JAGSON AIRLINES- NEWEST PLAYER for INDIA REGIONAL AIRLINE DEVELOPEMENT

JAGSON AIRLINES- NEWEST PLAYER for INDIA REGIONAL AIRLINE DEVELOPEMENT

By definition Regional Airline or more specifically Regional Schedule Airline, which has been incorporated in Indian CAR ( Civil Aviation Requirement) wef 27th August 2007 has been the recent addition to the expanding Civil aviation in the country.

By sheer definition as per CAR Section 3, Part C, Series VII, DGCA enumerates that “The need to promote air connectivity between specific regions and to enable more efficient air travel within the region, as well as linking such regions and expand air travel services for Tier II and Tier III cities within the country’s aviation network, the scheduled regional air transport services has been introduced”.It clariefies more as Air Transport service which operates primarily in a designated region and which on grounds of operational and commercial exigencies may be allowed to operate from its designated region to airports in other regions, except the metro airports of other regions.
Note 1: The regional airlines shall not be permitted to operate on Category I routes as given in Annexure-VII of the CAR. But it also inserts the following -
Note 2: The regional airlines of the southern region which has 3 metros would be allowed to operate between the metros within the southern region namely Bangalore, Chennai and Hyderabad.

Well, this very definition becomes itself a non-starter for upcoming enterprenuers. Which in other words means categorically that you could start a scheduled Regional Air services, with an aircraft lesser in MTOW than 40T, operate from a Specified metro to either smaller cities of Tier-II & Tier III and at times defunct airport and compete fiercely with Larger airlines which has Pan-Indian operations.

Lets run some interesting statistics before we proceed to get into the core issue of the Regional Airlines in India. Today looking at India aviation Domestic and Regional Market there has been a year on year growth of 39.5%, that is 28% growth of the previous Fiscal year and 20% on previous year. There has been whilst 123% growth year to year from Tier II & Tier III cities , which itself shows the market trends. Global data has clearly shown that the right mix of Business to leisure Travel has been 30 : 70 , wherein Global aviation has been 60% on leisure , VFR and other Traffic. Surprisingly in this region India is the only unique Market. Indian and Asian Travel scenario and fair understanding of the Flyers need, which in last few years most of the Airlines has forgotten to drive a new segment of Market, who may have that propensity to spend and yet deprived of the right connectivity. In the process of the LCC era’s emergence in India, true Air Travellers in India has been left high and dry . Studies conducted by Management Firms and Research bodies of International repute has produced some interesting figures :-
Out of the above 70% of the Total Market , which is primarily Corporate Travellers, 73.5% of Travel by Full Service Carriers in India , ie by Jet Airways, Indian Airlines & Kingfisher Airlines, out of which 72% of the 73.5% is being concentrated between In-Metro Travel. Interestingly Corporate Travellers in these carriers comprises of appx 59% of the total Economy Class Travellers in these full service Airlines. Which in pure laymans term means out of the total seats offered within the country daily which is 55000, between all the Carriers 4800 seats are offered primarily for regional Routes which is mere 8.7% and there could be growth propensity upto 11820 seats per day between the State Capital and State Financial Hubs for Travel within and to metro’s, which has to be handled by any Regional airline with the same finesse of a National Airline. Still restricting any Airline just to be confined to particular zone , might be the biggest Bottle neck for Growth.

One has been able to explain and convey the message that this a very vital sector which is good for the growth of the economy and tourism,. With multiple SEZ’s opening all across, all of us Aviation personnel has been able to convince the government that this is one Sector where growth means a win-win situation. But at the same time for things remain far from perfect in the rapidly changing Indian Market, however three is still plenty of work needs to be completed before we could even get into a detailed Regional Policy as discussed . Delays due to bottlenecks in the air Traffic control system are rampant and travel growth is being slowed due to the lack of airspace capacity. In addition most airlines are losing money, personnel shortages are an issue and service levels remains extremely poor at Airports making air travel an often unpleasant experience.

Lets look here at some major bottle necks which has not allowed even a single True Regional Airline to take its wings, barring Paramount Airways which has still date an ethos of True Regional Airline,may be due to their Unique Business Proposition, or by choice, it has been able to maintain its own niche. Thats extremely surprising for a airline which has a National Permit and with National permit these days becoming a rare commodity. In International scenario also we see the emergence of Medium sized players , who are strong in the market.

