I agree that the Tatas & Singapore Airlines will allow the business to be run professionally and wish them all the best.

Airlines globally is a very risky business, largely external factors - oil price, security / safety concerns, very high fixed costs.

In fact, this is one business which has made more millionaires (who first started with BILLION). It is like the shipping business with huge capex upfront but unlike shipping demand is much more fickle and falls drastically at the slightest hint of trouble for e.g. SARS, Global Financial Crisis, Mumbai terrorist attack, etc. - all of them had a massive impact on people flying to these places.

Most airlines globally follow the 'hub & spoke' or 'network' model where they fly from multiple cities to multiple cities in a highly complex (complexified further by use of technology) route structure, where a small problem in one small city / location affects the entire network.

1. Food is not a very high component of the total cost. The biggest costs are fuel (worse in India due to waiting time at major airports like Mumbai), staff costs and airport usage charges.

On smaller domestic flights, the 'service' becomes even less relevant than long distance travel as the propensity to 'adjust' is much higher for smaller duration flights where you anyways cant really enjoy the 'service' to its most optimum level. Especially in a country like ours which is very 'price sensitive'.

2. I think the benefits of falling oil prices will be offset by the lower pricing. And it could very well be a temporary phenomenon.

3. The fact that the same group owns Taj Sats will not make any difference. 'You pay for what you get'. Moreover, since there are different partners in both the ventures, there cannot be any cross subsidization - it will have to be arms length pricing.

4. Even if it is the Tata group they've got a few bad investments as well like Tata Teleservices (Tata Docomo), which has incurred massive losses. But even in that case, we as a customer will be guaranteed that our money will not be lost - they will fund and absorb all the losses but would not let their reuptation be spoilt. (eg Tata Tele, Tata Finance, etc.)

Add ModiLuft also. They were pretty good with their offerings those days. I think they closed down around 1996.

Am very keen to see how Vistara battles the odds of the Indian aviation industry. Its good to know their model is full service and they will charge more when necessary, something Kingfisher ought to have from the beginning considering all the experience which they provided.

Modiluft is modern day Spicejet i think. Spicejet renewed the flying permit of Modiluft/East west airlines.

A little off topic question. What happens to planes that are repossessed? I'd really like to know where all the spanking new Airbus's of Kingfisher which were / are now, re-branded as another bird or sent to cargo work?

I guess the fleet was dry leased according to wiki.

The fleet management company must have reacquired them and sent it for duty elsewhere.

I agree with most of what you say, but one of the biggest operating costs of an airline is aircraft costs (lease rental and maintenance). In many countries, this is even bigger than fuel costs but, in India, because of the inflated duty structure on ATF, the fuel cost is larger. Almost all the aircraft operated by private airlines in India is leased from an international lessor. Airline ownership of assets is practically zero.

Which is why I still find it mind boggling that SBI and other PSU banks could dole out >5000 cr of loans to Kingfisher, when the asset base of the airline was in a few 100 cr.

All the best to Vistara - I hope they manage to come up with a workable strategy to steer clear of the Indian aviation graveyard.

The costs involved in making a commercial flight.
Ranked in order of major expenses.

Aviation Fuel - Jet A1
Aircraft depreciation & Finance Charges
Comissions to travel agents ( used to be 9 % much less now on online portals and own web sale portal )
Salaries - Flying staff
Salaries - Ground Staff
Aircraft maintainence
In flight catering
Landing Fee
Navigation Fee
Aircraft parking charges

Flight catering - Economy Class ( typical domestic India ) is Rs. 250 per passenger
Business class ( Domestic ) Rs. 330 per passenger.

For the sake of a growing India I would love Vistara to grow and become successful. But at best it cannot acquire more than one A 320 every month so tight are the order books till 2020 at Airbus Industries. On the lease market there has to be a constant lookout. Aircraft can be brought in from Bahrain, Europe. Abu Dhabi ( Ethihad upgrading to 330 s now ) Sri Lanka and South Africa. Also from Air Newzealand. Both SAA and Air Newzealand have been badly hit by Emirates.

