei, Seoul and Tokyo. Its services are popular in the markets of the intermediate points. Yet it would be presumptuous to think that Singapore’s lack of a hinterland market, compared to, say, Hong Kong situated at the doorstep of the huge China mainland, may not do as well for a nonstop service to the US. The market is as wide as how you define it and make it work. Clever and effective marketing supported by an excellent product and a strong network of connectivity entailing growing partnerships with other airlines can overcome germane geographical issues, the reason why SIA flights to North America continue to be popular among Indian travellers even if they had to connect at Singapore with a layover, the way that the numbers are also increasing in competition on Cathay Pacific connections out of Hong Kong.

But the aviation landscape is constantly shifting and changing. Timing is everything but can also surprise. Emirates’ planned flight to Panama City is premised on what it noted of the Latin American city’s advantageous location, burgeoning business environment and gateway for tourism. Similarly, Singapore too is noted for its strategic geographical location as a gateway to Southeast Asia and beyond, and as a centre for global business, the way that Dubai too has grown in geographical importance as a gateway to not just the Middle East but also the rest of Africa and Europe. There is a hint of the early bird advantage in Emirates’ strategy. The Middle East carrier has so far been quite successful expanding its network across the globe, and its penetration into the US territory has recently caused the big three of American carriers (United, American and Delta) to cry foul alluding to an unfair advantage it enjoyed from state subsidies.

So too would SIA have enjoyed that early bird advantage when it launched its nonstop services to Los Angeles and New York, and becoming the first legacy airline to operate an all-business class service, which indicates the market segment that SIA was after. In fact, SIA was not the only Southeast Asian carrier to operate nonstop to the US. Thai Airways International introduced nonstop services to New York and Los Angeles in 2005. The New York run was short lived, ending in 2008. The nonstop Los Angeles service followed much late in 2012. The spiralling cost of fuel was cited as a reason.

Courtesy AP

Courtesy AP

But for Air India, there could not a better time than now in the context of the low fuel price that airlines are enjoying. The carrier’s planned service from Bangalore to San Francisco is a dream stolen from erstwhile Indian competitor Kingfisher Airlines which went under a heap of debts before it could realise its ambition. The new link appears to be a logical move particularly when there is a significant Indian population in Silicon Valley and there is increasing demand for travel between the two cities which are cyber hubs on opposite sides of the world. Besides, India has a large population base to justify more nonstop flights, unlike Singapore but like China, which has seen more nonstop flights from China to countries like Australia. Air India’s first challenge would be to attract Indian passengers back to flying with them non-stop where the options are available instead of connecting on other carriers. The record for flying the world’s longest flight is good only when the plane has the load to make it profitable.

This article (alternatively titled “Making sense of ultra long-haul flights” was first published in Aspire Aviation.

It’s the age of mega carriers: Will Air France-KLM raise its stake in ailing Alitalia?

Courtesy Wikipedia Commons

Courtesy Wikipedia Commons

Alitalia is fighting bankruptcy as its shareholders initiate efforts to raise funds in light of its main fuel supplier threatening to cut off supply. The Italian postal service will contribute 75m euros (US$101.6m) to the rescue package of 500m euros.

Meantime, Air France-KLM – already the biggest shareholder of the beleaguered airline – waits to see if it should increase, possibly double, its stake of 25 per cent. Air France-KLM chief executive Alexandre de Juniac is in favour of the takeover to gain greater access to the Italian market, but the Franco-Dutch board is cautious about the debt incurred by Alitalia. The Italian flag carrier last made a profit in 2002 and has so far lost 294m euros in the first half of this year. Air France once made a bid in 2008 to take over the airline but was thwarted by a consortium led by then Prime Minister Silvio Berlusconi. The timing today may not be right as the new Air France-KLM is itself struggling with restructuring and cost issues.

