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ROUND-UPREGIONALROUND-UPBUSINESSGulf juggernaut gains momentum with US 32 billion airport expansionThe arrival of Qatar Airways’ first A380 atthe airline’s Doha headquarters last monthgave the carrier’s chief executive, AkbarAl Baker, the opportunity to be graciousabout his client, and he took it. Qatar hadrejected the first three of its 10-plane A380order but said the delay was not the fault ofAirbus. “The delay was caused by us becausewe demanded additional quality,” Al Bakersaid. He added that “there is a possibility wewill buy more because the airline’s networkcould accommodate 20 to 25 of the airliners”,especially if Airbus follows the urging ofEmirates Airline and develops a NEOversion. Qatar will initially use the A380sfrom Doha to London Heathrow and Paris,but like its airline neighbor, Emirates, winningslots for the aircraft in key markets such asChina and India remain difficult. Recently,Lufthansa, another A380 customer, outbidEmirates for a slot at Mumbai’s ChhatrapatiShivaji International Airport.At Emirates, A380 services to Chicagocommenced in August, the Dubai carrier’sninth destination in the U.S. with plans toplace A380s on five of these routes fromDecember. The carrier’s global ambitionswill be very well served by the Septemberannouncement that the emirate’s governmentwill invest US 32 billion in the expansion ofthe Al Maktoum International Airport atDubai World Centre (DWC). The expansionprogram envisages catering for 120 millionpassengers a year by 2022 and 220 millionten years later. Asia-Pacific carriers will becompetitively effected by the DWC expansionas two thirds of the global population liveswithin eight hours flying distance from Dubai.However, DWC faces some competitionin the Gulf itself. Abu Dhabi InternationalAirport is expanding to handle a projected 40million passengers annually and Doha’s newUS 15.5 billion Hamad International Airportcan process 29 million travelers annually andhas forward plans for expansion. New resolve at Air IndiaState-owned Air India has saidit plans to cut the number ofunprofitable routes to 19% ofits overall network at the end ofthe current financial year, afterreducing flights by 38% in thelast fiscal year and 60% two yearsago, reports India’s BusinessStandard. “We have completelywithdrawn flights not meetingATF (aviation turbine fuel) costs.While there would be flights inwhich we would not be able togenerate operational profits,we are looking at meeting cashcosts on 81% of our network bythe end of this financial year,” asenior official at the airline said.Air India has singled out 19loss-making routes includingMumbai-Kolkata, Delhi-Bangalore,Sydney and Milan from Delhi.In September, the flag carriersold five B777-200LRs to EtihadCommission toinvestigate MASlosses likelyAirways for 67.3 million eachafter buying them for an average 127 million a plane seven yearsago.Vinod Rai, a formercomptroller and auditor generalat Air India, recently made theheadlines when he revealed in aninterview with The Times of Indiathat the original order in 2004was the brainchild of the civilaviation minister, Praful Patel,who wanted the airline to havedirect flights from India to theU.S. and Canada. The upshot ofthis was virtually crippling for AirIndia.”When any purchase has adebt proportion of 97%, there’sno way it can be commerciallyprofitable,” Rai offered. Mitsubishi and Embraer win over JALJapan Airlines (JAL) has signed a firm order withEmbraer for a total of 15 E-Jets comprising theE170 and E190 models, in addition to 12 furtheroptions, valued at US 677 million at current listprices. “We have been operating our E-Jets for fiveyears and the aircraft have achieved an outstanding99.7% dispatch reliability. They are efficientand have displayed exceptional performance,”8 / ORIENT AVIATION / OCTOBER 2014said Yoshiharu Ueki, representative director,president of Japan Airlines.JAL has also agreed to buy 32 MitsubishiRegional Jets (MRJs) worth almost US 1.5 billionat list prices, giving Japan’s first domesticallymanufactured commercial passenger plane in half acentury a sales boost. JAL said it will start operatingthe MRJs on domestic routes in 2021. Malaysia’s oppositionPan-Malaysian Islamic Party,or PAS, has called on thegovernment to set up a RoyalCommission of Inquiry (RCI)into Malaysia Airline SystemBhd.’s (MAS) losses over theyears. “It’s not that we want tosee MAS bankrupt, or that itneeds not be revived. We, asMalaysians, know that it needsto be salvaged because it isour national treasure. But wemust question those who havebrought down MAS over thelast 10 to 15 years to its currentstate,” PAS information chiefOmar said without naminganyone in particular. KhazanahNasional, the governmentinvestment arm that currentlyholds a 70% stake in MAS,last week announced a rescueplan for MAS titled “RebuildingA National Icon”. Khazanahsaid it would spend 6 billionringgit (US 1.9 billion) torevive the airline, including1.4 billion ringgit to take thecarrier private by year-end, 1.6billion ringgit for 6,000 layoffsand other cuts to operatingexpenses.

