Following the Money

Vol. 25 No. 3 April 2018 orientaviation.com

FOLLOWING THE MONEY

Jet Airways CEO, Vinay Dube, is focused on building a full service network that “follows the money”

Tailored charter services Qatar Airways commits India outpacing China rejuvenating Japanese to expansion despite in air passenger tourism into Australia mounting losses growth INDUSTRYSPECIAL INSIGHT REPORT lead world Asia-Pacificin cabincarriers innovation Now you can accept payments in virtually any form. Saying yes to alternative forms of payment means saying yes to new streams of revenue. Our payment solutions integrate easily with your current systems, helping you accept AFPs at a lower cost. And navigate the global payments market with ease. A more complete payment program starts with UATP. Learn more at UATP.com. CONTENTS Volume 25, Issue 3

COVER STORY

20 FOLLOWING

PUBLISHED BY THE MONEY ORIENT AVIATION MEDIA GROUP Mailing address: Global aviation veteran, GPO Box 11435 Hong Kong Vinay Dube, is relishing Office: 17/F Hang Wai Commercial Building, his role as CEO of India’s 231-233 Queen’s Road East, Jet Airways where he is Wanchai, Hong Kong Tel: Editorial (852) 2865 1013 focused on streamlining E-mail: [email protected] operations and Website: www.orientaviation.com “following the money”. Publisher & Editor-in-Chief Christine McGee E-mail: [email protected]

Chief Correspondent Tom Ballantyne Tel: (612) 9638 6895 Fax: (612) 9684 2776 E-mail: [email protected]

Greater China Correspondent Dominic Lalk Tel: (852) 2865 1013 E-mail: [email protected] COMMENT EXECUTIVE PROFILE

North Asia Correspondent 5 Getting there in India? 14 Australia’s Alliance Airlines charts new territory Geoffrey Tudor for Japanese tourists Tel: (813) 3373 8368 E-mail: [email protected] ADDENDUM 6 AirAsia’s Fernandes has Myanmar on his mind India Correspondent R. Thomas 6 Mainland China harnesses Big Data to improve Tel: (852) 2865 1013 industry behaviour E-mail: [email protected] 6 HNA Group’s Gategroup IPO collapses Photographers 7 Qantas Group looks to “Project Sunrise” after Rob Finlayson, Graham Uden, Ryan Peters Perth-London nonstop takes off 7 Drone’s near miss in Auckland shakes up Chief Designer Chan Ping Kwan regulators

Printing Printing Station(2008) NEWS BACKGROUNDERS 8 All Nippon Airways widens LCC gap with Japan ADMINISTRATION Airlines General Manager Shirley Ho E-mail: [email protected] INDUSTRY ADDENDUM ADVERTISING 26 Rolls-Royce breaks ground on Derby test bed

Asia-Pacific, Europe & Middle East 26 Air China and CFM inaugurate China MRO facility Clive Richardson 26 AFI KLM E&M and Vietnam Airlines renew long Tel: (44) 7501 185257 E-mail: [email protected] term partnership 26 SITA promises India seamless biometric air travel The Americas / Canada Barnes Media Associates 27 China Eastern Airlines and GE Aviation sign Ray Barnes digital services agreement Tel: (1 434) 770 4108 Fax: (1 434) 927 5101 27 Singapore companies target airport E-mail: [email protected] development projects [email protected] 11 Qatar carries on regardless as losses climb 27 SpiceJet boosts fleet with leased B737MAX 8s 12 India outpaces China in air passenger growth from CDB Aviation Follow us on Twitter @orientaviation 13 South Korea clamps down on rogue budget also - keep up with the news of the week with Orient Aviation’s Week in the carriers INDUSTRY INSIGHT REPORT Asia-Pacific 17 Design challenges ahead for Boeing’s New Regional trends in aircraft cabin design

© All rights reserved Midsize Airplane 30 Asia-Pacific carriers lead the world in interiors Wilson Press HK Ltd., 18 Korean Air benefits from UK funding for innovation Hong Kong, 2018 Bombardier’s C Series jets 30 Flight Centre loses out to competition watch dog

APRIL 2018 / ORIENT AVIATION / 3 A million reason$ to ﬂ y ATR.

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O 17T0877_AP_05_OrientAviation_202x273mm_GB.indd 1 O 19/05/2017 17:51 O O

O O O O COMMENT

Getting there in India?

India’s airport infrastructure is close to crisis mode. airport, 30 kilometres away at Navi Mumbai, has been Domestic passenger numbers will exceed 300 million this delayed by a series of land disputes and is not scheduled to year yet the country’s airport network will only be able to open until 2023 – at the earliest. handle 317 million passengers annually. India’s government, under prime minister Narendra With passenger numbers rising every 12 months by Modi, has made aviation expansion a priority. Airlines have above 20%, including this February’s figures of 24.14% over responded to demand with orders for jets valued at US$250 the same month a year ago, airport saturation is a given. billion. Indian passenger numbers are forecast to grow five-and-half But views vary about India keeping up with demand for times in the next two decades, which raises numerous red new infrastructure, especially as some analysts predict India flags, particularly for air safety. will have a billion air passengers a year by 2030. Earlier this India is by no means the only country in the Asia-Pacific year the government committed to $10 billion in airport that has failed to invest in sufficient aviation infrastructure to infrastructure. Doom sayers believed $45 billion might be meet rising airline demand, but its situation is worse than in the right number. many nations in the region because its aviation growth is so In such a conflicted debate, it might be worth taking explosive. note of an airline veteran who is the new CEO at Indian full It is forecast that by 2023 to 2025, India’s 30 to 40 service carrier, Jet Airways. Vinay Dube told Orient Aviation busiest airports will be operating beyond their capacity. Ten in this month’s cover story that “I can honestly say we have of them, including Dehradun, Jaipur, Guwahati, Mangalore, a wonderful minister, a great secretary and an excellent Srinagar and Pune, are there already. directorate general of civil aviation”. Mumbai’s Chhatrapati Shivaji International Airport “Is it the world’s best in terms of maturity, rules and (CSIA), which is functioning at 94% capacity, cannot expand regulations? Of course not. There is a lot more we can do. because it is ringed by slums. Construction of a second But they are great people to work with. Absolutely.” ■

TOM BALLANTYNE Chief Correspondent Orient Aviation Media Group

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APRIL 2018 / ORIENT AVIATION / 5 ADDENDUM

AirAsia’s Fernandes has Myanmar on his mind

AirAsia Group is not slowing known for a long time. He is a Au Aviation is owned by the down in its drive to establish well-respected guy. We’re going Thien Minh Group, which is budget joint ventures across the through that process”. ultimately owned by Tran Trong region, particularly in Southeast Fernandes also said he Kien. Asia. Co-founder and group expected AirAsia Vietnam to Apart from its airline CEO, Tony Fernandes, said in be up and running by October. expansion, AirAsia is rolling a Reuters interview last month “Once you’ve covered Vietnam out additional services to its 80 that the Malaysia-headquartered and Myanmar, you’ve got million plus customers, including company was discussing the all the big Southeast Asian foreign exchange to e-commerce launch of a joint venture carrier populations,” he said. “We have products and content. in Myanmar. had great support from the “The biggest asset is our “It’s not going to be a big Vietnam government and we data. Southeast Asian businesses airline, because the airport have a great partner. My team is like ride hailing company, Grab, infrastructure is not there. But it very bullish about it.” have to spend a fortune to build is a market of 50 million people AirAsia Vietnam, announced that brand and data. We have and it will develop over time,” in April last year, will be 30% 89 million customers travelling he said. Fernandes declined to owned by the AirAsia Group with us every year and we have identify the potential partner but with the remaining 70% held data going back 18 years. We’re revealed “we had a good meeting by Vietnam’s Gumin Co., Tran more than an airline. That’s the with someone in Sydney. He Trong Kien and general aviation message for 2018, like Amazon has a good airline that we’ve company, Hai Au Aviation. Hai is more than a bookseller.” ■

Mainland harnesses Big Data to improve industry behaviour

Mainland China is pushing hard Social Credit Management System director general of the Law infringements, including to implement “Social Credit” is a critical development for the Department of the CAAC, Gou transporting dangerous goods regulations in its aviation sector industry, speakers said. Rengang, told the symposium. that could lead to an accident, Gou with rules that apply to foreign and Social credit uses Big Data to The information will reveal said. Firms on the Black List “will local carriers, the International Air rate businesses and individuals how companies and individuals lose the right to apply for slots for Transport Association’s assistant and will be used by Chinese have responded to China’s civil one year,” he said. general counsel, Max Xie, told authorities to stop people it views aviation rules and regulations, and The Grey List will come into the association’s recent legal as undesirable from travelling. will be published “regularly” on effect on January 1, 2020 and will symposium in Bangkok. It also will apply pressure on the CAAC website and passed on “automatically record information Social credit, flight delays, companies to improve aviation to other government agencies, about illegal activities or anyone passenger rights and obligations corporate cultures. ministries and banks. Two lists will who has received a rectification and slot allocation are among The intention is for the CAAC be established. notice from the CAAC”, he said. the issues covered by the new to set up a social credit record The Black List has been Guo advised “you might rules, but the Civil Aviation for every company or person in place since the start of the the find consequences in other Administrations of China (CAAC) associated with aviation, deputy year. It describes 15 serious regulations”. ■