The age of the mega carriers has long arrived and it appears the trend, predicted in as early as the ‘80s, looks set to continue. In Europe, besides the Air France-KLM merger, there is the International Airline Group comprising British Airways and Iberia. Lufthansa wholly owns Austrian Airlines and Swiss, and owns 45 per cent of Brussels Airlines, 14.44 per cent of Luxair, and varying interests in a string of other airlines. The competitive field – not only in Europe but also in the United States and to a lesser extent elsewhere – has narrowed to a few mega groups of airlines with fiscal partner interests beyond mere marketing alliances.

In the United States, United Airlines is merged with Continental Airlines under United Continental Holdings; Northwest Airlines is merged with Delta Air Lines; and American Airlines is merged with US Airways. Delta made news when it acquired a 49-per-cent stake in Virgin Atlantic, the stake bought from Singapore Airlines (SIA) which until then had maintained a passive interest in its holding. For Delta, more than for SIA, it would materially increase its presence across the Atlantic.

In South America, LAN Airlines of Chile absorbed TAM Airlines of Brazil to form LATAM.

Somehow the trend is less prominent in Asia and the extended region where flag competing flag carriers generally prefer marketing alliances such as the partnership between Qantas and Emirates, and that between Singapore Airlines (SIA) and Virgin Australia. But it is changing as the competition intensifies in a tight market and as blocs begin to form to make bigger bites, and as countries relax their rules on foreign ownership. SIA now owns 19.9 per cent of Virgin, which is also 19.9 per cent owned by Etihad Airways and 23 per cent owned by Air New Zealand (ANZ). ANZ has announced it will increase its stake to 25.9 per cent, and thus continues to be Virgin’s largest shareholder outside the Virgin Group.

Cash-rich Middle-East carrier Etihad seems to be particularly active on this front, picking up stakes in Air Berlin, Air Seychelles and Aer Lingus, and targeting to complete a 49-per-cent acquisition of Air Serbia in January next year.

Yet the interest seems more as a matter of pure investment or hedging against a shifting competitive landscape. There is no white knight appearing in the horizon to rescue ailing Kingfisher Airlines while many foreign carriers have expressed interest to enter the large and growing Indian market now that India has relaxed its policy on foreign ownership. Etihad is more interested in the less vulnerable Jet Airways. Malaysian budget operator AirAsia and SIA have initiated separate deals with local investors to start new airlines. There is really no valid reason to buy into debts unless the potential for recoup plus growth is visible, almost tangible. But the Indian market has been somewhat of a come-and-go melee, susceptible to changing regulations.

Yet what should make the Alitalia case different for Air France-KLM? It is probably one of market proximity, where the impact may be more immediately felt by the suitors. It goes beyond passive investment – a case in point as mentioned earlier is the SIA/Virgin deal compared with Delta/Virgin deal – to more strategic considerations of how the acquisition would advance the Air France-KLM cause vis-à-vis its competitors within the same region. It becomes an issue of survival in itself.

Interestingly, Etihad was asked if it would be interested to buy into Alitalia, and chief executive James Hogan sidestepped the issue, telling AFP: “At the moment I’m focussed on India, transactions in India. We look at many businesses but we are primarily focused on Jet Airways.” Yet it is rumoured that Hogan has been meeting up with Air France-KLM to discuss the matter, purportedly to persuade Air France-KLM to raise its stake or let someone take its place. Does it appear obvious enough who that “someone” may be? You make a guess.

Third time lucky for Singapore Airlines’ pursuit of Indian dream

At last, some excitement from Singapore Airlines (SIA) which appears to have been for too long biding its time on the sideline. The airline announced its joint venture with Tata Sons to set up a new airline to be based in New Delhi, India. SIA will own 49 per cent and Tata the rest of the proposed full-service airline. The two partners have committed to an initial investment of US$100 million.

It is a dream that SIA has been pursuing for some years, having failed twice in the past with the same partner. SIA chief executive officer Goh Choon Phong said: “We have always been a strong believer in the growth potential of India’s aviation sector and are excited about the opportunity to partner Tata Sons in contributing to the future expansion of the market.”

