First Boeing 787 Dreamliner expected on Tuesday

New Delhi: After a delay of nearly five years, the firstBoeing 787 Dreamliner is likely to arrive here next week with Air India planning to take delivery of the aircraft on Tuesday.

"A total of three aircraft are ready for delivery at the Boeing's South Carolina factory. The first Dreamliner will take off from the US and is likely to arrive here on Tuesday," airline sources said.

The national carrier, which has ordered for 27 Dreamliners, will take the delivery of the rest two by early next month and get all the aircraft by the year 2016.

Air India was the second airline to place orders for 27 B-787s but is yet to receive the aircraft even as two Japanese carriers, All Nippon Airways and Japan Airlines, have started flying them.

The first Dreamliner was to have been delivered to Air India in the year 2008.

Air India had placed orders for 27 Dreamliners in 2005 and was supposed to take the delivery of the first of them in September 2008 and the rest by October 2011.

But their delivery was delayed due to various factors, including labour trouble at Boeing.

Apart from it, the delay was caused in finalisation of compensation package.

The Air India Board had on May 28 approved an agreement with Boeing on the compensation package and forwarded it to the government for approval.

On August 3, the Cabinet Committee on Economic Affairs permitted Air India to commence taking delivery of the Dreamliners after signing a compensation settlement agreement with Boeing.

Also, the delay was caused due to a probe by the US' National Transport Safety Board (NTSB) into the incident of failure of Dreamliner's engines during a pre-flight test on July 28 in which debris fell off the B-787's engine during a pre-flight test at the Charleston Airport in South Carolina.

Following this, civil aviation regulator, the Director General of Civil Aviation (DGCA), sought a report from its counterpart in the US the Federal Aviation Authority (FAA).

The DGCA has given safety clearance to Boeing 787 Dreamliner to fly to India.

The new carbon-composite aircraft can typically carry between 210 and 250 passengers on routes of 14,200 km to 15,200 km distance, while using 20 per cent less fuel than airplanes of a similar size.

The induction of the plane can enable Air India mount several new international flights.

Air India can be turned around, says CAPA

The national carrier, Air India, may be down in the dumps, but noted civil aviation consultancy Centre for Asia Pacific Aviation (CAPA) believes that it can make a turnaround based on the marked improvements in its domestic operations.

But the government must revamp the Maharaja’s board and management to achieve the desired objectives.

POSITIVE DIRECTION

“For the first time in several years, Air India’s domestic performance is headed in a positive direction which could become a trigger for an overall turnaround if the situation is capitalised. The national carrier needs to take advantage of the current domestic market conditions to focus on its restructuring by further reducing its cost base, improving productivity and solving its outstanding HR issues,” CAPA said in a report.

It said if Air India had a chance at achieving a successful turnaround, the time was now, but it needed a board and management that could seize the initiative.

“Air India’s domestic gross revenue per passenger increased by 46 per cent in the first quarter (April-June) resulting in top-line growth of $80 million, despite the impact of the pilots’ strike. Based on CAPA estimates, Air India’s average gross passenger revenue was the highest in the industry at Rs. 5,655.

As a result, domestic operations showed significant improvement and may have ended the quarter with a small surplus at the operating level, although CAPA estimates a net loss of Rs. 300-400 crore ($53.6-71.4 million),” CAPA said.

With no significant capacity induction expected in the overall domestic market, CAPA said that Air India should be in a position to maintain its improved yields and load factors.

The government-approved financial restructuring plan should help in significant reduction in interest costs, thereby reducing losses at the net level, the aviation think tank said.

However, Air India may not have the capacity to fully leverage the demand in the market, as it has less than 55 domestic aircraft, which is inadequate for a sustainable turnaround. Similarly, the carrier has only 20-25 aircraft available for international services, of which the B777s have not been appropriately deployed.

“Without an appropriate fleet to support it, Air India’s business plan is almost irrelevant,’’ it says. Subject to a strong performance in 2012-13, CAPA believes that the carrier may need to consider augmenting its capacity..

It said that these recent positive developments should be used as an opportunity to re-motivate employees and the upcoming retirement of 13 Executive Directors should be used as an opportunity to induct experienced industry professionals.

