07-29-2007, 02:25 PM
The merger of Air India and Indian Airlies has been a significant development in the history of Indian Civil Aviation. A report in Indian Express of date is reproduced below
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O N August 1, as a brand new Boeing 777-200 takes off on its maiden, non-stop flight from Mumbai to New York, it will launch Air India- the unified carrier created by merging Air-India and Indian Airlines - into the league of the world's premier airlines.
The unified national carrier christened Air-India to retain the popular brand name and alphabetically superior airline code AI - has reworked its network strategy in the wake of strong competition and a booming growth in passenger traffic.
The new carrier plans to utilise the synergies of both Air-India and Indian Airlines in a bid to establish itself as a major international player - the Maharajah of the skies. It has retained the popular Maharajah as its mascot. The new logo and livery have been drawn from the current features of both AirIndia and Indian.
On the carrier's agenda are plans to develop hubs in Europe, acquire morning slots to reposition Air-India as a product for business travel, join a global alliance, start direct operations to major international destinations from cities like Chennai, Bangalore and Hyderabad and develop a daily standardised hub and spoke model for Mumbai and Delhi. Shopping spree The unified carrier has already framed a revised business plan which talks of acquiring 38 new aircraft, including seven long-range planes for the proposed non-stop flights, 15 medium capacity long range planes with a capacity of 300 plus seats and another 16 MCLR of the 200+ seat capacity.
The new airline plans to move swiftly on integrating its operations with those of members of the STAR Alliance. It will also seek six-eight early morning transit slots at Munich airport, which will be the hub for its operations to the east coast of USA and Canada - to destinations like New York, Newark, Chicago, Detroit, Boston and Toronto.
Similarly, Air-Indiais looking to create a hub at Frankfurt to cater to its operations to South America and to the west coast of North America to places like San Francisco, Sao Paulo, Los Angeles and Vancouver.
By the winter of 2011-12, Air-Indiahopes to have established itself as India's premier airline, with daily non-stop flights to JFK airport in New York from Mumbai and Delhi, to Chicago from Mumbai and Hyderabad and to San Francisco from Bangalore and Delhi.
The unified carrier has already studied the much-hyped Airbus 380 and has found it viable to operate the 'gentle giant' on daily flights to London's Heathrow airport from Mumbai and Delhi and on the Mumbai-MunichChicago and Delhi-Munich-New York routes. Air-Indiais closely looking at the possibility of inducting seven to eight A380s into its fleet.
However, the merger has thrown up questions of fleet expansion. Despite Air-Indiagetting 50 new widebodied aircraft, including the eight Boeing 777-200 LRs, 15 Boeing 777200 ERs and 27 Boeing 787-8 by 201112, most of these planes would only replace the existing fleet and end up providing an average annual growth of 10.8 per cent to the carrier.
This is important because with a current market share of a mere 18 per cent and an average market growth of 16-18 per cent, Air India's absolute market share in 2011-12 is not likely to increase if new players grow as estimated by the way they are placing aircraft orders. Fleet expansion Of the 50 new wide-bodied planes being inducted into the erstwhile Air India, 34 will replace the existing planes, leaving only 16 new planes to tackle future growth. With this reality looming large, Civil Aviation Minister Praful Patel has already asked the new entity's Chairman and Managing Director V. Thulasidas to start planning for further fleet acquisition. Of the already ordered planes, 12 of Air India's 50 planes are scheduled to be delivered in 2009-10, another 10 in 2010-11 and nine the following year.
By adding 42 A320 family aircraft between July 2007 and March 2010, the erstwhile Indian Airlines (IA), too, hopes to have enough planes to phase out its B 737 fleet and three A 300 family aircraft. The new planes would also enable Indian Airlines to replace the leased A320 and A319 planes. IA also plans to phase out its fleet of owned A320 aircraft from 2011 and is likely to begin planning for fleet acquisition beyond 2011.
IA also plans to develop a fleet of ATR (turboprop aircraft) and 70-seater regional jets by inducting 25 aircraft for both types by 2010-11. This would not only help the airline compete with the likes of low-cost carrier Air Deccan when it comes to connecting smaller regional places but is also expected to help bring feeder traffic from regional cities to the metros.
Route rationalisation, common pricing in markets where they overlap, operating feeder flights through check-in and seamless transfer are likely to yields benefits worth Rs 187 crore annually. Preliminary estimates indicate that route rationalisation in markets like Kuwait, Oman, Singapore, Bangkok, Kuala Lumpur, Hong Kong and Tokyo is likely to result in synergies worth Rs 124 crore annually.