It was back in 1995 when SIA and Tata made its first application to start a full service airline in India, but a change in the country’s civil aviation policy in 1997 that prevents foreign carriers from holding any stake in domestic airlines stopped the proposal in its track. Another change of the policy last year to permit foreign investment up to 49 per cent now clears the way for SIA and Tata to renew its partnership.

Before this third attempt, SIA and Tata made a joint bid in 2000 for a 40-per-cent stake in Air India but met with political opposition which again rocked the application. A year later, SIA decided to withdraw its participation.

So it is third time lucky for SIA, which cannot be said to be proud of past equity acquisitions in Air New Zealand and Virgin Atlantic. The airline has also recently raised its stake from 10 to 20 per cent in Virgin Australia.

The question for SIA is whether the Indian venture coming 18 years late would be any different from its previous acquisitions.

The announcement has on the whole sent out positive vibes. There is no need to over-emphasize the huge potential of the Indian market premised upon not just a growing population but also growing wealth and mobility of its people. This has been eyed by more airlines than just SIA. In April, Etihad Airways announced it was buying a 24-per-cent stake in Jet Airways, and in February, AirAsia announced that it had formed a joint venture with Tata to set up a budget airline. Emirates Airlines was also said to be interested in picking up stakes.

This can only mean increased competition. But that is not something to fear considering the huge market potential. Mr Prasad Menon, who was named chairman of the new airline, said: “It is Tata Sons’ evaluation that civil aviation in India offers sustainable growth potential.” And all the more so, when you are flying the colours associated with one of the world’s most popular and successful airlines, i.e. SIA. So said Mr Menon: “We now have the opportunity to launch a world-class full-service airline in India.”

Trust that SIA and Tata will get the formula right. SIA needs more room to grow beyond Singapore, and Tata is not exactly new to aviation. Former Tata Group chairman J R D Tata was the founder of India’s flag carrier Air India before it was nationalized in 1953, and the company has for many years been trying to re-enter the aviation business.

The new airline already enjoys the advantages of experience, reputation and motivation (do not underestimate the passion that turns the wheel of success). There is something else that will help the proposed joint venture in its initial years, and that is the deep pocket of the partners. SIA/Tata can expect hitches in the current climate of high fuel costs and low fares as the competition intensifies. All major airlines except low-cost operator IndiGo have reported losses. Kingfisher Airlines, bankrupt and waiting to be rescued by foreign investment, has not made a profit since its inauguration in 2005. The price war may become more aggressive with SIA/Tata’s entry.

The new airline will commence operations as a domestic carrier. Indian regulations require an airline to fly domestic services for five years before it is allowed to operate internationally. If the current not so buoyant market conditions persist, the long 5-year gestation may weaken rather than strengthen the carrier’s position. Deep pockets therefore help. But indications are that the Indian government may relax its rules and allow the new airline to mount international services earlier than expected. When that happens, SIA/Tata can expect to be challenged by Etihad through Jet Airways as a dominant carrier of westbound traffic to Europe, the Middle East, Africa and beyond. Air India is more likely to feel the pinch with SIA/Tata’s entry rather than the other way round.

A burning question that many industry watchers would ask of SIA is whether Tata as a partner also of AirAsia would lead to any conflict, if not operationally but perhaps as a matter of corporate policy. AirAsia chief Tony Fernandes has never disguised an apparent disdain of SIA (his dream was to finally own the Singapore carrier). Of course, it is to be pointed out that Tata’s partnership with AirAsia is for a low-cost airline whereas that with SIA is for a full-service airline. Theoretically, there should be no conflict of interest as far as the competition goes. Besides, Air/Asia/Tata will be based in Chennai while SIA/Tata will be headquartered in New Delhi. However, realistically, it may be the same wider domestic market that both joint-ventures may be serving. Yet one can never quite know how Mr Fernandes would react; he may well relish the connection to SIA through Tata.

For now, the excitement is all about SIA finally returning to shake up the skies.