HNA Group’s Gategroup IPO collapses

What is HNA Group going to in the Zurich headquartered to the deal. offload next? That’s the question Gategroup in the hope of adding The Financial Times also most students of the colourful up to US$1.37 billion to the reported that HNA Group’s conglomerate are asking after the group’s coffers. But information plan to hold onto a third of sprawling Mainland group’s plans about a possible unenthusiastic Gategroup after the IPO would to list its Gategroup investment response to the sale prompted have concerned some potential on the Swiss Stock Exchange a change of heart among HNA’s investors. In other companies, an collapsed last month. upper management. “There was anchor shareholder is welcomed. Only weeks earlier, the HNA too big a gap in valuation between This time an anchor shareholder Group announced it would hold their expectations,” the Financial was not, the Financial Times was an IPO for 65% of its holding Times was told by a person close told. ■

6 / ORIENT AVIATION / APRIL 2018 ADDENDUM

Qantas looks to “Project Sunrise” after Perth-London nonstop takes off

Speaking to Asia’s CNBC Interview soon after the high of travelling on Qantas’ inaugural nonstop Perth to London flight, Qantas Group CEO, Alan Joyce, predicted Project Sunrise, i.e. nonstop flights between Australia’s eastern seaboard cities and London as well as potentially Sydney-New York, could be as close as 2022. “You have to fly 21 hours and both Airbus and Boeing have an aircraft that can nearly do it Network changes and the new dramatically improves the revenue won’t change. today – the A350-1000 and the technologies given to Qantas of the entire aircraft and improves “You take Chinese visitors B777-AX,” Joyce told CNBC’s really have benefitted us for the the economics. to Australia as an example. This Christine Tan. “We are getting first time and have allowed us to “It also is about 20% more year they became the largest those one per cents, little bits of do things we always wanted to do fuel efficient. We can actually group of visitors at 1.2 million. improvements. If, by the end of but never had the capability to do.” fly two B787s tail to tail and its On our projections, that could the year, we can get the aircraft Asked about the viability of cheaper than flying an A380 by grow in the next 20 years to eight there, we will do a tendering ultra long haul flying, Joyce said: about five per cent. million visitors a year which is process. In 2019, if it passes the “What you are able to do is put He continued: “When we more than the entire world that business phase, we will put in an a bigger premium cabin in the move the A380s to Singapore comes to Australia now. Australia order and I think by 2022 we will aircraft. For example, the B787-9 this weekend [March 31-April 1]. only gets one per cent of Chinese be doing it if it passes those few that is flying Perth-London has We will have an 80% growth in visitors yet it is the number one hurdles. more premium seats on it than capacity to Singapore because destination that Chinese people “We are looking at Sydney- we have ever had because you that is where we think the growth want to come to. London, Melbourne-London, get more business traffic. They will be. It’s the Asian, the Chinese, “If we can tap into more of that Brisbane-London and potentially want to travel with you because it the Southeast Asian, the Japanese market, it is going to be a massive Sydney-Melbourne New York. is direct and therefore faster. This where the huge growth is. That tourism boom in this country.” ■

Drone’s near miss with aircraft in Auckland shakes up regulators

clear “tougher deterrents” were safely. The ATM said it logged 600 necessary to prevent drone use drone flights a week compared around airports. He called for with 30 a week four years ago. prison terms for drone operators There are 7,000 registered users who endangered lives. of the ATM’s website. In response, the Civil Aviation “Air Traffic control technology Authority of New Zealand said is currently unable to detect small drones are required to be kept at objects such as drones so we rely least 4 kilometres (2.4 miles) from on drone operators to follow the any airport. The March 25 near rules and register with us before miss was the second for Air New they fly to ensure all aircraft Air New Zealand (Air NZ) has “NZ92 was metres away Zealand in a month. On March are integrated safely into our called for “tougher deterrents” from a serious accident on 6, Auckland Airport operations airspace,” Airways New Zealand on the use of drones after one Sunday (March 25), Air NZ were suspended for 30 minutes chief executive, Graeme Sumner, of the airline’s B777s, with 278 chief operations, integrity and after a pilot observed a drone said in response to the near miss. passengers onboard, was within standards officer, Captain David within controlled airspace at the “Drone detection technology five metres of a collision with a Morgan, said in a statement. “The airport. is still in its infancy worldwide, but drone as the aircraft approached pilots spotted the drone at a point Airways New Zealand said it Airways has been actively looking Auckland airport. Pilots of NZ92 where it was not possible to take allows drone operators to request for solutions. We plan to begin were alerted to the drone because evasive action,” he said. flight clearance and receive trials of a new system in the next it was flying so close to the aircraft. Captain Morgan said it was information on where they can fly three months.” ■

APRIL 2018 / ORIENT AVIATION / 7 NEWS BACKGROUNDER

conference, the airline group made it clear that successful Peach All Nippon Airways would continue as a brand, which may not be the case for Vanilla. Regional LCCs groups such as widens LCC gap over AirAsia and Jetstar are reporting annual sales ranging from US$1.8 billion to US$2.7 billion in the last Japan Airlines 12 months. Consolidating Peach and Vanilla into one LCC will put ANAHD in a more competitive position in the region’s budget By Geoffrey Tudor in Tokyo sector. At present, international NA HOLDINGS (77.9%), First Eastern Holdings year ANA Group Medium-Term destinations served by Japanese INC (ANAHD) (7%) and Innovation Network Management Strategy” that was LCCs are largely to South Korea confirmed industry (15.1%). For the 12 months to released in February. Rather than and Taiwan with a few routes expectations in March 31 this year, Peach sales a merger, the strategy suggested to Southeast Asia. By 2020, March when it were 51.7 billion yen and net the group was looking to launch the group wants to include Aannounced the two low-cost income was 4.9 billion yen. a medium-haul low-cost carrier destinations on the Indian carriers (LCC) in its portfolio would Vanilla is fully owned by with a greater focus on the airline sub-continent in its network. be merged into Japan’s biggest the ANA parent group. It rose budget market. ANA aims to double its LCC by March 31, 2020. The from the ashes of an All Nippon However, signs of a merger low-cost sales by 2022 and process of integrating the carriers Airways/AirAsia joint venture of the two ANA LCCs have long intends to widen its lead over arch will start in the second half of and has struggled to earn been apparent. In February 2017, rival, Japan Airlines (JAL), through fiscal year 2018 and be completed consistent profits. For the fiscal ANAHD reached agreement with the merger. JAL owns 30% of by March 2020. Jetstar Japan, but it has not fully The two ANA-related LCCs immersed itself in the low-cost hold second and third places in business. Japan’s budget carrier rankings. “The possibility of a Peach/ Their combined sales in the Vanilla merger was not a surprise current financial year to March 31, at all because it appeared to be 2018 are 76 billion yen (US$716 an established strategy ever since million) overtaking Japan’s low- ANA launched Vanilla four years cost market leader, Jetstar Japan, ago. ANA cannot have two similar a joint venture of Australia’s LCCs within its portfolio,” said Qantas and Japan Airlines. AirAsia Japan Aviation Management Japan is in fourth place. Research’s chief analyst and “We have been considering director, Haruo Ushiba. combining the companies year to March 31, it reported an the other two Peach Aviation “My big concern is that JAL’s for some time,” said ANAHD operating loss of 600 million yen. shareholders to increase its non-LCC minded attitude will put president, Shinya Katanozaka. Its headquarters is at Greater shareholding to 67%, from them far behind ANA’s aggressive “Now is a good time because Tokyo Narita Airport where it 33.3%. The other joint venture LCC strategy. According to ANA’s both companies’ business operates 14 A320s on seven partners, First Eastern Aviation new medium-term plan, the total performance is healthy and domestic and seven international Holdings and Innovation Network, ANA LCC fleet, including Peach inbound traffic to Japan is on a routes. reduced their equity to 17.9% and Aviation and Vanilla, will increase strong upward trend,” he said. Plans for the integrated carrier 15.1%, respectively. to 55 by 2022. Sooner or later, Peach Aviation, a consolidated include entry into the medium In October last year there was the Japanese international LCC subsidiary of ANAHD, is based distance routes of seven to nine another hint of change at Peach market, particularly Asian routes at Osaka’s Kansai International hours by 2020. Peach also has and Vanilla when ANA CEO, Yuji and even Hawaii, will grow to Airport and was the first low-cost expressed interest in acquiring Hirako, revealed a plan to use a nearly 50% of total market carrier to be launched in Japan 13 new airplanes by 2020, which ANA’s B767 aircraft on medium share, thanks to the new narrow – in March 2012. It operates 20 could include A321LRs. haul routes in Asia of up to body jets such as A321LRs. Flight A320s on 15 domestic and 14 ANAHD had previously eight hours as part of Peach and length extensions and new international routes. After the announced plans to strengthen Vanilla’s networks. At the time, airport capacity, especially at merger, the shareholders in the cooperation between the two ANA operated 36 B767s. Narita, could make JAL’s present carriers will be ANA HOLDINGS carriers in the “2018-2022 fiscal At the March 23 press indecisiveness fatal.” ■