The Concept
JAGSON Airlines – Regional Jet Project – India’s Premium Dual Class Regional Airline with a built-in concept was conceptualized in OCTOBER 2009 and has already being formalized with a detailed Business Plan being build up over the months. The Project and the implementation stage of Jagson Airlines has evolved from its initial planning stage to a detailed Research and Development phases, which has yielded a more concrete and Factual Planning.
The concept of Low Cost Airlines till 2002 was an unique concept in Asia, with Air Asia breaking the silence and making itself heard , yet became a profitable venture only in 36 months and through enormous changes in their planning and strategies. In India Sep 2004 marked the emergence of Deccan Air into pure LCC service which also took more than 24 months to establish itself and the Mantra for the success in these 24 months has been intense and fast paced expansion with addition of Aircrafts every months and now flying to more than 56 stations and more than 312 flights / day.
Jagson Airlines on the other hand has gone through its tested philosophy of R & D, which has churned Millions of numbers, Seat Mile costs, Yields, immaculate planning, Route dispersals , Route planning, Ramp-up and all other fine tuning, which is needed for a Professionally run airline in the market. The other factors which has attributed to a Sound Planning of the Jagson Airlines to minimize the lag time for set-up are :-

Detailed study and day to day comparisons of the Indian Aviation Markets…Competition activities and competition figures, which get daily accumulated and analyzed ( for last 4 months ) to understand and strategize the LCC and Corporate flying dynamics

A rock-solid Management Team chosen from best of Indian and International carriers who are either the pioneers in start-up of these airlines or have had Introduced

Airline concepts in the Country. Most of them are updated and has fresh experience of handling airlines as a part of the airline or as a Competition.
The entire process of start-up of the airline , its pains , pangs and woes…the loop holes and the Governmental Red-tapism, which delays the process has all been tested and tried ( unlike any other start-up airlines ), which makes the Proposed team of Jagson Airlines, more apt and ready to solve these impending issues without much cliches. Expected that with application process in place by 17th Nov 2009 and with expected Security Clearance, AOC, NOC and all licenses in place with 45 days the Airline , with its financial backing from the Investor/ Investors/Syndicate should be flying with atleast One aircrafts latest by 15th Jan 2009.
The realm of Uniqueness in Concept- A sheer differentiator in Aviation of Today :-
Jagson Airlines ’s concept has been derived from years of experience of the Management Team, who has studied the Indian and Asian Travel scenario and has fair understanding of the Flyers need, which in last few years most of the Airlines has forgotten to drive a new segment of Market, who may not have that propensity tospend. In the process of the LCC era’s emergence in India, true Air Travellers in India has been left high and dry .
Studies conducted by Management Firms and Research bodies of International repute has produced some interesting figures :-
Unlike any other Nation ( Japan excluded ), India’s base of Corporate Travel forms more than 80% of the entire Market, while 20% Travellers travel for leisure, VFR and other purposes. Out of the above 80% of the Total Market , which is primarily Corporate Travellers, 73.5% of Travel by Full Service Carriers in India , ie by Jet Airways, Indian Airlines or Kingfisher Airlines.Interestingly Corporate Travellers in these carriers comprises of appx 59% of the total Economy Class Travellers in these full service Airlines.
Jagson Airlines , is a low cost-low Fare, two class Regional Airline in India, which is primarily targeting Frequent Fliers, Corporate Travellers, SME- corporate Travellers of India/ international, would comfortably Break even and succeed with a mere conversion of 3.59% of the above 59% ( of Full Service Airlines- Economy Class Travelers ) through their two Class models and exclusively through the Economy model in Tier II & Tier III cities in northern India
Jagson Airlines lines thus proposes in the following Business plan :-
A Two Class- Regional low cost-Low Fare Airline – Northern regional network Airline focused at Leisure,Corporate, Frequent travellers for Tier II & Tier III cities. Conceptualize an Unique concept- a differentiator in Service Levels through Concept-fare and service route
• Immense expansion and reach within 12 Months to 9 stations with 2 aircrafts, virtually mapping Northern India
• Maintaining the Low fare and Strong Leisure-Corporate Airlines Image over the competition Low Cost carriers in the region.
• With these strong notes and carefully planned and tested (through service Mapping and survey process), Jagson Airlines proposes detailed Insight and a strong business case with an in –depth analysis.

Key to Success : The keys to success for starting the Airline are as follows:-
• Obtaining the required governmental approvals in time.
• Securing funds.
• Experienced management.
• Marketing; either dealing with channel problems and barriers to entry; or solving problems with major advertising and promotion budgets. Targeted market share must be achieved even amidst expected competition.
• Product quality. Always with safety foremost.
• Services delivered on time, costs controlled, marketing budgets managed. There is a temptation to fix on growth at the expense of profits. Also, rapid growth will be curtailed in order to keep maintenance standards both strict and measurable, however we will certainly grow keeping the pace of the market growth.
• Cost control.
• The overall cost per ASK (Available Seat Kilometer) is pegged at 6.5 cents or less .This ASK factor places Jagson Airlines in a grouping of one of the lowest in the airline industry within the long haul and short haul market globally. (Full Service Airline, the dominant carrier in the Domestic Market, averages between 10.5 to 12 cents per ASK by comparison). The only one airline with lower operating cost is operating older, less reliable equipment with turboprop operation at present, and even then the lowest cost in the airline industry is currently of Indigo at 8.50 cents per ASM. Thus, we need to launch and grow faster than this airline to capture the market in low cost segment.