The new Boeing 737 NG will also be available through cancelled orders of failing airlines but costs can go very high if an airline operates a series of single aisle aircraft, ask Lufthansa how they were bleeding money with a fleet of over 24 types of aircraft.

When the low cost carriers like Indigo, Kingfisher Red, Spice Jet and Go Air spread their wings in India. Jet Airways and Kingfisher went into a dizzy spin quite undecided on their own business and pricing strategy. Jet did everything possible, Jet Lite, Jet Konnect, Jet Konnect with 8 business seats, back to all jet full service.

As things stand today Indigo is the biggest and best overall airlines.

INDIGO

Pros

Highest on time performance and dispatch reliability.
Excellent pair of flights for morning departure / evening return for most major cities a forte held earlier and lost by Jet Airways.
Very high frequency on trunk routes e.g. Delhi - Mumbai, Chennai, Bangluru etc.
Very good flight operations model

Cons

Food theory still not right. With an Airbus 320 galley and four cabin crew hot meals can be sold.
Get a bit unfaithful on pricing 48 to 24 hrs before a flight.
Reluctant to expand to smaller stations like Dharamshala, Shimla etc. with regional aircraft.
Reluctant to reward loyal corporate customers with any airmiles program

If indigo can get its in flight service act right it will score over all others and be a market leader for it has more fleet than any competitor at the moment.

Civil aviation in India is poised to grow at 30 % per annum till 2025. A lot of this growth will come from tier II and III cities in India besides state capitals.

As of date there is a shortage of 16,000 to 20,000 seats per day with Kingfisher folding up. Jet curtailing domestic operations and recent Spice Jet cancellations. The market is there.

At the moment there are over a dozen India cities like Patna where 60 flights per day are possible and thus a private airport like Hyderabad becomes ecnomically viable.

But airlines need to improve their services overall - Vistara will be the top in service it may be already and will be, look at the others.

Air India - Oh my God. Airline in a finacial whirlpool where does the cost cut come ---- In FLight catering. From Hot meals to terrible meals and box service in most sectors.

Indigo - Did some thinking but not enough. Free sandwitch and drink to corporate clients but this is not enough. Bring in the hot meal free or paid for corporates.

Spice Jet - Free low quality hot meals to corporates. But 192 seats @ 28 inch pitch in a 737-800 it is always the last choice.

GO AIr - Nothing at all a frequent flyer club started then stagnated.

Jet Airways - Same thinking as Air India. By serving free poor quality sandwitches on full fare flights it thinks it can cut costs. Mr. Naresh Goyal go back in time to 2003 when you brought in the first 737 - 900 bring out the crisp linen and steel cutley and climb back to the leadership.

Vistara needs to keep its price hovering very close to Indigo fairs or the penny wise pound foolish administration managers of corporate houses will spread rumors of banning it for employees. Jet airways did suffer a lot of this negative publicity.

Will those dyas the year 1994 of East West and Damania lavish service in economy class ever come back ?

Have my doubts on this highly publicised claim - the flying time on Indigo is always inflated, usually by about 1/2 an hour on the international flights that they do. Where other airlines show a flying time of 3.25 hours, Indigo publishes a full 4 hours - then they land either in 3.25 or later (I've been on a few that have gone perilously close to 4 hours) and claim 'on time' or 'before time' landing proudly over the microphone.

Its very irritating - especially if you have to pick someone up. You budget for the standard landing time plus some time for baggage and clearance, but the passenger usually calls up announcing that they're outside when you're planning to leave home for the pickup.

ModiLuft then became SpiceJet. Ajay Singh, the original promoter of SpiceJet who was responsible for reviving the then defunct ModiLuft is now back at the helm of SpiceJet, having bought the Maran's stake (announced today).