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VIE_Aviation_Strauss_Culture_202x273.indd 1 19.03.18 09:19 NEWS BACKGROUNDER

Qatar. With an operating fleet of 213 aircraft, it also has a massive Qatar carries on order book of 50 A320neo, 18 A350-900s, 36 A350-1000s, one A380, eight B777-300ERs, regardless as losses 10 B777-8s, 50 B777-9s and 30 B787-9s, Its freight orders are eight A330-200Fs and three B777F freighters. continue to climb In Berlin, Al Baker said Qatar would become the first It has been a tough 12 months for Qatar Airways as it endures Gulf carrier to operate a direct service to Luxembourg. Other its Gulf neighbours’ ban on operations and addresses the new destinations are London inevitable impact on its bottom line. Despite these setbacks, Gatwick, Cardiff, Lisbon, Tallinn, the Doha carrier continues to expand across the globe. Chief Valletta, Malta; Cebu and Davao in the Philippines, Langkawi, correspondent, Tom Ballantyne, reports. Da Nang, Bodrum, Antalya and Hatay in Turkey, Mykonos and Thessaloniki in Greece and Málaga. Frequencies will increase to utspoken Qatar double daily to Warsaw, Hanoi, Airways group Ho Chi Minh City, Prague and CEO, Akbar al Kiev and to three daily to Madrid, Baker, is not Barcelona and the Maldives. burying his head With the demise of Oin the sand when comes to the Etihad-backed Alitalia, the airline circumstances of his carrier. Qatar wants to transform Meridiana Airways, he said last month, – renamed Air Italy – into Italy’s would be reporting “a very large flag carrier. Al Baker said the loss” for the year ending April airline would receive 30 B787-8s 1 as a result of the sanctions from the Gulf carrier after Qatar imposed on the airline’s network begins taking delivery of the by Dubai, Abu Dhabi, Bahrain, larger B787-9s. Saudi Arabia and Egypt in a geo- In India, where the airline political row. is proceeding through the “We don’t know how long is tremendously excited to state of Qatar of supporting final stages of acquiring an it will last,” Al Baker said in announce further expansion Islamic extremist groups. It is an air operator’s certificate for a Berlin. “As long as it is required with a significant number of allegation Qatar’s rulers deny. It dedicated carrier, bureaucratic we will have to take the losses. destinations to be added to our followed U.S. and U.K. travel and hurdles remain, Al Baker said. We have to be prepared for the extensive global network in 2018 electronics bans on citizens from He added he wanted to buy into worst.” He added the airline and 2019,” he said. several Middle East countries. Royal Air Maroc even though the would need to find new sources “This is a direct reflection of The exclusions have had a carrier is not ready for such an of financing to survive because it our commitment to connecting crippling effect on Qatar Airways investment. has no access to the equivalent travellers across all corners of the revenue. More than 20% of its Nor is a shrunken bottom of U.S. Chapter 11 bankruptcy world in a way that is meaningful income is earned from short line curbing the airline’s appetite protection. This might include and convenient to them. We are haul flights to Dubai, Abu Dhabi, for sponsorships. Discussions an equity injection, something committed to continuing our Saudi Arabia, Egypt and Bahrain. were underway to add to the for which the government is ambitious growth strategy in The ban on Qatar also excludes airline’s sporting sponsorship prepared, he said. order to provide our passengers Qatar Airways from flying in portfolio, Al Baker said. Already Visiting an industry fair in with as much choice as possible the airspace of the five entities, it is the official sponsor of the German city last month, and to take them anywhere in which has extended Qatar’s many top-level sporting events, Al Baker announced Qatar the world they wish to go.” flying times and added to fuel including the 2018 FIFA World would add 16 destinations to its The sanctions were imposed costs. Cup in Russia, the 2022 FIFA network and increase frequency in June last year by Qatar’s Pulling back from network World Cup in Qatar and the FIFA on some routes. “Qatar Airways neighbours, who accuse the expansion is not an option for Club World Cup. ■

APRIL 2018 / ORIENT AVIATION / 11 NEWS BACKGROUNDER

India outpaces China in air passenger growth

By chief correspondent, Tom Ballantyne

ir traffic growth in India has overtaken every other country in the world a series of recent forecasts Ahave revealed. Data compiled by India’s Directorate General of Civil Aviation (DGCA), reports air traffic in India increased six fold, to 265 million passengers in 2016, compared with 44 million passengers in 2008. This year, Indian airports expect domestic air passengers to exceed 300 million, a figure that is only 17 million passengers short of India’s national airport capacity. In the next five to seven years, the top 30 to 40 airports in India will be operating beyond aircraft with load factors above contained by an 81% increase every week for the next 10 their capacity. 80%, with Gurgaon-based in fuel costs since 2016. Indian years, the manufacturer said. New Delhi’s Indira Gandhi SpiceJet recording 96.3%, airlines pay more for fuel than “Make in India is at the heart International Airport and followed by IndiGo with 91.8% U.S. carriers because of Indian of our strategy,” said Airbus Chennai’s International Airport and part Singapore Airlines- domestic fuel surcharges and Commercial Aircraft president are forecast to reach maximum owned Vistara with 91.2%. taxes. India, Srinivasan Dwarakanath. handling capacity in four to six All of this is music to the ears Airbus’ latest forecast, also “Airbus has the largest footprint years. Mumbai’s Chhatrapati of aircraft manufacturers. They released in March, was slightly in India of any international Shivaji International Airport (CSIA) are increasing their long-term more conservative than Boeing. aircraft manufacturer across all is at 94% capacity and “close to forecasts of aircraft Indian Airbus said India would need aircraft programs. Our sourcing saturation”, aviation regulators airlines will need in the next two new passenger and cargo aircraft volume has grown 16 times over said. decades. Boeing Commercial valued at US$255 billion in the the past ten years and is at more Across India, flights have Airplanes senior vice president for next two decades: 1,320 single than $550 million annually.” increased every year by 20% or sales in the Asia-Pacific and India, aisle aircraft and 430 wide Embraer also is betting big more since 2015 and there is Dinesh Keskar, said in March India bodies. on the Indian market, although it no sign of stalling growth. The would need 2,100 airplanes at a Traffic serving the Indian only has 17 aircraft in the country latest figures from the DGCA, cost of US$290 billion. Speaking market is forecast to grow 8.1% at present. It forecasts a market for February, revealed domestic at the Wings India 2018 aviation per year in the next 20 years, for 1,000 commercial regional airlines had recorded passenger show at Begumpet airport, he almost twice as fast as the world jets in the next two decades. The growth of 24.14% compared said India’s growth is way above average of 4.4%. Domestic Brazilian manufacturer wants with the same month a year ago. the global average. Indian traffic is expected to grow to fill the gap between 70-seat Indian airlines carried 10.7 In the last five years, Indian five-and-half times over the next turboprops and larger 180-seat million passengers during the domestic passenger traffic 20 years, reaching the same level single-aisle aircraft. month, up from 8.6 million has outpaced forecasts, albeit as U.S. domestic traffic today. Embraer’s vice-president in February 2017. All major assisted by the appreciation of On average, one Airbus sales and marketing Asia-Pacific, scheduled operators flew their India’s rupee. Profits have been aircraft will be delivered to India Cesar Pereira, said his company’s