BOEING's decison to purchase Vought facility - A breather to Dreamliner project

Boeing’s announcement to acquire the business and operations conducted by Vought Aircraft Industries at its South Carolina facility, where Vought builds a key structure for Boeing's 787 Dreamliner airplane is one of the key factors in re-assuring the 787 customers, who has been extremely worried on the Composite structure of 787 and its failures in recent past. The transaction is expected to close by the third quarter of 2009. Vought had already been struggling financially while the industry had been thriving and the economic downturn only served to stifle that rebound.

Accelerating productivity and efficiency within 787 supply chain -- Bolsters Boeing capability to develop and produce large composite structures -- Vought continues relationship with Boeing on range of programs. The Vought facility, located in North Charleston, performs fabrication and assembly of structures and systems installation of 787 aft fuselage sections, which are made primarily of composite materials. After the transaction, Vought will continue its work on many Boeing programs, including other components of the 787, as well as structures and components on the 737, 747, 767, 777, C-17 and V-22 through operations located elsewhere. The successful execution of Boeing Commercial Airplanes and Integrated Defense Systems backlog; the effects of customers cancelling, modifying and/or rescheduling contractual orders; the timing and effects of any decisions to increase or decrease the rate of commercial airplane production; the timing and effects of decisions to complete or launch a Commercial Airplanes program at Boeing, would have the booster with the Vought facility and the highly trained manpower at the facility.

Boeing's ability to successfully develop and timely produce the 787 and 747-8 aircraft; the ability of suppliers and, as applicable, subcontractors to successfully and timely perform their obligations; the effect of political and legal processes; changing defense priorities; and associated budget reductions by U.S. and international government customers affecting defense programs; relationship with union-represented workforce and the negotiation of collective bargaining agreements; the continuation of long-term trends in passenger and cargo traffic and revenue yields in the airline industry; the impact of volatile fuel prices and the airline industry's response; the effect of declines in aircraft valuation; the impact of airline bankruptcies. Through the agreement, Boeing will acquire the North Charleston facility, its assets and inventory and will assume operation of the site, and the parties will resolve all matters related to Vought's prior work on the 787 program. The cash consideration to be paid to Vought at closing is approximately $580 million. In addition, Boeing will release Vought from its obligations to repay amounts previously advanced by Boeing. Separately, Boeing entered into new agreements with Vought for work packages on the 737, 777 and 787.

Vought Aircraft Industries has found itself at a convergence zone of declining production output by airframers that is likely to cause significant financial pain to the company in 2010. Cuts in production on Boeing products like the 777, the Gulfstream G450 and G550 business jets, Airbus A330/A340 reduced output, slowing ramp ups on 767 and 747-8, an uncertain budget on the C-17, and Cessna's decision to suspend the Cessna Citation Columbus program are sources of worry for Vought.
Today if Boeing were to place a second 787 line in Charleston, the facility would be the manifestation of the once mused-about 'supersite' that former 787 program manager Mike Bair discussed in November 2007 as a potential solution for the company's supply chain woes. The supersite would manufacturer and integrate not only the individual aircraft structures, but deliver them to an on-site final assembly line that would see the aircraft completed and delivered to customers. A Charleston assembly line would immediately benefit from a significant reduction in required flights by the Dreamlifter to move both structure and tooling between partner sites and final assembly operations in Everett, WA. Currently, the center and aft fuselage sections are flown to Everett from Charleston. In addition, the Italian Alenia-built horizontal stabilizer is delivered by way of the South Carolina site where the Dreamlifter refuels before continuing on to Everett. However, Boeing has found significant challenges in Charleston as it has worked to begin production on 787 facing workmanship and experience issues at a greenfield site that has little historical aerospace manufacturing experience. By contrast, Boeing's Everett and Renton, Washington final assembly facilities have almost a combined century of aerospace manufacturing experience.

In the wake of the nearly two years of delayed incurred by the 787 program as a result of the challenging logistical requirements, Boeing began 2009 examining how to rebalance its supply chain to apply its lessons learnt and push ahead with further development and production without similar disruption. Boeing had already moved significant 787-9 engineering work back in house for the development of the first Dreamliner variant.

