Airlines

Time to spare? Go by air. It's hard to imagine a form of travel more consistently annoying than modern air travel but since there's usually little alternative, the goal must be to get through it as painlessly as possible. Complaints

Aer Lingus
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US Airways
Virgin America
Virgin Atlantic


................ABOUT AIRLINES...................

Falling crude prices have lifted low cost carrier SpiceJet’s share price which soared 14 per cent over the last week, before losing 4 per cent on Thursday. That’s despite the fact that the carrier ended the three months to June 2008 with a net loss of Rs 102 crore on the back of higher aviation turbine fuel prices which increased 132 per cent y-o-y.


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- Time Out : food, travel, sports, health...


The airline had delayed the announcement of its quarterly results because of a deal that it was negotiating with WL Ross for an infusion of funds into the company. SpiceJet managed better average fare realisations during the quarter — up 37 per cent —also a 39 per cent increase in number of flights that helped it post a 72 per cent y-o-y increase in revenues to Rs 457 crore. But the airline ended up with an operating loss before rentals of Rs 395 crore compared with a profit of Rs 255 crore in the June 2007 quarter.

While lower aviation turbine fuel prices will no doubt help bring down costs for airlines, carriers are grappling with falling air traffic— June saw airlines in the country carry fewer passengers than they did in June 2007. This is despite the fact that some airlines are now operating on fewer routes and capacity in the industry has been scaled back by about 15 per cent.

The trend could continue till the start of the festive season, say industry watchers, though higher fares might mean falling traffic even during the peak seasons this year. Airlines have been compelled to hike fares-- ticket prices have risen by 10-15 per cent on average in the last quarter. That has caused occupancy levels to decline---SpiceJet’s load factor dropped 700 basis point in the June quarter. Airlines are therefore in a fix; it’s unlikely people will fly more often unless they feel fares are affordable.

The $100 million fund infusion into July, mainly by WL Ross, will help the cash-strapped SpiceJet, which is understood to have deferred the delivery of three Boeings. The airline is also believed to have sub-leased 2 of the 5 aircraft it was supposed to add to its fleet by the end of the year.

The SpiceJet stock has underperformed the market, losing 65 per cent since the start of the year, while the Sensex has lost around 26 per cent. It could be a while before crude prices come off to levels at which airlines can afford to cut fares. Until that happens demand for plane seats is likely to remain depressed. As are the bottom lines of airlines.


MUMBAI: It may not be as big, or rather, as less as the summer of 2005 when air fares to London dropped drastically with the launch of new flights on this route, but this time around, the rates have gone down a lot, compared to what was on offer till a week ago.

Two days before Kingfisher Airlines launched its maiden Bangalore-London daily flight, British Airways slashed its base fare from Rs 24,150 to Rs 9,990. The fare is on offer for London flights from Delhi, Mumbai, Kolkata, Chennai and Bangalore. With taxes included, it would work out to Rs 28,261 for a return fare from Mumbai/Delhi and Rs 34,757 from the other Indian cities. "The offer is a 59% reduction of our regular fares and the tickets are available for sale only till October 13. But one can travel on these fares from now till January 31, 2009,'' said Amanda Amos, British Airways area commercial manager for South Asia. The offer will also be available on the Hyderabad-London route, which is scheduled to be launched on December 7.

Soon after this announcement, Virgin Atlantic brought down its base fare on the Mumbai-London sector to Rs 9,990 too for some flights. "Just a week ago, the average base fare for a return flight to London was Rs 23,000. This is a massive drop. It was not predicted,'' says Anoop Kanuga, chairman, western India, Travel Agents Association of India. "The airlines are trying to get India's Diwali holiday traffic to fly west rather than fly to their favorite, cheap destinations in the east.''

Kingfisher Airlines, on its part, has also introduced low fares at various levels. The discounted fare for Kingfisher Airlines comes to around Rs 10,990 (without taxes), which was Rs 18,730 earlier. The airline will launch Mumbai-London flights from October 26 and so Diwali will see some great offers for flyers from this city. "We have been getting tremendous response for our Bangalore-London flight. The passenger load factor has been on the rise and the low fares are subject to seat availability ,'' said Siva Ramachandran, vicepresident , global sales of Kingfisher Airlines. As is in Bangalore, the airline will launch daily flights on the Mumbai-London route with its 217-seater A 330-200 . Other airlines too may follow suit, said insiders. "Depending on market dynamics, we will decide our fares on the India-UK route,'' said an Air India spokesperson. The airline operates 25 flights from India to UK weekly.

In 2005, flights between Mumbai and London saw a sudden drop in air fares as Virgin Atlantic, BMI and Jet Airways launched direct flights on this route breaking the duopoly of British Airways and Air India.

BRUSSELS, Sept 4 (Reuters) - Shareholders in Brussels Airlines believe the carrier is worth at least 200 million euros ($290.4 million) and are looking at other potential partners than Lufthansa (LHAG.DE: Quote, Profile, Research, Stock Buzz), a Belgian magazine said on Thursday.

Deutsche Lufthansa AG, Europe's second-largest airline, said last week it planned to pay 65 million euros for a 45 percent stake in Brussels Airlines with the option to buy all of the company in two years.

The price of this option would depend on the future performance of Brussels Airlines.

Belgian weekly magazine Trends said on Thursday the Belgian carrier was negotiating with various airline partners and believed its purchase by Lufthansa was not a done deal.

"The ideal partner would offer a business strategy in which Brussels Airlines could fulfil an independent role," Trends said.