12 / ORIENT AVIATION / APRIL 2018 NEWS BACKGROUNDER

jets are part of the solution to complain about flights having accelerating demand. Tickets AAI chairman, Guruprasad overcrowding at six major airports to circle for 30 minutes before can cost as little as US$15 (1,000 Mohapatra, said the authority in India. “There must be small landing. Clearly, they have not rupees) which is cheaper than is preparing to commence aircraft making point-to-point been to China. Earlier this year, train travel. “mega projects of new terminal flights, avoiding the six hubs that Mumbai said it had broken its In January last year, Civil buildings” at 14 airports this year. are taking 60% of the traffic,” own world record for handling Aviation Secretary, R N Choubey, AAI is now looking for a he said. the most number of arrivals and said $10 billion would be spent consultancy to frame a business Pereira said Air India, departures on a single runway in in the following five years with strategy to increase revenue at its Vistara, IndiGo, SpiceJet and Jet one day when 980 flights landed many of the 400 unused airstrips airports. From April to October Airways have shown interest in and took off in a 24-hour period. across the country brought 2017, passengers processed at Embraer’s E-175 Jets. The bulk of The government is building a back to life. Addressing an India AAI airports increased to 171 regional airline fleets in India fly new airport at Navi Mumbai, 30 Aviation Summit, he said India million compared with 149 million Bombardier and ATR turboprops. kilometres away, to ease airway was determined to maintain the a year earlier. Annual passenger Embraer has an order for 25 congestion. It is not scheduled to “historic” 23% growth rate it had traffic in India is expected to be 190-E2s and 25 195-E2s, with open in 2023. achieved in the aviation sector. about 322 million in 2018-2019. options for another 50, from Jet Airways CEO, Vinay But in February this year, Mohapatra said airports and India’s Air Costa, but the order is Dube, does not have a problem Finance Minister, Arun Jaitley, terminal buildings are likely to be in limbo after the airline ceased with the service Indian airports announced that only $613 ready at five places: Jharsuguda in flying in February last year. Its offer to his full service airline. million would be allocated to the Odisha, Tezu (Arunachal Pradesh), future remains unclear. He told Orient Aviation last Airports Authority India (AAI) to Calicut (Kerala), Gorakhpur (Uttar There is universal agreement month (See Following the Money expand facilities, a figure that falls Pradesh) and Pakyong (Sikkim). among analysts and industry page 20): “we have almost no far short of the $45 billion some This year, the “mega insiders that India needs to fast infrastructure concerns and analysts said should be spent projects” of constructing track infrastructure development a great relationship with the by 2030 to cope with future new terminals will commence otherwise many of the aircraft director general of civil aviation. demand. at Guwahati, Leh, Patna, set to arrive at airlines across the Perhaps there might be minor slot In January this year, AAI Trichy, Vijayawada, Jabalpur, country will have nowhere to take shortages. Do you know what? If announced it was developing Ahmedabad, Chennai, Srinagar off and land. it pushes up fares one or two per a national strategy for airport Pune, Lucknow, Mangalore, Domestic travellers flying into cent that’s not bad.” development and the formulation Dehradun and Jaipur, the finance Mumbai, India’s financial capital, Extremely low fares are of model concession agreements. minister said. ■ South Korea clamps down on rogue budget carriers

outh Korea will tighten Jeju Air, has 31 aircraft, followed as an LCC will be cancelled conditions for start-up by Korean Air subsidiary, Jin if a budget carrier does not low-cost carriers in the Air, with 25. Government data improve its financial performance country “to improve shows local LCCs control 55.5% and structure as ordered by the overall quality of of the domestic market and 26% government regulators. Sthe airline industry with fair of international flights in South Budget carriers will be restricted for them because of competition”, the Ministry Korea. allocated traffic rights based on geo-political tensions between of Land, Infrastructure and The ministry also will remove air transportation criteria, which the two nations. But in recent Transport announced last month. a benefit that allows an LCC to will include flight reliability, to months relations between China The new rules will apply from operate international flights if create a fair market. Companies and South Korea have improved July1 if approved by regulators. it has flown 20,000 domestic that have contributed to in this key market for South The revised legislation flights without an accident. cooperation with countries Korean carriers. requires airline investors to At present, the government abroad and practice social It has been announced that show they have US$28 million can demand a better financial responsibility will be given T’way Air has applied for an available in current capital and a accounting from an LCC if priority in distribution of traffic initial public offering (IPO) in fleet of five aircraft. The existing more than 50% of its capital is rights. the second half of this year and requirements are capital of $14 impaired for three years. The South Korea’s budget that Eastar is considering the million and three aircraft. new rules will shorten the period carriers have resumed expansion addition of its first B737MAX to South Korea’s leading LCC, to two years. Licences to operate in China, a market that has been its fleet. ■

APRIL 2018 / ORIENT AVIATION / 13 EXECUTIVE INTERVIEW AUSTRALIA CHARTS NEW TERRITORY FOR JAPANESE TOURISTS

Australia’s Alliance Airlines and Japan’s largest tour operator, JTB, have signed a three-year contract to provide charter services within Australia for Japanese travel groups. Chief correspondent, Tom Ballantyne, reports from Brisbane, Australia.

t has been a busy start to 2018 for Australia’s Alliance the strategy because we can open up areas of Australia to the Airlines, the world’s largest operator of Fokker jets and Japanese that are not available from scheduled services. JTB turboprops. It took delivery of its 32nd plane, a Fokker does the distribution in Japan. Our role is providing air tours.” F100, at the turn of the year and in February the Schofield wants to negotiate similar contracts with airline signed a three-year contract, largely an initiative Mainland Chinese agencies. In 2017, 1,355,500 Chinese Iof Tourism Australia, to bring more Japanese visitors to visited Australia, a 12% increase compared with 2016, and Australia’s tourist hot spots. contributed A$10.4 billion (US$8.1 billion) to the Australian At its peak, 700, 000 Japanese a year flocked to Australia, economy. Tourists from New Zealand slightly outnumber but the market dwindled to more than 300,00 annually Mainland visitors to Australia, however the Tasman visitors before it began to recover. To December 31, 2017, 434,000 spend less than a third of the money Mainland Chinese Japanese visited Australia, a 4% increase over the previous 12 travelers outlay during their Australian stays. months. “JTB has a vision to drive up these numbers,” said Alliance Airlines CEO, Lee Schofield, ”Alliance comes into

14 / ORIENT AVIATION / APRIL 2018 EXECUTIVE INTERVIEW

We very much have ten plus years in the current fleet. We are very bullish about our remaining life span in the aircraft. We get almost better dispatch reliability than you would from a new jet. The economics are more than satisfactory. They are very compelling. We monitor the replacement options, but from an economic perspective we are nowhere near any replacement.

Lee Schofield Alliance Airlines CEO, operator of an all Fokker fleet

“There are some discussions. Nothing we can announce but we are interested. We would be silly if we were not,” Schofield said. The first Alliance Airlines charter flight will take place this month after JTB delivers its Japanese passengers to Darwin. Alliance will fly the group to Uluru (formerly Ayers Rock) and onto Australia’s eastern seaboard, which will be a non-scheduled domestic service. “At the moment, scheduled services fly to Uluru from “Our heavy maintenance Melbourne and Sydney. We can do it out of the Gold Coast, procedures effectively pull it apart and put Brisbane and Cairns and, potentially, the Whitsunday it together as new. Fokker Services still do a great job of Islands. In 2018, there will be about 20 flights. We are starting maintaining the type certificate support. Secondly, while small, but there could a great amount of growth added to the calendar age is probably one factor it may be the least relevant network in 2019,” said Schofield. factor. Alliance is essentially a charter operator whose business “Most important is how many flights and how many includes fly-in-fly-out services to Australia’s mines, where take-offs and landings an aircraft has done. That determines many of the sites are hundreds of kilometres from the nearest its real maintenance life. On average, we are one-third of the airport. way through the available life of our fleet so we will never have It flies scheduled services from Brisbane to Emerald, an exhaustion of life. Cloncurry, Mt Isa and Rockhampton on wet leases for Virgin “We have an open relationship with all the 100-seat jet Australia as well as operating code shares to Bundaberg, manufacturers and always listen to what they have to say but Gladstone and Port Macquarie with the carrier. we are a long way from that.” Alliance has two VIP aircraft in its fleet, including Its latest F100 was rolled out at Brisbane Airport with a a former Dutch Government VIP jet that can take 24 special commemorative livery to celebrate and pay homage passengers. It also has 100-seat Fokker 100s, a Fokker 70 with to Australian aviator, Sir Charles Kingsford Smith. The 48 business class seats, standard Fokker 70s with 70-80 seats occasion celebrated the 90th anniversary of his historic first and turboprop Fokker F50s for airports that can’t take jets. trans-Pacific crossing from the U.S. to Australia. Bankrupt Fokker ceased production in 1996, but Schofield That Fokker aircraft, the “Southern Cross”, took 83.5 told Orient Aviation the fleet is highly economic to run. “The hours to complete the journey, with stops in Hawaii and Fiji. analogy we use is that it is like your grandfather’s old axe. It has The original aircraft is on display in its own memorial hangar the same head but lots of new handles,” he said. at Brisbane Airport. ■

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LHT_181_AZ_AIX_18_Orient-Aviation_202x273.indd 1 16.03.18 16:17 NEWS BACKGROUNDER