Under the Marans SpiceJet became probably the most uncomfortable airline to travel in with the smallest seats and the least knee-room. Flew just once on the airline, never again.

It would be great if the Banks got together and took on board Captain Gopinath and the Kigfisher crew who are still looking around for employment to bring back Kingfisher airlines or rather Air Deccan with a new name but with the same low-cost flying that it pioneered years ago

Please not Capt Gopinath. His intentions were good, but his modus operandi was quite erratic. Terrible corporate management resulted in Air Deccan becoming a money losing enterprise before he sold to KF. He tried to put up a cargo airline business after getting out of Air Deccan, but that did not take off at all.

Steeroid: I totally agree with regard to Indigo's on time claim, but I would like to add one more observation. I have taken 4 Indigo flights in the last 1 month and all of them have taken off late, but in all cases they have tried not to communicate the delay to the passengers in advance.

Most recent experience last week in Delhi: flight scheduled for 7:25 pm departure. I was running late to the airport and checked with Indigo while in the cab, and was told that flight is on time. Fully expecting to miss my flight, I entered the airport at 7:05 pm (thankfully I had my boarding pass). When I enter the airport, I find that they have posted a departure time of 7:35 pm. Heaving a sigh of relief, I got myself to the departure area, but there was no sign of the flight boarding. In fact the previous flight had not even landed. So I actually had a long wait for the flight, which finally took off at 8:30 (more than 1 hour late). All the while, the display board showed 7:35 pm departure. Worst of all, the pilot on board calmly told us that the plane has been running late since morning because of fog and this was consequential delay. So they knew all along that flight was going to be late but did not bother to tell passengers.

Similar experience on earlier flights also from Coimbatore, Rajkot and Mumbai.

3 issues here:
- why not send an communicate to passengers on flight delay, why make them reach airport early and crowd around?
- they still close check-in counters early, so if I had did not have my boarding pass in hand, I would not have been able to check in at the counter even though I reached almost 90 min before actual departure.
- do they allow so much buffer in their flight times that they can accommodate these kind of delays and still claim to be on-time?

Anyway, I am probably making this an Indigo rant on the wrong topic, so I will stop right here.

Please no!! I really don't know what Air Deccan achieved other than bleeding themselves plus the others to slow death. May be the few thousand people who enjoyed ultra low fares for a certain period plus all those who profited out of the sell out to KF.

Really good to know about the overall feel that there's need for Full Service Domestic player.

Capt. Gopinath is not looking around for employment. He is happy and contented in a 600 Acre coffee plantation near Mudigere.

Just returned from a Chennai visit.
To and fro was on Jet Airways.

I was aghast to see the mess Jet is in. To bring things to perspective, even the yellow uniforms of the crew members was torn near the armpits

During the security instructions, the demo life jacket was filthy and smelly
(sitting near the emergency door didnt help me either as the crew went ahead with their demo instructions just under my nose!!).

An overhead plastic strip gave way mid flight and hit a passenger smack on his face!!

Jet, once the preferred and revered brand for the corporate flyers has been hit by a very low phase.
Negative growth and negative margins has laid it real low.

It is evident in all its aspects, be it the flight upkeep or the crew in itself.
The food served on board was equally tasteless and disappointing.

In this scenario, Vistara has its task etched out.
Will it succeed? Time has the answer.

But, honestly, the task is uphill as overheads in the aviation industry are pretty high.

As per NDTV news today i.e., January 17, 2015, Jet Airways has decided not to charge any fee for cancellation and date change requests within 24 hours from passengers who book their tickets through the airline's website.

The move comes in the face of increasing competition in the full-service segment, particularly after the national carrier Air India joined the 27-member global airlines club Star Alliance and Tata-SIA joint venture Vistara launched its service recently.


Source: http://profit.ndtv.com/news/corporat...4-hours-728353

Five facts that one must know about this newly born airline.
source: http://www.dnaindia.com/money/report...istara-2051009