Commonality in signages, documentation, check-in counters, tags, advertisments, logos, uniforms, livery, in-flight entertainment, in-flight services, customer complaint handling, and an integrated call centre and an integrated website would help present the airline's new, unified face. Flying higher The new carrier is not only expected to lend competitive strength to the airline but also improve its ranking among top international airlines. Civil Aviation ministry estimates suggest that the combined revenues of both Air-Indiaand Indian Airlines - in the range of Rs 13,040 crore - would catapult the carrier to the 35th spot in the world as against Air India's current ranking of 48 and Indian Airlines' ranking of 70. Estimates suggest that the induction of new fleet would further take the airline's ranking to 20.
Further, the new national carrier is also expected to improve the dwindling market share of both the erstwhile national carriers. Government estimates show that the market share of both Air-Indiaand Indian Airlines has fallen from 24.5 per cent and 100 per cent respectively in 1990 to 19.5 and 31 per cent in 2005. In fact, both the carriers have been competing with each other in some sectors and eroding each other's market share. The merger is now expected to eliminate
"unproductive competition" and also improve the combined market share of both the airlines.
Then, there are calculations indicating that the merger would ensure an improvement in annual revenues to the tune of 7-8 per cent on a recurring basis while the one-time increase in cost would be roughly 2 per cent. The merger is also expected to eliminate a slew of common expenses, primarily related to marketing and advertisements, and this should help the carrier control its operating costs to stay competitive in the sector.
Not only will Air-Indianow provide a larger network, induction of 111 aircraft over the next five years will also give a wider dimension to its fleet.
What will also stand in favour of a bigger national airline is the fact that competition in the sector is only going to increase further.
Factors like Open Skies with USA and near open skies with UK, ASEAN and SAARC and liberal bilateral agreements with Germany, France and China have resulted in huge increase in seat entitlements and new routes for foreign airlines.
While domestic airlines, subject to certain minimum conditions, can fly overseas and forge partnerships with foreign carriers, international carriers, too, have been interlining with domestic airlines. While some private airlines have developed large networks and are in a position to fill international flights with ease, some more domestic airlines will qualify for international operations in next 3-4 years, having a large network by then.
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Quote
O N August 1, as a brand new Boeing 777-200 takes off on its maiden, non-stop flight from Mumbai to New York, it will launch Air India- the unified carrier created by merging Air-India and Indian Airlines - into the league of the world's premier airlines.
The unified national carrier christened Air-India to retain the popular brand name and alphabetically superior airline code AI - has reworked its network strategy in the wake of strong competition and a booming growth in passenger traffic.
The new carrier plans to utilise the synergies of both Air-India and Indian Airlines in a bid to establish itself as a major international player - the Maharajah of the skies. It has retained the popular Maharajah as its mascot. The new logo and livery have been drawn from the current features of both AirIndia and Indian.
On the carrier's agenda are plans to develop hubs in Europe, acquire morning slots to reposition Air-India as a product for business travel, join a global alliance, start direct operations to major international destinations from cities like Chennai, Bangalore and Hyderabad and develop a daily standardised hub and spoke model for Mumbai and Delhi. Shopping spree The unified carrier has already framed a revised business plan which talks of acquiring 38 new aircraft, including seven long-range planes for the proposed non-stop flights, 15 medium capacity long range planes with a capacity of 300 plus seats and another 16 MCLR of the 200+ seat capacity.
The new airline plans to move swiftly on integrating its operations with those of members of the STAR Alliance. It will also seek six-eight early morning transit slots at Munich airport, which will be the hub for its operations to the east coast of USA and Canada - to destinations like New York, Newark, Chicago, Detroit, Boston and Toronto.
Similarly, Air-Indiais looking to create a hub at Frankfurt to cater to its operations to South America and to the west coast of North America to places like San Francisco, Sao Paulo, Los Angeles and Vancouver.
By the winter of 2011-12, Air-Indiahopes to have established itself as India's premier airline, with daily non-stop flights to JFK airport in New York from Mumbai and Delhi, to Chicago from Mumbai and Hyderabad and to San Francisco from Bangalore and Delhi.
The unified carrier has already studied the much-hyped Airbus 380 and has found it viable to operate the 'gentle giant' on daily flights to London's Heathrow airport from Mumbai and Delhi and on the Mumbai-MunichChicago and Delhi-Munich-New York routes. Air-Indiais closely looking at the possibility of inducting seven to eight A380s into its fleet.