Boeing launched planes such as the NMA with a major U.S. Design challenges carrier. This time, he forecast, the manufacturer had to be “super careful” that it built an aircraft ahead for Boeing’s that is fit for purpose in Asia because that is where the action is. “This is the big issue. Typically in the States, it’s bags plus five New Midsize Airplane tons of cargo. The Asians want bags plus 10 tons for this aircraft. So, for whom do you build?” Slattery asked. Several Asia-Pacific airlines By chief correspondent, Tom Ballantyne are interested in the NMA. Indian

oeing announced at last year’s Paris Air Show that it planned to launch a New Midsize Airplane B(NMA). Since then, the emerging diverse design requirements of its North American and Asia- Pacific customers have added to the challenges the Seattle manufacturer faces in developing the aircraft. At press time, the NMA, sometimes called the B797, was And that was both good has the potential to sell 4,000 low-cost carrier, SpiceJet, said the still a paper airplane. Boeing’s and bad news for Boeing. U.S. units. proposed jet would relieve airport commercial aircraft arm had yet carriers have very different Another factor at play for congestion and open routes out to receive board approval for the configuration plans for the new Boeing in establishing the NMA of South Asia. “We have 1.3 project, which will have 225 to aircraft compared with customers business case is the “cargo billion people in our country. 275 seats and ranges of up 5,000 elsewhere in the world, including conundrum”, said Avolon’s They need to travel to different nautical miles (9,250 kilometres) Asia-Pacific airlines. Domhnal Slattery recently. parts of the world and they don’t and 4,500 nm, respectively. Boeing’s senior vice-president Commentators have said the big necessarily need to travel through It is estimated the NMA will sales Asia-Pacific and India, three U.S. carriers, Delta, United hubs that have been created by cost from US$10 million to US$15 Dinesh Keskar, said recently it and American differ with their several airlines on both sides of million to develop. Its maiden is likely to be a twin aisle plane Asia-Pacific peers about the our country,” said Spicejet CEO, flight is planned for 2024. An intended to fill the gap between volume of baggage and freight Ajay Singh. engine decision also has to be the narrow body B737 MAX and the new jet should haul. Asian Boeing wants to build an made sooner rather than later the wide body B787, which have airlines want greater below deck aircraft that more efficiently with one contender, GE, saying ranges as long as 3,800nm and capacity because their fleets carry serves airlines on heavily it must have a go-ahead for the more than 8,000nm, respectively. more than a third of global cargo. congested short-range services in aircraft by year end. Importantly, the NMA would Boeing has been working China and wider Asia as well as Such uncertainties have not have a greater range than the with more than 50 customers longer flights on routes such as deterred the enthusiasm for the A321neo, but Airbus also has a globally on the new jet, including the U.S. Midwest to Europe. The airline at Atlanta-headquartered long range variant available to the many airlines in Asia. The U.S. Seattle manufacturer believes the Delta Air Lines. In February, market, the A321LR.Additionally, network carriers have said belly aircraft will open up hundreds the airline’s CEO, Ed Bastian, Airbus is expected to make cargo is not a high priority for of direct routes much like the declared: “You’re going to incremental improvements to them, which has meant Boeing B787 is doing. The B787’s fuel see us participate in Boeing’s the A321 family to compete with is leaning towards an “ovoid” air efficiency and long range has middle-of-the-market campaign. the new Boeing plane. In the frame that will have a roomier launched 170 new city pairs, I hope we are going to be a meantime, analysts have put their passenger cabin and a smaller Boeing Commercial Airplane launch customer on that program heads together and don’t dispute cargo hold. vice president marketing, Randy as well.” Boeing’s forecast that the NMA Historically, Slattery said, Tinseth, has said.

APRIL 2018 / ORIENT AVIATION / 17 NEWS BACKGROUNDER

Slattery said 600 of the the B787 are manufactured in composite and metallic materials. develop it. It does not favour a 1,350 unique new city pairs North Charleston and Wichita NMA designers are geared fan. The engine OEMS launched last year were in Asia, in the U.S. and Nagoya in Japan. understood to be examining a have said they need a launch of which 400 were in Mainland Boeing recently opened a new geared turbofan (GTF) prototype decision this year to meet first China. By contrast, in the factory in Everett, Washington to engine for the aircraft. Pratt & flight and delivery dates in domestic market served by U.S. bake the epoxy-infused carbon Whitney and Rolls-Royce have 2024-2025. carriers, 61 new city routes were fiber wings of the B777X. The put forward engines for the Not surprisingly, trans- created. NMA’s composite fuselage manufacturer’s consideration, Atlantic bickering is already Boeing’s vice president of also may require a new factory, with Pratt weighing up the merits underway between Seattle and airplane development, Mike analysts have said. of an upgrade of its existing GTF, Toulouse about demand for the Delaney, has said the wings and Boeing has not specifically the PW1000G. Rolls-Royce is new jet. Airbus said it has jets fuselage of the NMA will be explained why it refers to the advocating the UltraFan, a GTF it that can serve all the markets made primarily from carbon fiber NMA fuselage as composite with has in development. the NMA will targeting. Delaney composite material like the larger a “hybrid cross-section”, but it CFM International, a joint has retorted that one airline B787 and that would require has been reported Delaney used venture between GE Aviation has estimated the new plane Boeing to expand its carbon the term to describe a fuselage and Safran Aircraft Engines, is could cut flying costs by as much fiber composite manufacturing. with elements of a narrow body considered likely to build a new as 45% compared with the Composite fuselage sections of and a wide body that would use engine if it has sufficient time to A330neo. ■ Korean Air benefits from UK funding for Bombardier C Series planes

By chief correspondent, A second jet of the type is to Canada’s export credit agency. The Québec-based plane Tom Ballantyne enter service with KAL later this Analysts said the decision was manufacturer has a workforce year. a fresh blow to Boeing’s efforts of more than 4,000 in Northern outh Korea’s Korean Air The president of Bombardier to stop exports of the aircraft Ireland with a quarter of them (KAL) is the beneficiary aero structures and engineering to the U.S. On January 26, the involved in the construction of of a policy revision by services in Northern Ireland, International Trade Commission the C Series wings and fuselage. the UK’s Britain’s export Michael Ryan, said the company (ITC), a U.S. trade body, The UKEF said financing for KAL’s credit agency, UK is “proud” to have secured the determined that the low prices of jets would support jobs in Belfast. SExport Finance (UKEF). For the “first C Series aircraft sale to C Series sold to Delta Air Lines did Although the British government first time the agency has agreed an Asian airline,” and added not harm Boeing and discarded has provided around $240 million to provide funding for deliveries the company looked forward a U.S. Commerce Department in loans to the Northern Ireland of Bombardier’s C Series jets to to building on this success with proposition to impose duties of plant over the years, it is the first an Asian airline. the backing of the UKEF and the 300% on the sale of the plane to time UKEF has backed a sale of C Parts of the Canadian C Series Export Development Canada, U.S. customers. Series aircraft. ■ are built in Northern Ireland, but the credit agency had until last month held back on financial backing for deliveries of the aircraft. It said it regarded the jet as a competitor to Airbus in which the UK is a major partner. But now Airbus is requiring majority control of the C Series program the objection no longer holds. The South Korean flag carrier has ordered 10 C S300s, with options for 10 more and purchase rights for a further 10. It became the first Asian operator of the new jet when the aircraft was delivered to Seoul last December.

18 / ORIENT AVIATION / APRIL 2018 Extending our presence in India with Jet Airways, one of our longest standing partners.

SMBC A C, the leading aircraft leasing company, has signed its most signiﬁ cant single deal to date in India with Jet Airways, the premier, full-service international airline. The transaction involves the sale and leaseback of 13 Boeing 737 MAX 8 aircraft with the ﬁ rst aircraft to deliver in August 2018.

