Readers of this daily news service will be comforted by the fact that everything happening in the market at the moment is doing so as we predicted over 12 months ago save for the occasional interesting surprise. Now if we look across the landscape of the airline market with the falloff in passenger numbers from August/September, we can see that passenger numbers in India and China are actually falling at a faster rate than most other regions.
The paying passenger is reverting to type; the low-cost carriers should therefore be in their element at this time. This is good news for airline in the APAC region such as Jetstar, AirAsia X and the like, but it is bad news in many ways for Scoot/SIA as it is missing out on a solid period of potential growth in a rough market – missing out on the holiday traffic for the holidays and Chinese new year. In Europe, as reported yesterday, Ryanair is back on the growth scale and IAG should consider starting that low-cost airline at speed. While for troubled easyJet and AirBerlin, the going should improve at pace over the holiday period and if it does not then the writing might well be on the wall for at least one of these carriers.
This time last week we reported that Kingfisher cannot carry on and is unable to come out of leases even if offered to do so as it will not be able to replace aircraft. We also reported that save for the injection of funds from the beer company via Vijay Mallya the airline is virtually dead a week later, as it cancels 12 flights from Delhi and several more across India including those to Jaipur, Bangalore, Amritsar, Mumbai, Chennai, Hyderabad, Pantnagar and Bagdogra due to a shortage of cabin crew and pilots. This follows four cancellations on Sunday.
The cancelled flights are on all major routes with the highest domestic traffic numbers. Last week we said that if the core domestic routes were to fail then the airline was doomed. In fact the airline needs to be brought back to the core domestic routes of Air Deccan to get back into shape.
Kingfisher will cancel 31 flights every day for the next 12 days including 27 domestic flights on key routes covering the cities of Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Kochi, besides four international flights to Bangkok. The main reason for this is that staff – having not been paid on time – have deserted the company and the airline simply cannot serve routes. Vijay must swallow his pride and get rid of as many aircraft as he can quickly to cut costs
Many employees have lost faith in the struggling airline’s ability to survive and are failing to report to work because they are busy finding other jobs. This is no different from the situation at Air India though!
I will not even go into the fuel bill again save to say that Kingfisher has had a great deal of trouble paying for it of late and the price is going up.
Last week, a Rs 15-crore cheque issued by Kingfisher to the Airports Authority of India (AAI) bounced following which the state-run airport operator put the airline back on daily cash-and-carry. AAI has started accepting some part payment but has called on the airline to make its stand clear on the over Rs 200 crore now due.
AAI's dues from AI, on the other hand, are now close to the Rs 1,000-crore mark with the figure climbing to Rs 950 crore.
The effect of the Kingfisher slow motion collapse is showing in the wider market as air fares are rising the cost of a Delhi-Mumbai one-way flight on Jet Airways, for example is increasing fast a sure sign that they think competition on the route is eroding.