AirAsia blames ANA for budget break-up

Courtesy Wikipedia Commons/Flickr

Courtesy Wikipedia Commons/Flickr

AirAsia chief Tony Fernandes has put the blame on All Nippon Airways (ANA) for the breakup of AirAsia Japan budget joint-venture. (See Budget business matures, Jun 12, 2013) The beef is that majority shareholder ANA as a full-service airline does not understand budget operations, giving rise to differences between the two partners in financial and management issues.

A marriage across cultures is not always an easy one, even if both partners hail from the same level. The aviation industry has seen the break-up of even the most likely partners. Ultimately it all comes down to the numbers. AirAsia Japan is not doing as well as the other budget operators, namely ANA’s other budget arm Peach Aviation with a Hong Kong partner and Jetstar Japan, a joint-venture between Qantas’ Jetstar and Japan Airlines (JAL) as major partners.

How then do you explain Peach and Jetstar being more successful? Mr Fernandes may argue that it is because Peach’s other partner is non-aviation, so is it a case of too many experts spoiling the broth? And, interestingly, Mr Fernandes said he has learnt one critical lesson from the failed tie-up; he was quoted as having allegedly said: “The lesson is I will never ever work with another airline in my life. Let me qualify that – premium airline.” That again may have also explained why he has chosen to set up AirAsia India with non-aviation partners Tata Sons and Amit Bhatia instead of with another airline or buying into an existing airline such as Kingfisher Airlines which is clutching at straws for some help.

What about Jetstar Japan, assuming it has so far not faced the kind of problems that confronted AirAsia Japan, even though JAL, like ANA, is a full-service airline and Jetstar, like AirAsia, operates the no-frills model? Or, if Qantas, instead of Jetstar, is driving the business, does it not augur ill when two full-service airlines try to operate a budget joint-venture along legacy lines? Yet the Jetstar brand has enjoyed good growth across the region.

ANA will now buy up the AirAsia stake in the joint-venture, and AirAsia Japan may then merge with Peach. Since Japan is a prized market for leisure travel, AirAsia may again seek to re-enter the market on its own. Can it do better the next time round? The longer it waits, the more it has to catch up with lost ground as the market matures.

Curtains for Kingfisher Airlines

Courtesy AFP

Courtesy AFP

IT  looks like the fat lady has sung for Kingfisher Airlines. Or has she really?

India’s Ministry of Civil Aviation has withdrawn international flying rights and domestic slots from the debt-ridden airline whose licence expired at the end of 2012 and which has been grounded since October last year. The company has up to two years to apply for a reinstatement.

The reason cited by the authorities was one of non-operations, and a long awaited decision since so many other airlines are said to be waiting to take up Kingfisher’s slots. One senior official reportedly said the wait for Kingfisher to restart operations “cannot be an endless one.” The airline’s international operations cover Bangladesh, Hong Kong, Nepal, Singapore, Sri Lanka, Thailand and the UK.

But a statement issued by Kingfisher said it is still “confident of securing approval” from the authorities for a plan that it submitted, even as hope of rescue from foreign interests has all but waned. AirAsia has snubbed that possibility when it announced recently it would set up a joint venture with non-aviation partners Tata and Bhatia. (see AirAsia boosts Indian confidence in new joint venture, Feb 21, 2013). And Etihad Airways in evaluating Kingfisher against Jet Airways seems to favour the latter.

If the fat lady is still singing, its voice may peter out quietly. Broken and unwanted, Kingfisher, which has not made a profit since inception in May 2005 with accumulated losses of US$1.9 billion, has waited too long.

AirAsia boosts Indian confidence in new joint venture

NO, budget carrier AirAsia is not taking the route of Etihad Airways which is still mulling over a possible buy-in of Jet Airways. It will not be laden with the debt of airlines such as Kingfisher Airlines, a possible candidate for takeover. Instead, Asia’s largest discount carrier is partnering with non-aviation Indian investors to set up a new budget carrier to be based in Chennai, taking advantage of India’s relaxed ruling to allow foreign owner4ship up to 49 per cent. AirAsia will own 49 per cent of the new venture, with Tata taking 30 per cent and Bhatia 21 per cent.