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SMBC_AC_737_MAX_Jet_OA_v4.indd 1 05/04/2018 08:18 COVER STORY

20 / ORIENT AVIATION / APRIL 2018 FOLLOWING THE MONEY Vinay Dube is relishing his role as CEO of India's full service carrier, Jet Airways, where he is focused on streamling operations and “following the money”, reports Dominic Lalk.

fter more than three decades working outside years in aviation that included international management roles India, recently appointed Jet Airways CEO, at American Airlines, Delta Air Lines and Sabre. Vinay Dube, has come home. With recent “I was born and raised in India. I have kept in touch with forecasts that predict India will be the third my family and the country over the last 35 years, going back largest aviation market in the world by 2020, and forth. One of my two brothers lives in Mumbai, my father Ahis timing is perfect. It is anticipated that by 2036, Indians lives in Mumbai, even my wife lives there,” the unassuming will take four times more flights than they do today and Dube Dube told Orient Aviation in Hong Kong last month. plans to be there for the corporate ride of his life. Dube was a typical third culture kid. “I was 16 when I left In an exclusive interview with Orient Aviation last month India. I went to international school in Wales and did my IB he made it clear he was hell bent on ensuring Jet Airways will [International Baccalaureate] there. After that I went off to the capitalize on this growth momentum and come out on top. U.S for my undergraduate and graduate degrees. My first job Dube took over as CEO of the Mumbai-based full service was with American Airlines in 1990. carrier eight months ago, capping a career of more than 30 “When American spun off and created Sabre, I was spun off with that group as part of the airline solutions team. We did a lot of consultancy and software services for airlines around In a Forbes report in March, the world. I lived a year in Frankfurt, a year in the UK, a year a regional aviation consultancy said in France then two more years in the UK. It was a lot of travel.” He spent 17 years between American and Sabre followed it believed Etihad would sell its 24% by a decade with Delta, most of it as head of the airline’s equity in Jet Airways this year, Asia-Pacific operations in Hong Kong. possibly to none other than Dube’s After 30 years abroad, it could be expected that working for an Indian company would be challenging, but it has former employer, Delta Air Lines. not been the case, said Dube. “The transition has not been What is the cost for someone particularly crazy or difficult for me because my entire life like that going out and making a has been spent adapting to different corporate and national cultures,” he said. statement like that? All I have to say is: “I have been wandering for the past 35 years: 20 years in You heard it from me; you heard it America, seven in Europe, seven in the Far East. I’ve worked from Peter. I can’t speculate on why with Lufthansa, British Airways, Air France, KLM, Korean Air, the Japanese, the Chinese, all with Sabre and Delta. a third party would say something Jet Airways was yet another one of them. There are some like that. There’s nothing to it differences, but at the end of the day it’s an airline so the transition has been just fine, no issues.” Vinay Dube Leaving Delta was not an easy decision for Dube. “I was Jet Airways CEO incredibly happy at Delta. Delta is a very employee-centric

APRIL 2018 / ORIENT AVIATION / 21 COVER STORY

infrastructure, both in terms of hardware, software, and the Jet Airways to buy Air India? people who do the analysis is hugely different. It’s a lot more advanced on the Delta side than it is at Jet,” he said. Is Jet Airways interested in acquiring Air India and Air Applying advanced data analytics and introducing India Express? “I think there’s a little too little information at this point for me to be able to tell you if we’re going to technologies are top of Dube’s agenda. “Indians export make a pitch,” Dube said. technology and analytics to the “Having been through the merger and acquisition rest of the world, so the capabilities of Delta and Northwest, I know such scenarios often certainly exist at both Jet and in look easier on paper. When you execute them, they’re India. It’s just being a small airline versus an fraught with danger and have the ability to bring both the airline that’s ten times the size. The historical acquirer and acquiree down. I would not want to embark need has not been as prevalent at Jet. We on something like this until a whole lot more information is are now at 118 aircraft and are mapping known for me to even be able to tell you if we’re interested our way toward 175 so the requirement for or not.” better data analytics is very apparent. It’s “Until we know a little more, what the government plans, how much of Air India it plans to dispose of, in what an area I have to build up,” he told Orient shape and what format, what the debt structure looks like, Aviation. what the labour agreements are, it’s too premature to say “As the CEO whether we are interested or not.” you say ‘OK, what Several potential bidders for Air India have emerged are the analytics in recent weeks. “India is a strategic market for Singapore related to this and how do Airlines (SIA). We have an open mind,” said David Lim, I answer that question’. Some things general manager for India. SIA already has a foot in the you can’t do without data even though door in India through its part-ownership in full-service you want the data because you have to Vistara. Other potential suitors for Air India include India’s make a very quick decision. It’s a mixture of getting people largest carrier, low-cost IndiGo Airlines, Tata Group and Turkey’s Celebi Aviation Holding. to work on data analytics and also making decisions without Quizzed on a Reuters story published in late March the data, based on intuition and gut, not just my own but that saying “informed sources“ were suggesting a consortium of of the 16,000 plus employees I look after.” Jet, Delta and Air France-KLM was looking into acquiring “It’s the good old CEO life. Moving into a role where you Air India, Dube said: “I’m the informed source and I’m can actually control all of the buttons and knobs that you have telling you that people talk a lot. If you ask me have I at the airline’s disposal is extremely exciting.” thought about it for more than 10-15 minutes, then I will tell Jet Airways is listed on the Bombay Stock Exchange. Fifty you ‘yes, I have’, but again it’s way too premature because one per cent of the airline is owned by founder and chairman, we just don’t know enough. Right now there’s no internal Naresh Goyal, through his company, Tailwinds International. taskforce or anything like that.” The remainder is held by other investors, including Etihad Airways’ equity of 24%. company. They treated me extremely well. I left because it was From 2010 until 2015, the airline was bleeding money. as much a move to India as it was moving into a CEO role,” he In 2016, it eked out an INR11.7 billion net profit (US$180 said. million), followed by a INR3.9 billion profit in 2017. “My father is 88 years old. Just over three years ago my Will Jet post a profit this year? “I obviously cannot forecast mother passed away. That got me thinking that I should see if I profitability for you right here, right now. What I can say, and could get a year or maybe two or three or five with my father.” that’s very apparent, is that we’re going to grow. That’s not just Dube came Jet Airways via an unusual route. “India has us, but the whole Indian aviation industry,” he said. always been on my mind. I told Delta I wanted to move to “Some of that might be challenged as fuel prices have India and the way I got the job was that Delta introduced me gone up by almost US$10 a barrel in the seven months since I to Jet. So it’s one of those stories where if you’re honest and arrived in Mumbai. That’s just my luck I guess, but it puts a lot straightforward with your bosses good things can happen,” he of pressure on the business.” said. Jet Airways embarked on a wide-ranging restructuring in Dube quickly realized that some of the knowledge, skills 2015, largely because its cost base was much too high. “Our and abilities he acquired overseas did not necessarily apply costs are still way too high. It is a very traditional restructuring at Jet Airways. A lot of the organizational and technical of a legacy airline that we have to continue. My predecessors infrastructure airline chiefs take for granted in Europe and the have spent a lot of time restructuring costs, but you can’t do it U.S. have not yet arrived at Jet Airways. in 12 or 18 months. It’s a multi-year journey,” he said. “There really are 101 differences. The infrastructure, the “We operate on a very traditional model: high costs of data and the analytical capabilities at Jet are vastly different. distribution, fleet complexity, high cost of sales and some people Whether it’s plain software systems in the operations arena inefficiencies. Aircraft utilization, which at one point was not for forecasting and network planning, fleet optimization or as high as the traditional low-cost carriers, has been addressed. revenue management technology, the data and analytical Then there is high debt and therefore high servicing costs.

22 / ORIENT AVIATION / APRIL 2018 COVER STORY

“When you want to reduce your unit cost, one of the best so I’m personally leaning on them to help with discussions at ways is to grow. So we have the benefit of that. At the same the board level.” time, for example, we don’t have the benefit of bankruptcy In the past decade, there has been a lot of industry talk protection – Chapter 11 – which there is in the U.S.” about Jet Airways joining one of the big three global airline One of the hottest topics in Indian aviation is the proposed alliances, another rumour Dube quickly puts to rest. sale of government-controlled Air India. The flag carrier, Jet “As you know, I have a lot of deep experience with alliances. Airways and Vistara are the only full-service carriers on the My first job at Delta was VP Alliances. I’ve a good sense of how Indian subcontinent. they work. My view is we are not In February, India’s minister for civil aviation, Jayant in a hurry to join Sinha, said the government planned to split debt plagued Air India into four