Indian Aviation Hopes- 2009: A new beginning

by KOUSTAV M.DHAR -Chief Operating Officer & Executive Director, MDLR Airlines

The year that went by: A chaotic year of shattered dreams for the global aviation industry, where players not only relinquished their dreams for fleet expansion, but also had to discontinue and declare bankruptcy or shut shop. This was the year where most players reached the bottom, it can't be lower. From here, anything new would only see growth and progress.

With the global economic conditiond cooling down, business and discretionary travel demand trends turned pointedly downwards in full season of third quarter of 2008. As a result, Indian- full service and low cost airline profit forecast for the year 2008 has progressively deteriorated with each succeeding quarter and losses have surmounted considerably.

The massive additional impact of fuel costs in the past four months is hampering the bottom line. If oil prices do come off significantly like the trend passed by Oil Ministry to the Indian aviation, with ATF prices hitting a 36 month, all time low on 15, December 2008, and airlines do make the service reductions they are talking of, the picture could look much more attractive. In the meantime, however, the rhetoric will continue to fly. Future credibility demands a level of restraint.

Key areas to be looked at to boost growth in 2009 :-

• Improving consultation and co-operation between airport operators and state and local governments on airport and facilities usage planning.
• Integrating investment on airports with improved road and rail links to and from airports.
  Ensuring non-aeronautical developments do not compromise aeronautical requirements of airports. Improving mechanisms for guiding development around airports to ensure aircraft noise issues are fully addressed in planning.
• Passenger redressals and gaining back passenger confidence by relaxed cancellation charges and refund policies.
• Developing mechanisms for effective ongoing dialogue between airport operators and airlines on maximum time-slot utilisation according to the airline need to capture the large mass of Indian air travellers.
• Addressing future airport needs, recognising the importance of airports as an element of the national economic infrastructure and accommodating the safe and effective use by civil aviation of joint user or defence-owned airports. A suggested opening up of larger civil enclaves with defence parameters.
• Allow more intra-Indian carrier interlining and allowing airlines to continue self handling within airport premises.

Ancillary airports need to be upgraded
Alternate airports with 20 minute fly zone to be spruced up to maintain, more hangar space for all airlines, proper passenger terminal to attract Cat II and Cat II enhanced operations. The Government should subsidise such positioning flight to create, develop and encourage more players to park outside metro airports and only fly to same as a hop over.

Trends in 2009
Industry has outgrown its nascent stage and no new addition or start-up of any airline in the last 20 months clearly marks that the optimum level has been derived between all the players. The new trends that would emerge would be:

• Return of low fare flying and with that Tier II and III cities business travel would increase by at least 65 per cent in Q1 and Q2, 2009 .
• The pure bred low cost model would now turn to low fare- low service model.
  B2B and B2C sales trend would now emerge as the handiest, next generation process for booking air travel in the country which could de-stabilise the travel fraternity and their long dominance on Indian traveller mind set.
• Meta-search engines like www.ixigo.com would make knowing and comparing airline timing and fare now a desktop click job and become more popular.
• Freebies like valet service, limousine service, goody bags, etc would be non-existent as the cost for such services would now be passed by airlines to passengers.
• Demand will be much more globally-focused. By the end of the forecast period, Middle East will be responsible for less than one third of new airliner deliveries, while China will be approaching 18 per cent and India would reduce to approximately 3.8 per cent.
• Demand for current-generation regional jets is now down to approximately 256 units through 2011 and even these will be larger 75 - 90 seat models replacing 50-seaters. There are no new-technology lesser than 70 seat jet airliners in the planning stage. Therefore, some projections made elsewhere for 2,000 new small jets are simply not attainable and would be completely relinquished.
• In the US, over 800 regional jets will retire from fleets. The effects on air service levels and airline strategies will be dramatic. Asia, Middle East and Africa would turn out to be dumping ground for the same and with non-supply of pilot demand growing all time high it would be dramatic.
• The consolidation model, which has become more of a PR- exercise or, maybe, a carefully plotted exercise by two big giants of Indian private aviation, would drastically change this year. Singapore maintained after consolidation three brands- Singapore Airlines (a full service wholesome brand), SilkJet (a regional low fare- medium cost - single aisle operations) and Tiger Airways (a true blooded LCC), a great business model. This has proved to be one of the most successful models. But in the Indian scenario, Jet Airways with the confused Jetlite brand or Kingfisher with diminishing Kingfisher Red brand has mixed up the business models, which definitely is not the consolidation business model. In that case, the most successful, yet less spoken about consolidated successful business model from the industry perception is of NACIL -Air India, which has integrated the branding and procedural operation with real finesse, though stages for initial hiccups are far from over.