Spice Jet.....A Star in making....Rs 57.85

Sun, Mar 28 04:54 AM



Over a month after they applied, the decks have been cleared for an in-principle approval to low-cost carriers IndiGo and SpiceJet to fly abroad.
The Sunday Express has learnt that the Civil Aviation Ministry has given its go-ahead and procedural formalities will now be completed by the Directorate General of Civil Aviation.
While SpiceJet completes its stipulated five years of domestic operations on May 23, IndiGo meets this condition only on August 4, 2011.
Both wanted time to get their requisite infrastructure in place — and approach foreign governments — so they moved requests for in-principle approvals.
Until now, Jet Airways and Kingfisher Airlines are the only two private carriers flying abroad. When the government first gave its nod for private carriers to fly abroad, only Jet Airways and the former Air Sahara were eligible. However, Jet took over Air Sahara and similarly, Kingfisher Airlines benefited from Air Deccan's rights, once it qualified, after the merger.
The criteria laid down for a private carrier to be eligible for consideration to fly abroad is a five-year track record of uninterrupted domestic operations with a minimum fleet size of 20 aircraft. Both these airlines already have the necessary fleet size and will, in due course, meet other criteria. Taking note of this, sources said, the government agreed to give in-principle clearances.
While Jet, Kingfisher and Air India have faced heavy losses over the past few years due to high operation costs, IndiGo and SpiceJet have been among the better performers and even generated some operating profits. Both these airlines have a little over 20 aircraft in their fleet with IndiGo planning to acquire some more aircraft this year.
Unlike Jet and Kingfisher, the two airlines are not looking at long haul operations to Europe and the US. Restricting themselves to a fleet of narrow-bodied aircraft — SpiceJet has a predominantly Boeing 737s-800 while IndiGo has Airbus 320s — the two airlines have targeted the South Asia region and slightly beyond.
In fact, SpiceJet, which plans to start operations from June 1, is looking only at Kathmandu, Dhaka and Colombo to begin with even though its earlier plans included the Middle-East. IndiGo is looking not just at the SAARC region but also ASEAN and Middle-East.
Government sources pointed out that in the past few years there has been a proliferation of low-cost carriers in these sectors, particularly from the Gulf. Relatively new carriers like Air Arabia, Jazeera Airways, Mihin airlines of Sri Lanka, UAE-based RAK Airways and now even FlyDubai airlines — some with even less than five years of domestic experience — have made a significant impact on the market. Most of these are clocking over 80 per cent passenger load factor.
Delaying the entry of better established Indian low-cost carriers, sources said, may see the market move decisively in favour of foreign airlines like these. Given that India has worked hard over the past few years to either rework or negotiate afresh its air bilateral agreements to cater for multiple designation of airlines, operationalising these decisions may be less cumbersome than when it was first implemented.
Pranab Dhal Samanta

My Comments:
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