any of the ‘Big Three’ global alliances. Most of the value we are going to get in the short- and medium-term is from deepening our partnerships, our bilaterals. That is exactly what units and offer at least 51% of we will be doing,” Dube said. each of them for sale. “Since I arrived at Jet, we have signed an The minister said Air India and its low-cost extended commercial agreement with Air France-KLM, subsidiary, Air India Express, would form the core airline strengthened our cooperation with Delta and Virgin Atlantic business, while three other units – regional subsidiary Alliance while continuing our strategic partnership with Etihad. We will Air, MRO operator Air India Engineering Services and ground follow that path without being confined to one of the major handler Air India Air Transport Services – would be put on the alliances.” market separately. Jet Airways has a robust and expansive domestic and Dube is crystal clear about Air India’s fate. “My view on the regional network but it is short on long-haul destinations. whole Air India business is that no matter what happens, who buys it, what happens to it, it’s a good thing for Indian aviation if Air India has to go,” he said. Intent on being a world beater “Anytime you have a subsidized carrier it tends to skew the market. India’s aviation market is mature enough in terms Could the long-haul market out of India soon belong of free market economics, competition, low fares and network to IndiGo Airlines, the LCC that is closing in on an order penetration. As a country we don’t need a state-subsidized of up to 50 A330neo. “I have no issues with that. I say to them bring it on. We carrier. No matter what happens, we’ll be fine at Jet.” are very happy to compete head-to-head with anyone. Its Any potential bid for Air India would certainly have to be music to my ears when a LCC that’s been ultra-disciplined approved by Jet Airways investor, Etihad Airways. Many in the over the last ten years decides to suddenly have turboprops industry have been suggesting Etihad and Jet Airways would and wide bodies, adding complexity to their operations, part ways this year, speculation the CEOs of both airlines while we are going in exactly the opposite direction, unequivocally deny. creating fleet simplification and reducing our cost. I’m When Orient Aviation spoke to Etihad Airways CEO, extremely happy with this development,” Dube said. Peter Baumgartner, in February, he said: “It is a highly “Of course they are a real competitor to Jet Airways. successful and very carefully managed partnership. We make They’ve got a good airline with a good management team. sure we can take advantage of the full potential on both sides. Essentially, we still go after the same market share. There’s a reason why the legacy carriers in recent years all started It’s a very happy marriage.” unbundling their fares,” Dube said. Are they also a threat? Dube agreed. “Our marriage is more than happy. Etihad “Everyone is a threat. In our business you simply can’t has two seats on our board. We have a wonderful relationship. afford to be complacent,” he said. They’re not overbearing,” he said. “Having said that, I would bet on myself that after our “For me, working with Etihad has been great. When a restructuring, we could take on any airline in India and CEO goes into a new role, you are looking for people that worldwide. The brand and the service culture we have at can speak your language. At Jet, there are a number of board Jet is far superior to anybody in India and is on par –in my members who are incredibly smart and very experienced, but view – with the finest in the world.” they don’t have huge aviation experience. The Etihad folks do

APRIL 2018 / ORIENT AVIATION / 23 COVER STORY

24 / ORIENT AVIATION / APRIL 2018 COVER STORY

weight and thrust for some of the shorter missions,” he said. I’m keen on following In line with early government-backed regional the money trail. I don’t care connectivity programmes, Jet Airways has amassed a fleet of 18 leased ATR72s and the turboprops are to stay. personally about planting “We will have a requirement for the next 20 years or so Jet’s flag on the shores of any country. until the infrastructure, roads, bridges, railways and buses improve. It’s a spread-out geography with all kinds of terrain. It’s not about market share for me. We will have a requirement for small aircraft servicing regional It’s not about sexy new destinations. routes. So I don’t see our ATRs going anywhere at this point. It’s about making money. We have 18 and that’s plenty for us,” he said. He added that its wide body fleet of 10 B777-300ERs and I have no cadence or pace that seven A330s were adequate for the carrier’s needs for now. I need to follow in terms of Nonetheless, the Jet Airways CEO did have some news X number of destinations I have to for Orient Aviation on the wide body front. Dube said the airline has decided to retire the first class cabin, only featured launch per year. It’s really all about on the B777-300ERs, which primarily fly the three times a day the best utilization of our assets Mumbai-Heathrow route. The first class cabin “real estate” will be taken up by a new business class product. Vinay Dube “We are refurbishing our B777-300ERs. They have 346 Jet Airways CEO seats and a better number for that should be much closer to 400+ seats, 20% more ASKs, 20 % less CASKs and an elevated customer experience. This is something that we will do so our It operates more than 500 flights a day but at March 30, its long-haul cost structure will go down,” he said. long-haul network consisted of Amsterdam, Paris, London- “We have a great business product today, but it’s a bit tired. Heathrow and Toronto (operated via Amsterdam). We will introduce a state-of-the-art business class following As a result, Jet relies heavily on traffic from Etihad, Air the refurbishment. Who needs first class if you have an France-KLM, Delta and its huge codeshare partner network outstanding business product? We are in a unique position of Aeromexico, Air Canada, Air Seychelles, Alitalia, All where we can have our cake and eat it too.” Nippon Airways, Bangkok Airways, China Eastern Airlines, The refurbishment of the airline’s ten B777-300ERs will Fiji Airways, Garuda Indonesia, Hong Kong Airlines, take 18 months. It might refurbish the A330s at a later date. Jetstar, Kenya Airways, Korean Air, Malaysia Airlines, This CEO is obviously proud of his airline and he is Qantas Airways, South African Airways, United Airlines clearly pleased about his return to his natïve India. “We have and Vietnam Airlines to provide the long haul services its a fantastic staff and a great spirit. Aviation in India overall is customers demand. taking off. There’s a palpable sense of excitement everywhere,” Jet Airways used to fly to New York, Johannesburg, he said. Shanghai and San Francisco, but a return to these cities in the “We have almost no infrastructure concerns and a great near future is not a priority for Dube. relationship with the directorate general of civil aviation “It is not that we don’t have long-haul growth. We (DGCA). Perhaps there may be minor slot shortages. But you have just [October 2017] launched Bengaluru-Amsterdam, know what? If that pushes fares up one of two per cent, that’s Chennai-Paris and a third daily Mumbai-Heathrow service. not bad. We also have some of our widebodies flying domestic routes “I can honestly say we have a wonderful minister, a great and some flying to the Gulf. Its not optimal utilization, so we secretary and an excellent DGCA. Is it the world’s best in have some spare capacity there,“ he said. terms of maturity, the rules and the regulations? Of course not. Jet will start taking delivery of 75 B737 MAX 8s in July. There’s a lot more we can do. But are they great people to work Dube confirmed to Orient Aviation a top-up order for another with? Absolutely.” ■ 75 at the press time. He stressed more than once that Jet wants to simplify its fleet. The airline’s fleet includes seven A330s (-200s and No wide body orders for now -300s), 10 B777-300ERs, 83 B737s and 18 ATRs (three Jet Airways ordered 10 B787-9s Dreamliners in 2006, 72-600s and 15 72-500s). The initial batch of 75 B737 but deferred delivery of the aircraft “indefinitely” when its MAXs will completely replace the carrier’s current B737s by restructure took priority. 2025. The new order of 75 aircraft will be for growth. “We “We’re not in the process of any request for proposals expect 8%-10% fleet growth a year for the next five years, to for wide bodies. The B787 order is where it was a few years 165-170 aircraft,” Dube said. The aircraft will have a common ago. There’s no movement on that, one way or the other. configuration of 12 business class and 162 economy seats. Right now we don’t need the capacity. I’m not asking for “There will be some sub-fleeting in there, some will be any more wide body capacity,” he said. high-gross, some low-gross variants. You don’t need that extra

APRIL 2018 / ORIENT AVIATION / 25 INDUSTRY ADDENDUM

Rolls-Royce breaks relationship between Vietnam Airlines and the MRO. ground on testbed at Vietnam Airlines president and CEO, UK headquarters Duong Tri Thanh, said: “this agreement is of significant importance to Vietnam Airlines Teams at global engine manufacturer, Rolls- and further enhances our time honoured Royce, broke ground on a new testbed at the partnership in a wide range of areas. company’s Derby headquarters last month. “From our previous successful The testbed, scheduled for completion in collaboration on component support for 2020, will test the Trent XWB and Trent 1000 our airline’s B787-9s and during the first engines. It also will serve as a base for testing Trade Zone of the western Chinese city, quick turn shop visit operations carried out the UltraFan, the manufacturer’s engine for the new complex is the largest CFM engine on the GEnx, we have full confidence in AFI the next generation of aircraft. maintenance facility in Asia. KLM E&M’s ability to guarantee the smooth Rolls-Royce president civil aerospace, Air China senior vice president and operations of our B787 aircraft and fleet in Chris Cholerton, said: “the new testbed SSAMC chairman, Chai Weixi, said: “The general.” comes at a pivotal moment for our civil expanded capacity of the new facility will Since 1994, Air France and Vietnam aerospace business as we ramp up enhance SSAMC’s ability to provide world Airlines have worked together on the production to record levels and look forward class MRO services to customers from China operations side with partnerships in MRO, to completing a hat trick of engine launches and around the world.” crew training and the transfer of technology with the Trent 7000 due to enter service this CEO of CFM parent, Safran Aircraft for 10 new A320s. year.” Engines, Olivier Andries, said “SSAMC Last year, the two companies signed a The testbed will be the world’s largest has grown to be a highly valuable asset for comprehensive strategic partnership that our partner, Air China, and Safran Aircraft will optimize operational efficiency, service Engines. The quality of work and the quality and technical maintenance of aircraft turnaround times this facility has achieved equipment. ■ prepares it well for future LEAP MRO as this engine continues the fastest ramp up in aviation history.” SITA promises India SSAMC is a 60/40 joint venture that seamless biometric was established in 2010. Since then, it has serviced more than 1,000 CFM engines for air travel 40 airlines across Asia. ■ Air Transport IT provider, SITA, plans to take advantage of India’s acceptance of automated AFI KLM E&M and Vietnam biometric identity checks to market its indoor facility of its type. It will harness the Airlines renew long term common use and Smart Path technology at latest digital technology to set conditions airports across the nation. and obtain evidence from a wide variety partnership India’s biometric identity system, of test activities including water ingestion, Aadhaar, has more than one billion enrolled endurance testing and new X-ray capabilities, European headquartered AFI KLKM E&M and members, which SITA said demonstrates Rolls-Royce said. Rolls-Royce assembles the Vietnam Airlines have signed a 12-year flight Indian passenger willingness to embrace Trent XWB and the Trent 700, 900 and 1000 hour support contract for the GEnx engines facial recognition systems at the sub- engines in Derby. ■ that power the carrier’s B787s, a part of the continent’s airports and airlines. airline’s fleet that will increase to 19 by 2021. SITA vice president Indian subcontinent, The agreement provides spare engine access Eastern and Southern Africa, Maneesh Air China and CFM for the airline in a deal that cements a 25-year Jaikrishna, said at a recent conference inaugurate China MRO facility