Serious attention must be given to providing Air India with the necessary framework, including an effective board and senior management to maximise the prospects of achieving a successful turnaround.

Based on its April-June quarter performance and subject to sorting out issues with the pilots, a robust result in Q3 and Q4 could see Air India’s projected full-year loss for 2012-13 decline from $1.3 billion to just under $1 billion, CAPA said.

In this report, CAPA said that Kingfisher was heading for a temporary operational shut down as the airline continued to operate with minimal cash flows and its services were subject to occasional disruption due to labour issues.

“Without an investment of about $600 million in the next 30-60 days, and access to a further $400 million over the next 12-18 months to fully-fund its business plan, Kingfisher faces the prospect of an operational shutdown, possibly temporarily, to allow it to restructure and reorganise,” CAPA said.

It said that considering severe setbacks at Kingfisher and Air India, recently Jet Airways had failed to leverage on the weakness at the full service space.

Air India’s international operations post losses: Minister

The international operations of Air India are proving to be a losing proposition.

In a written reply to Parliament, Minister for Civil Aviation Ajit Singh said between April and June, the total revenue that the airline generated from its international operations stood at Rs 1,711.22 crore, while the total cost of operations was Rs 2,626 crore.

The total revenues from all its European operations stood at Rs 213.51 crore, while cost of operations was Rs 404.70 crore. From its North American operations, the airline raised revenue of Rs 447.25 crore, while the total costs stood at Rs 702.88 crore.

In the past, too, the airline’s international operations did not do well, the Minister’s reply shows. During fiscal 2011-12, its total revenue stood at Rs 7,763 crore against a total operation cost of Rs 13,793 crore. Similarly, during 2010-11, its total revenue from international operations stood at Rs 7,035.18 crore against Rs 12,659 crore on total cost of operating these services.

The Minister said the airline had taken several measures to improve its performance, including ensuring that all long-haul routes to North America, the UK, Europe and Far East are upgraded and are now operated with the new Boeing 777-200 Long Range and 300 Extended Range aircraft. Besides, the airline is also progressively increasing the utilisation of all aircraft.

In response to another question, the Minister said that the provisional loss incurred by Air India during 2011-12 was about Rs 7,853.94 crore. The cumulative loss suffered by it since April 1, 2007 till March 31, 2012 was about Rs 28,000 crore, he added.

Thai Smile’s India service to take off from Hyderabad

Thai Smile Airways, the newly formed carrier of Thai Airways, will be launching its maiden flight from India connecting Hyderabad with Bangkok from September 16.

Thai Smile, a light-premium carrier positioned between a low-cost carrier and a full service carrier, was introduced by the airline in July, connecting three destinations so far — Macau, Surat Thani and Krabi — to Bangkok.

Hyderabad will be the carrier’s fourth destination. Thai Smile will actually be replacing the Hyderabad service being currently operated by Thai Airways and upgrade it to a daily service. It will be operated by an A320 aircraft.

New price point for passengers

Thai Airways currently connects seven cities in India. The new service was launched to offer a new price point for its passengers.

“We have priced Thai Smile at about 15 per cent cheaper than the regular Thai Airways flight, but with more or less the same facilities, such as onboard snacks and luggage capacity,” Woranate Laprabang, Managing Director, told Business Line.

The carrier is acquiring four A320s this year, as it scales up its operations. “We plan to have a fleet of 20 A320s by 2015. These narrow-body aircraft is best suited for our operations in terms of configuration and fuel efficiency,” he said.

Passenger traffic

Laprabang said the passenger traffic between India and Bangkok was now at 900,000 and with the introduction of Thai Smile services, it could go up to one million. Leisure travellers account for nearly 80 per cent of this traffic.

The carrier is looking at two new destinations to be added to its global network.

“On the radar are Ahmedabad, Amritsar and Thiruvananthapuram. We will take a call depending on the response of our maiden service in India (Hyderabad-Bangkok),” he said.

The carrier is also thinking of connecting new cities in Thailand to India such as Phuket and Krabi.