However, the merger has thrown up questions of fleet expansion. Despite Air-Indiagetting 50 new widebodied aircraft, including the eight Boeing 777-200 LRs, 15 Boeing 777200 ERs and 27 Boeing 787-8 by 201112, most of these planes would only replace the existing fleet and end up providing an average annual growth of 10.8 per cent to the carrier.
This is important because with a current market share of a mere 18 per cent and an average market growth of 16-18 per cent, Air India's absolute market share in 2011-12 is not likely to increase if new players grow as estimated by the way they are placing aircraft orders. Fleet expansion Of the 50 new wide-bodied planes being inducted into the erstwhile Air India, 34 will replace the existing planes, leaving only 16 new planes to tackle future growth. With this reality looming large, Civil Aviation Minister Praful Patel has already asked the new entity's Chairman and Managing Director V. Thulasidas to start planning for further fleet acquisition. Of the already ordered planes, 12 of Air India's 50 planes are scheduled to be delivered in 2009-10, another 10 in 2010-11 and nine the following year.
By adding 42 A320 family aircraft between July 2007 and March 2010, the erstwhile Indian Airlines (IA), too, hopes to have enough planes to phase out its B 737 fleet and three A 300 family aircraft. The new planes would also enable Indian Airlines to replace the leased A320 and A319 planes. IA also plans to phase out its fleet of owned A320 aircraft from 2011 and is likely to begin planning for fleet acquisition beyond 2011.
IA also plans to develop a fleet of ATR (turboprop aircraft) and 70-seater regional jets by inducting 25 aircraft for both types by 2010-11. This would not only help the airline compete with the likes of low-cost carrier Air Deccan when it comes to connecting smaller regional places but is also expected to help bring feeder traffic from regional cities to the metros.
Route rationalisation, common pricing in markets where they overlap, operating feeder flights through check-in and seamless transfer are likely to yields benefits worth Rs 187 crore annually. Preliminary estimates indicate that route rationalisation in markets like Kuwait, Oman, Singapore, Bangkok, Kuala Lumpur, Hong Kong and Tokyo is likely to result in synergies worth Rs 124 crore annually.
Commonality in signages, documentation, check-in counters, tags, advertisments, logos, uniforms, livery, in-flight entertainment, in-flight services, customer complaint handling, and an integrated call centre and an integrated website would help present the airline's new, unified face. Flying higher The new carrier is not only expected to lend competitive strength to the airline but also improve its ranking among top international airlines. Civil Aviation ministry estimates suggest that the combined revenues of both Air-Indiaand Indian Airlines - in the range of Rs 13,040 crore - would catapult the carrier to the 35th spot in the world as against Air India's current ranking of 48 and Indian Airlines' ranking of 70. Estimates suggest that the induction of new fleet would further take the airline's ranking to 20.
Further, the new national carrier is also expected to improve the dwindling market share of both the erstwhile national carriers. Government estimates show that the market share of both Air-Indiaand Indian Airlines has fallen from 24.5 per cent and 100 per cent respectively in 1990 to 19.5 and 31 per cent in 2005. In fact, both the carriers have been competing with each other in some sectors and eroding each other's market share. The merger is now expected to eliminate
"unproductive competition" and also improve the combined market share of both the airlines.
Then, there are calculations indicating that the merger would ensure an improvement in annual revenues to the tune of 7-8 per cent on a recurring basis while the one-time increase in cost would be roughly 2 per cent. The merger is also expected to eliminate a slew of common expenses, primarily related to marketing and advertisements, and this should help the carrier control its operating costs to stay competitive in the sector.
Not only will Air-Indianow provide a larger network, induction of 111 aircraft over the next five years will also give a wider dimension to its fleet.
What will also stand in favour of a bigger national airline is the fact that competition in the sector is only going to increase further.
Factors like Open Skies with USA and near open skies with UK, ASEAN and SAARC and liberal bilateral agreements with Germany, France and China have resulted in huge increase in seat entitlements and new routes for foreign airlines.
While domestic airlines, subject to certain minimum conditions, can fly overseas and forge partnerships with foreign carriers, international carriers, too, have been interlining with domestic airlines. While some private airlines have developed large networks and are in a position to fill international flights with ease, some more domestic airlines will qualify for international operations in next 3-4 years, having a large network by then.
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