Sichuan Services Aero Engine Maintenance Company (SSAMC), a joint venture between Air China and CFM International, has inaugurated a 43,880 square metre centre in Chengdu that will expand its capability to conduct MRO on up to 300 CFM and LEAP engines a year. Located in the Chengdu Free

26 / ORIENT AVIATION / APRIL 2018 See the future from here.

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that “leveraging India’s national Aadhaar GE Aviation chief commercial officer, collaboration with Surbana Jurong and CAPE, biometric identity system, which is one of Andrew Coleman, said: “Working with China can produce holistic solutions that will build the biggest in the world, with our technology Eastern over the past four years, we have smart airports.” will deliver a seamless biometric experience made great progress by analyzing flight data Surbana Jurong is one of the largest across all airlines and airports in India. It and using it to identify opportunities for Asia-based urban and infrastructure would allow passengers to use their biometric operational savings for the airline. consulting firms. Said Group CEO, Wong identity no matter where they travel.” “This agreement is a great example of Heang Fine, “Our strengths lie in the ability In a 2017 SITA Passsenger IT Trends comprehensive digital cooperation with to weave airports into the surrounding urban an airline. It can significantly help China fabric. Our aviation track record spans Asia, Eastern strengthen its flight risk management including Singapore, and the Middle East.” capability as well as produce significant “CAPE has worked on 60 projects in savings across the airline’s operations.” ■ 20 countries and has broad experience in master planning, airport engineering, terminal design and project management,” Singapore companies said CAPE managing director, Peter Lee. ■ target airport development projects in region

ST Engineering and urban and airport survey, 70% of passengers in India said they planners, Surbana Jurong Pte Ltd and would definitely use biometrics if given the Changi Airport Planners and Engineers Pte option because it removed the need to show Ltd (CAPE) have joined forces to participate a passport or a boarding card at key points at in the region’s airport development and an airport. ■ services sectors. It has been estimated expenditure on global airport development will reach US$1 China Eastern Airlines and trillion by 2058. To win some of this business, SpiceJet to boost fleet GE Aviation sign digital the consortium intends to export next with B737MAX 8s generation smart airport and city capabilities service agreement to overseas development projects. Indian low-cost carrier, SpiceJet, ST Engineering president and CEO, has signed long-term leases for five Shanghai’s China Eastern Airlines (CEA) Vincent Chong, said: “Airports of the future B737MAX 8s with CDB Aviation, a and GE Aviation signed a three-year are destinations in themselves – less like wholly owned subsidiary of China comprehensive digital analytics solution transit hubs and more like mini smart cities. Development Bank Financial Leasing for CEA’s fleet of more than 700 aircraft last “Airport operators have the opportunity Co. Ltd. Deliveries are scheduled for the month. to fully harness the power of new Gurgaon-headquartered carrier in 2019. The agreement requires GE to provide technologies, from sensors to robotics CDB Aviation has ordered 78 B737 digital analytics to CEA based on the U.S.- and data analytics to redefine the travel MAX family aircraft. In 2017, it was one headquartered company’s Big Data platform. experience in an integrated manner. of the launch customers of the MAX 10 More than 50 digital service projects are “ST Engineering, with our strong variant. ■ included in the agreement. Among them capabilities in technology and engineering, in are engine and aircraft maintenance, flight safety, operational efficiency and marketing/ revenue analytics. CEA vice president, Feng Liang, said: “Digitalization is the eventual object of airlines. It also is an important development vision for CEA. In the process of transformation to digital, CEA is more than happy to cooperate with GE as a leading digital industrial company. “We look forward to collaborating with GE to dig the ‘gold mine’ of aerial data, operate our flights more safely, efficiently and profitably and also to bring the values to society and better benefit the industry.”

28 / ORIENT AVIATION / APRIL 2018 LESS FUEL.

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first class suites, the latest entertainment systems and full Asia-Pacific carriers lead connectivity in every seat. At a cost of US$350 million, world in cabin innovation the carrier’s initial fleet of 10 B787-10s will have cabins furnished with a full flat bed seat irlines in the Asia- in business class and personalised Pacific continue to IFE for passengers in every class of lead the world in the airplane. onboard innovation, The new premium seats will cabin comfort recline to a 76 inch flat bed and Aand digital connectivity. As a will have a 1-2-1 configuration collective group, they are the in the cabin. The 18 inch largest providers of inflight WiFi entertainment monitors will be for passengers in all classes and powered by Panasonic’s eX3 are the carriers most prepared to system. invest in new lighting technology, At Qantas, the Australian advances in seating design and airline group is collaborating with flexible digital boarding and scientists at Sydney University to luggage retrieval systems. for passenger connectivity Now, passengers can access redefine the cabin environment. Global investment in aircraft will dominate aircraft interiors their own content via an internet Projects include reducing the cabin interiors is forecast to business. connection that downloads impact of jetlag, noise and exceed US$2 billion in the next First class will not disappear, to either satellite or ground turbulence for passengers, eight years with more than but the size of the cabin is communication stations. particularly on ultra long haul 50% of that sum to be spent by shrinking to suites of four to six In the next three to four years, journeys. both full service and low-cost or cabins that typically offer four Cathay Pacific Airways plans to Another trend in the Asia-Pacific carriers. seats. At the same time, selected fit out its ordered B777-9 aircraft region is high density low-cost Analysts forecast that airlines including Singapore with newly designed first class carrier interiors that offer fewer narrow body interior retrofits and Airlines and the Gulf carriers have suites and also equip its regional amenities than a standard passenger to freighter conversions added more luxury and privacy to fleet with improved business class economy seat. The aircraft are will be the largest sectors of their first class cabins. seating. fitted with more and slimmer the market. In the wide body WiFi connectivity is replacing Singapore Airlines is outfitting seats and have a reduced seat market, more installation of more hard drive provided content its A380 fleet with more personal pitch to maximize load factor and sophisticated communications delivered by a seat back screen. space in all cabins, six private save on fuel. ■

concerned” by the Flight Centre told Orient Aviation on the Flight Centre loses approach which it felt was an sidelines of the symposium. attempt to use its bargaining “If you are engaging in out to Australia’s power to fix ticket prices, ACCC business in Australia the ACCC general counsel, Wendy Peter, expects you to understand the competition watch dog told delegates at the recent Australian competition and International Air Transport consumer law. So it’s important By Michael Mackey in Bangkok Association Legal Symposium in to get advice from qualified Bangkok. lawyers to assist you,” Ms Peter he travel industry Australian courts where its “We have broad guidelines said. This was especially true for is still digesting the legal team alleged Flight Centre on particular aspects of our overseas airlines in their dealings implications of the managing director, Graeme operations rather than a response with their agents and visa-versa, Australian Competition Turner, and other senior to a court case and of course she said. and Consumer executives at the company, had we expect parties to stay on Justin Oliver, a partner TCommission’s (ACCC) December approached Singapore Airlines, top of the law and obtain their in international legal firm, victory over listed Flight Centre in Malaysia Airlines and Emirates own advice once there has been MinterEllison, said the Court’s a dispute centring around alleged Airline about discount fares the a specific decision like this,” decision gives the airlines the attempts to fix fares. carriers were directly offering to Australian Competition and right to say do as I say to their The Australian watchdog potential customers. Consumer Commission (ACCC) agents. “It’s not often done,” agency took the case to the The ACCC was “really General Counsel, Wendy Peter, he said. ■

30 / ORIENT AVIATION / APRIL 2018 No.1 Asia-Pacific commercial aviation magazine

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