FIRST BLOOD DRAWN?

I have been away in Macao and almost missed some stories from back home in India. When I got to Singapore, the first news from India that caught my eye was about Indus Airways stopping flights and shutting down. It brought back memories from the 1990's when start-up airlines in India started folding, one after another.

Funnily enough, I had written in December last year that some of the airlines in India are run on ego and not on sound business plan and I had predicted their closure. This included Indus, as evidenced from one of my replies to a comment from a reader. My post got some bouquets and brickbats, as it usually does, with some going on to refute my prediction. I had mentioned that the reasons for my observations were based on pure math and also from knowing that the wrong aircraft for the wrong routes and wrong pricing can never add up to profits.

The writing is on the wall, I had said, sounding more like a doomsday prophet than an aviation professional, and some had questioned my observation about corporate investment in the airline sector.

I had said in my blog then "There's another curious activity going on these days that's also making news. Financial companies, investment firms and other corporate types are buying up small equity shares in some of the Airlines. I don't know why and some seem keen on picking up larger equity. I don't know who is advising these guys and I'll bet there is an army of CA's and MBA's in ties involved. I did hear some sound bites from the "experts" about this and they were saying: "these are very positive a signs indeed, signs of maturity, such an investment lends credibility etc" and all that hogwash these guys come up with. And they get paid a mint, mind you, to say all this rubbish".

I had written about specifically the TATA group having picked up a stake in Spice Jet and that I thought was a mistake. This led to a question from a reader asking why I did not support corporate investment in Aviation business. I had felt that while corporate investment in the Airline sector was a good thing to have, it did not make much sense for a company to invest blindly. TATAs do know a thing or two about Aviation but on the advice of some of their financial consultants it seems, they had found it prudent to pick up some equity in Spice Jet.

So, coming to Spice Jet's current cup of woes, the latest news projects Spice Jet's loss this quarter is up by 395%. Staggering? It would be for any one else but as I mentioned, some one keeps injecting some fresh life in the scene and things keep floating for a longer time.

I have heard that the other Airlines are all keeping a positive attitude - that's good because that's all they can do; keep positive. They will paint red all over the skies with their results this year, notwithstanding bravado statements from the "glitterati" of aviation. The sector is set to lose something like Rs.1,800 crores and that’s no small change! Like I said before, it's been good for the flying public, cheap fares and all. My advice, stop complaining and keep flying. When more airlines fold up, the fares are heading north for sure!

So, we have the first blood drawn in this aviation scenario. Luckily it has not been a bloodbath in terms of an all out price war and the intention of one Airline to see another go down the tubes and fail. My blog on Macao had to wait for this piece, just had to get this one off my chest. This blog appeared first in desicritics.org

IS CHINA AND JAPAN A PART OF ASIA OR NOT?

I am sure my readers may be wondering what I am talking about in my curious headline. Let me begin by saying that the Indian media, whether print or TV, has most of the time got it wrong when it comes to reporting about Aviation. I have been ranting about this aspect in a few of my previous articles now confined to the archives on my blog. I have often wondered whether the mis-reporting is because of the lack of knowledge of the subject or the media's obsession with the industry termed as a "glamorous" one. Of course anyone in Aviation will tell you that we are in it because of our love for all things flying and has nothing to do with glamour. Most of us know that the glamour tag is only that - a tag! Let me not digress from the topic and come straight to the issue.

I saw a news report on CNN-IBN online recently and apparently it was on TV as well about the impending merger of Air India and Indian Airlines. Great, long time coming and better now than never. That's not the reason for my grouse against the reporting. The news continues to say that the said merger will create Asia's largest Airline! Wow! Another news report says that compared to Asian tigers such as Singapore Airlines, Malaysian and Thai, the merged Airline will be larger with around 110 Aircraft (never mind some of them are very old Aircraft in terrible condition and need to be replaced asap) and with purchases of new jets, the fleet size is going to be around 130. Fantastic I thought, until a quick research on the net showed Singapore Airlines with a bit more than 90 Aircraft currently and 110 on order. You do the math. But that's not the end of the story, there's more to it. And that pertains to China and Japan.

One of the things that a reporter can do these days before cooking up stories is browse the web, collect better information and then say what they need to say in print, online and on TV. Not so in the CNN-IBN case. The reporter makes a sweeping statement that AI-IA will be Asia's biggest Airline when merged into a single entity.

Forget Singapore Airlines and the other 'Tiger' economies of the region for the moment and think China. What did I say? China? Oh right. There is a country called china and maybe they have some Airlines too flying there, right? If the naive Indian media thought that the Airline sector in India was booming, they need to pay attention to the giant next door where Airlines are not only booming but booming a lot louder than any one in India. Like I said, all that a news reporter has to do these days it to simply browse the web and do a bit of research. I will only give two examples here about the size of the fleet of Airlines in China:

1. China Southern Airlines has a fleet of 235 Aircraft and 99 more on order.
2. China Eastern Airlines has a fleet of 186 Aircraft currently.

Here's one example as far as Japan is concerned. Japan Airlines (JAL) has a current Aircraft fleet strength of 232 Aircraft with 75 more on order. That's mammoth.

One must ask these reporters and the channels whether China and Japan are considered as a part of Asia or not. If they are to be considered as a part of Asia, then quite clearly the AI-IA merged entity CANNOT be the largest Airline in Asia. I did put in a comment on the online website of CNN-IBN. Who cares to read or respond?

Is it not time for the Indian media to stop hyping everything about India and especially about aviation in India and creating a myth that does not exist? Is it not time that the Indian media realize that everyone who reads their reporting are not fools and do a bit of research before saying something without basis? One need not be a rocket scientist to do the math or need to be an aviator to read between the lines.