BUSINESSROUND-UPIndiGo cuts 2.6 billion deal with China lessorLifeline for THAIIndian low-cost carrier (LCC) IndiGo has signeda 2.6 billion deal with China’s Industrial andCommercial Bank of China Ltd. (ICBC) who willfinance the Gurgaon based airline’s acquisition of30 new A320s. IndiGo is India’s largest carrier, witha market share of 32%, and the only airline on thesubcontinent that has been continuously profitablesince its 2006 launch.Thai Airways International(THAI) is struggling to makeends meet and has embarkedon a restructuring missionaimed at turning its fortunesaround after a net loss of 7.654billion baht (US 236 million)in second-quarter 2014, morethan double its 2.899 billionbaht loss in the year-ago period,and the fifth consecutivequarter of losses for the legacycarrier.The Bangkok Post saysThailand’s Finance Ministry hasasked the Government SavingsBank (GSB) to lend 87 billionbaht to THAI, without collateral,to keep the carrier in the skiesthroughout September.The loan is likely to beapproved, when the GSB isholding its next board meeting,said GSB board chairmanSomchai Sajiapongse.In other news, THAI said ithas reduced its fuel hedging forthe rest of the year to 50% offuel needs compared with 90%late last year, as global oil priceslook to remain largely stable. In 2011, IndiGo ordered 180 A320 jets worth 15.6 billion – the then second largest singleorder in the commercial aviation industry. AdityaGhosh (36), the airline’s president, said some ofthe aircraft will service the Gulf state and south andSoutheast Asia, but the majority of them will be forthe carrier’s domestic expansion. IndiGo operates afleet of 80 A320s. AirAsia Group loss-making as competition increasesAirAsia Group has turned inunexpectedly poor performanceresults for second-half 2014.While the group’s Malaysiansubsidiary, AirAsia Malaysia,remained profitable with asmall operating margin, all ofthe group’s overseas affiliatesincurred losses. The group’sperformance is in line with resultsfrom other low-cost Asia-Pacificcarriers as they struggle tomaintain yields in a market withtoo much capacity.Thai AirAsia (TAA) posteda rare 318 million baht (US 10million) loss in second-quarter2014, following 18 consecutivequarters of profits.The Thai market hasexperienced a huge capacityincrease in recent monthswith start-up Thai Lion Air andNok Air providing most of theadded seats, whilst puttingpressure on yields as growthoutpaces demand. The timingfor expansion has also beenunfortunate, given Thailand’sslump in overseas visitornumbers, particularly from EastAsia and Europe because ofmonths of political instability.Meanwhile, the outlook at thegroup’s two long-haul divisionsis positive. Malaysia’s AirAsia Xreported a 128.9 million ringgitloss(US 40.9 million) in theGulf Air cuts lossesBahrain’s Gulf Air has cut itsfirst-half 2014 losses “by morethan 30%” compared to thesame period a year ago, theairline said.The better figures are theresult of a major restructuringprogramme that has seenGulf Air concentrate onhigh-demand, high-yield,regional point-to-point routesprimarily aimed at the Gulfregion’s business community.Simultaneously, the carrier’slong-haul network has beenreduced to focus on a numberof profitable trunk routes tofeed its expanded short-haulnetwork.Gulf Air is a state-ownedquarter to June 30, attributingit to its strategy of capacity andnetwork expansion. Thai AirAsiaX was launched in May and itsstrong load factor and forwardbooking reports suggest it couldbe profitable. Japan AirAsia Mark11 is the group’s only subsidiarythat is not currently flying. Itsre-launch is planned for 2015from Nagoya’s Central JapanInternational Airport (Centrair).AirAsia Group is made up ofeight airline affiliates: MalaysiaAirAsia, Thai AirAsia, IndonesianAirAsia, Philippines AirAsia,India AirAsia, Japan AirAsia, andthe two long-haul arms MalaysiaAirAsia X and Thai AirAsia X. Profitable Juneyao applies for IPOenterprise and under Bahrainilaw this exempts it fromdivulging actual figures.Kamal Bin Ahmed, Ministerof Transport and Chairmanof Gulf Air’s Board ExecutiveCommittee said: “We arepleased with these strongfirst half results, which areevidence of the on-going fiscaland operational improvementsbeing made across the business.These early results are fully inline with our expectations as wecontinue to further strengthenthe position of Bahrain’s nationalcarrier. To date, much has beenachieved and we look forward tocontinuing this progress for therest of 2014.” China’s ‘boutique’ budget carrier, Juneyao Airlines, has bucked thetrend of dwindling profits and losses at Mainland carriers in 2014. Theairline posted a 191 million yuan (US 31.1 million) operating profiton revenue of 3.2 billion yuan for the reporting months. However,it has received government subsidies of 57.1 million yuan, whicheffectively reduced its net profit to 134 million yuan. Following in thefootsteps of Spring Airlines, China’s first low-cost airline, Juneyao hasfiled an application to go public with the China Securities RegulatoryCommission. The Shanghai carrier flies 36 A320/321 aircraft to 38domestic and regional destinations. OCTOBER 2014 /ORIENT AVIATION/ 9

BUSINESSROUND-UPSHORTTAKESAIRLINES: Air India hassuspended a pilot and 10 cabincrew for habitually showingup late for work and delaying,amongst others, flight AI144 fromNewark to Mumbai by over twohours on September 13. ApsaraInternational Air, a new start-upfinanced by Chinese investors,has received its AOC and plans tocommence domestic services outof Phnom Penh later this monthusing an A320. China Airlinesplans to commence a codes

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