AirAsia’s foray may be seen as a move to restore confidence in the somewhat messy and debt-ridden Indian airline business. Only one of India’s six main scheduled carriers- IndiGo – made a profit last year.  AirAsia chief Tony Fernandes is beaming with confidence, having reportedly said: “First, there are a billion people in India; second, millions of people travel in trains; and third, there is a big potential in under-developed routes. We have been studying the Indian market for the past three years and we feel now is the right time.”

Few analysts would refute the potential of the Indian market, which explains the continual sprouting of upstarts, yet not few have come and gone. AirAsia, which planned to kick off operations of the yet-to-named airline in the third quarter of the year, said it would introduce new low fares – very much its trademark selling pitch across its network – and this comes at a time when airfares in India are rising. How will this play out in the competition?

It may be a test of staying power. AirAsia is backed by strong partners without the mess of a debt hangover. Besides, AirAsia is not an unknown brand in the Indian market, as the carrier already operates to five Indian cities. AirAsia’s long haul arm – AirAsia X – pulled out of India last year because of poor demand. If the new domestic carrier succeeds, AirAsia will stand to gain even more in attracting customers beyond India.

But the competition may become more challenging for the smaller carriers such as SpiceJet and IndiGo, especially when AirAsia is targeting the same market. But that’s India. Despite the turbulent skies, there are opportunities. And in spite of the opportunities, some carriers will make an exit sooner than expected.

Kingfisher unruffled

Courtesy AFP/Getty Images

Courtesy AFP/Getty Images

Kingfisher Airlines rings in an early dismal note for 2013. It has lost its flying permit for failing to meet the deadline for renewal of its suspended licence. India’s civil aviation chief Arun Mishra said: “Kingfisher’s flying permit has lapsed. They failed to provide additional details on the finding of operations.”

Kingfisher’s operations have been suspended since October last year, following five years of losses since it started. Service providers such as Airports Authority of India to whom money is owed are petitioning for suspension of the airline until it has cleared all dues to them.

But the airline has reacted with no “cause for concern”. Apparently, Indian aviation rules allow a grace of two years following expiry for renewal. Kingfisher spokesman Prakash Mirpuri said: “Kingfisher is confident of securing approval from the regulator on the restart plan, licence approval and reinstatement of its operating permit.”

Yet again the beleaguered airline is not admitting defeat and continues to relish hope that its talks with potential foreign investors including Middle East airline Etihad Airways may help lift it off the ground. But industry analysts are beginning to doubt if Etihad would be interested to “buy” a debt load that could be as much US$2.5 billion. (White knight Etihad Airways to Kingfisher Airlines’ rescue, Dec 13, 2013).

Confidence or chutzpah, call it what you will; Kingfisher is not finished with its story yet. (Kingfisher Airlines’ Bollywood drama, Oct 19, 2012)

White knight Etihad Airways to Kingfisher Airlines’ rescue

kingisherKingfisher Airlines is not ready to submit to the proverbial straw that breaks the camel’s back. Not yet. It may have found its white knight in Middle-East carrier Etihad Airways, which is said to be interested in acquiring a 48-per0cent stake in the debt-ridden Indian carrier.

The airline is saddled with problems to the brim: it runs a debt of US$2.5bn, staff are on strike for not being paid their wages, the authorities have grounded the airline, and banks have refused to provide any more loans. Launched in 2005, Kingfisher has never made a profit.

Here comes Etihad Airways with the deep pocket, keen to expand into the Indian market (as it is elsewhere). Kingfisher provides the opportunity although it was said that Etihad was originally interested in Jet Airways, India’s largest airline by total passengers carried.etihad

Kingfisher issued a statement to confirm Etihad’s interest: “We would like to clarify that the company is in discussion with various investors, including Etihad Airways, for equity investments in the company.” According to the Mumbai Mirror, the deal would cost just over 30bn rupees (US$552m). It would be in two phases: an initial 30-per-cent in December and a further 18-per-cent by August next year. A formal announcement is expected within days.