A Brussels Airlines spokesman declined to comment on the report beyond saying negotiations between its parent company SN Airholding and Lufthansa were continuing with a view to reaching a definitive deal in the coming weeks.

British Airways (BAY.L: Quote, Profile, Research, Stock Buzz) and Chinese carrier Hainan Airlines (600221.SS: Quote, Profile, Research, Stock Buzz) would also be interested in Brussels Airlines, German daily Sueddeutsche Zeitung said in an article to be published on Friday, without identifying its sources.

Brussels Airlines was created in 2006 by merging Richard Branson's budget carrier Virgin Express and SN Brussels Airlines, the successor of the country's state airline Sabena. Belgian companies hold 70 percent, Virgin the rest.

It carried 5.8 million passengers in 2007, a modest increase on 2006. Its revenue increased by 2 percent to 903 million euros and its consolidated net profit shot up 66 percent to 23.1 million euros. (Writing by Philip Blenkinsop; Editing by David Holmes/Elaine Hardcastle)


Former Ally Bush Fights Airlines With New York Flight-Sale Plan

By John Hughes

Sept. 4 (Bloomberg) -- President George W. Bush, who helped U.S. airlines with cash and loans after the 2001 terrorist attacks, has turned against them with plans to auction off flight rights at New York-area airports to boost competition.

The Federal Aviation Administration may hold the first sale this month, for a round-trip flight at New Jersey's Newark airport. The agency says the auctions would let startups enter the largest U.S. air-travel market and spur carriers to fly bigger jets as part of a plan to reduce congestion.

Airlines including Continental Airlines Inc. and American Airlines are trying to stop the FAA, which plans to sell as many as 208 New York-area flights before Jan. 20. The carriers say the sales would make it impossible to recoup investments such as Continental's $2 billion at Newark in the past decade.

``They are ignoring the views of the airlines,'' said James May, chief executive officer of the Air Transport Association trade group in Washington.

The sales would add to the financial strain on an already unprofitable industry and make airport investments less attractive, Ray Neidl, an analyst with Calyon Securities in New York, said in an interview.

Record fuel costs sent the 8 largest U.S. carriers to $5.9 billion in second-quarter net losses, and they say they will trim 26,000 jobs and retire 465 jets.

The airlines have gone to court, complained to regulators, and enlisted politicians to try to thwart Bush, while Transportation Secretary Mary Peters plans for the sales to proceed. Auctions will foster competition by bringing in new carriers, she said in an interview.

`Worth Trying'

``I challenge those who are opposing this to find an economist to tell us why this is a bad idea,'' Peters said.

Her agency's monthly air-travel report showed yesterday that New York's John F. Kennedy airport was the nation's most congested in July, with an on-time arrival rate of 57.4 percent. It was followed by New York's LaGuardia at 58.4 percent and Newark Liberty International at 59.5 percent.

Bush ``fully supports Secretary Peters's plan to address the chronic delay problems in the Northeast, which ripple out across the country,'' White House spokesman Scott Stanzel said yesterday.

Each auction for a takeoff and landing slot gives the winner authority to operate a round-trip flight. A 10-year lease for a pair of slots may fetch ``hundreds of thousands'' of dollars, said D.J. Gribbin, Peters's general counsel. Winners will probably use bigger planes, raising passenger counts with the same amount of flights, he said.

Startup Airlines

New carriers such as Virgin America Inc. may gain, though it says it plans to skip the first Newark sale. ``We strongly support auctions,'' said Abby Lunardini, a spokeswoman for Burlingame, California-based Virgin America, which has 10 daily New York flights.

The ``worst nightmare'' for big airlines would be more competition from young carriers, said George Donohue, director of the Center for Air Transportation Systems Research at George Mason University in Fairfax, Virginia.

Carriers such as AMR Corp.'s American may have to spend millions of dollars to hold onto their current flight slots. ``We don't have any money,'' said Will Ris, AMR's senior vice president of government affairs. ``We're not in the buying mode.''

JetBlue Airways Corp., the second-biggest in the New York market after Continental, plans to open a $743 million terminal Oct. 1 at Kennedy airport, where No. 3 American unveiled a $1.3 billion terminal last year.

`Rent It Out'

``How would you feel if you added a room to your house and someone came along and said you have to rent it out?'' said Ron Kuhlmann, a vice president at consulting company Unisys Corp. in Blue Bell, Pennsylvania.

The Bush-airline battle is a reversal from the aftermath of Sept. 11, when Congress and Bush gave airlines $5 billion in cash and as much as $10 billion in loan guarantees. That cooperative spirit ``evaporated'' over auctions, ATA's May said.

To take on Bush and Peters, the industry has enlisted the Port Authority of New York and New Jersey, the airports' operator; the two states' governors; all of New Jersey's U.S. House members; and congressional aviation leaders.

FAA Review

Peters originally scheduled the first auction for yesterday. The FAA postponed the sale on Aug. 28 pending an ``expedited'' review of an airline protest.

Bids may be held for 128 to 208 flights at the three New York airports before Bush leaves office, or 7 percent to 11 percent of New York round trips, Gribbin said.

New York Mayor Michael Bloomberg said Aug. 8 he supports ``a limited pilot program'' to see whether auctions would spur use of use larger jets in peak times. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

With incumbent airlines opposed to the sales, there may be few auction bidders, said Bill DeCota, the port authority's aviation director.

``If any flight does try to come to our airport, we will not allow it in,'' he said. ``That is not just a threat. It's an absolute promise.''