This news comes on the heel of reports that AirAsia chief Tony Fernandes was in India looking for opportunities to take advantage of India’s relaxation on foreign ownership. But Mr Fernandes denied any interest in embattled Kingfisher. Interestingly, Mr Fernandes was largely reputed for turning a debt-ridden airline which he bought from the Malaysian government for one ringgit (US$0.26) along with debts amounting to US$11m into Asia’s largest budget carrier.

AirAsia eyes Indian joint-ventures



AirAsia chief Tony Fernandes is eyeing possible Indian joint ventures now that India has relaxed the rule on foreign ownership, allowing foreign airlines to buy up to 49 per cent equity in a local carrier.

Mr Fernandes said on Twitter: “AirAsia will focus on larger joint ventures. Think we are done in Asean.”

AirAsia has been expanding its presence in Asean (Association of Southeast Asian Nations), having set up bases in four member countries – home base Malaysia, Indonesia (Indonesia AirAsia), the Philippines (AirAsia Philippines) and Thailand (Thai AirAsia) – and operating to eight of the countries including Singapore, Cambodia, Laos and Myanmar. Mr Fernandes also made a bid to acquire a stake in Indonesian carrier Batavia Air but the deal fell through. Outside Asean, AirAsia has partnered with All Nippon Airways to set up AirAsia Japan.

Mr Fernandes’ renewed interest in India is interesting since it was only early this year that its long-haul budget arm AirAsia X announced suspension of flights between Kuala Lumpur and the Indian ports of Mumbai and New Delhi early this year. Thai AirAsia also reduced frequencies between Bangkok and New Delhi. (See AirAsia branding losing ground, Feb 1, 2012)

India is a huge market and AirAsia’s presence is thin compared to its coverage of Asean, but the competition is intense, in light of India’s many budget carriers, a number of which have come and gone. Would AirAsia be interested in rescuing Kingfisher Airlines which is teetering on the edge of extinction? Rumour had it that AirAsia might be interested in acquiring a stake in SpiceJet instead, but this was denied by Mr Fernandes.

Whichever airline he picks, will AirAsia – hyped as Asia’s largest budget carrier – be able to replicate its success elsewhere in India?

The end of the Kingfisher Airlines saga?


IF you were an employee of bankrupt Kingfisher Airlines and who has not been paid for seven months, would you accept an offer from the airline to be paid three months on condition that you return to work? That’s the deal that Kingfisher is dangling before the striking staff.

However, that outcome withstanding, the Indian authorities have suspended Kingfisher’s licence until it could outline a plan to the satisfaction of the authorities of a financially sound and operationally safe future. Kingfisher, deeply indebted to airports, tax agencies and creditors, has never posted a profit since its launch in 2005. Is this the end of its saga?

But Kingfisher chief executive Sanjay Aggarwal continued to hold out hope of resuscitation. He reportedly informed Reuter news agency: “We are continuing discussions on recapitalisation. Those discussions slowed down but they are not stalled.” And he believed Kingfisher staff would be back at work within a couple of days – ahead of the government’s review of its suspension, which should nonetheless view this as a positive development albeit an inadequate one.

Kingfisher’s last straw of hope lies in the Indian government’s relaxation of the restrictions on foreign ownership of domestic airlines, allowing a stake of up to 49 per cent. There had been rumours about Kingfisher engaging in talks with interested foreign investors, but a white knight has yet to appear on the horizon.

Any potential investor is likely to take a closer look at the Indian aviation landscape where cut-throat competition has led to the downfall of numerous carriers, amongst them Air Deccan which was acquired by Kingfisher after three years of operations. Is there something anemic about the Indian aviation industry, though one would expect a growing demand for air travel in a country as populous as India that is at the same poised as an emerging Asian economic power? Or is it just the way things come and go in the world’s largest democracy? C’est la vie.