Airlines Deals

Jet Airways clarified its position yesterday in relation to the current controversy surroundings its deal with Sahara.

Despite this, some sections of the media have carried an impression that Jet Airways “blames” the Government for the lapsing of the deal.

Jet Airways maintains that there is no question of any “blame”.

Commercial deals are fashioned to respond to events, and they have to be factored in as commercial risk. Government policy, in evolving markets, is always a recognized commercial consideration and is generally dealt with in large commercial deals.

The deal was based on some assumptions – which were in turn made conditions precedent. Since they did not materialize, the deal lapsed. In such a situation, there is no occasion to “blame” anyone or any agency.

Jet Airways reiterates that the reform of the civil aviation sector has been relatively fast-paced and has never had any reason to complain about any government policy.

Comments(0)

Airways is considering an early out-of-court settlement with Air Sahara following the failure of their 500 mln usd merger deal, the Economic Times reported, citing unnamed sources.

It said Jet Airways chairman Naresh Goyal has convened an urgent meeting of the carrier’s top management at his London residence to discuss the matter.

The newspaper cited sources as saying that Jet and Sahara have been advised that a protracted legal battle will not benefit either side.

Both Jet and Sahara went to court after the deal collapsed, over money lodged in escrow accounts earlier.

A Sahara group executive was quoted as saying: ‘Our legal team is working overtime, and it is too premature to talk about out-of-court settlement.’

Comments(0)

We expect Jet’s earnings to remain under pressure given high fuel prices and continued pressure on yields and are downgrading FY07 and FY08 estimates by 47% and 32% respectively. The acquisition of Air Sahara has fallen through on technical grounds and we view this as positive. However, Jet may have to write-off about Rs 2 billion invested in working capital of the company. Further Rs 20 billion is stuck in escrow account and advances to promoters of Sahara and recovery of the same may be delayed in the event of a protracted legal battle. Recommend Underperform with a price target of Rs 600. Downgrading estimates for FY07 and FY08.”

Downgrading estimates for FY07 and FY08

“We are downgrading estimates for FY07 and FY08 by 47% and 32% respectively primarily due to high fuel costs. Jet’s average fuel cost per litre for 1QFY07 is up 12% QoQ and 25% YoY. Our assumption of average jet fuel prices for FY07 at USD 65 per barrel remains conservative considering present prices of USD 72-75 per barrel. Yields are also under pressure, both in domestic and international operations and we expect them to decline by 2-3% in FY07. We estimate that over the next 3 years the capacity in India skies will increase by 136% based on the capacity addition plans of various players. For the system to achieve a capacity utilization of 75%, traffic will have to grow at a Cagr of 42% for the next 3 years.”

1QFY07 results: Forecast 76% decline in net profit

“Jet’s domestic market share has declined from of 41% in Jun-05 to 35% in Apr-06. Yields during 1QFY07 are about 5% below 4QFY06 even after the fuel surcharges levied since May- 06 as over 60% of its passengers travel on discounted tickets - a sign of intense competition, which is unlikely to abate. For 1QFY07, we expect revenues to increase by 17.4% yoy and net profit to decline by 76.3% yoy. Cost savings are coming through as online ticket sales increase (10% at present and up from 2% last year). The reported numbers likely to be higher since Jet is planning to sell and lease back four aircrafts.”

Jet backs-off from Air Sahara acquisition

“Jet’s proposed acquisition of Air Sahara has fallen through on technical grounds. We view this as positive since integration issues, Sahara’s cost structure and poor profitability would have meant significant challenges for Jet. Numerous media reports have indicated that decline in Jet’s stock price and delay in raising funds also resulted in Jet doing a rethink. Jet has already invested over Rs 2 billion into Sahara’s operations besides Rs 5 billion paid as part consideration to Sahara’s promoters and Rs 15 billion deposited in an escrow account. A protracted legal battle in court will mean delay in recovering the money for Jet. An out of court settlement will mean higher than expected write-offs for Jet.”

Valuations still expensive

“Jet’s debt-equity is presently over 200%. Jet intends to raise USD 800 million (combination of FCCB and GDR) at an opportune time to deleverage its balance sheet. With the stock trading at 24.0xFY07CL, we believe there is still downside even after the recent correction (33% since May-10). Our price target of Rs 600 is at an EV/ Ebitdar of 6.0xFY08CL.”

Comments(0)

A consortium of public sector insurance companies, led by New India Insurance, has bagged the insurance cover for Air India, reports Business Line.

It has been learnt that the airlines managed to negotiate a 15-16% discount in the lead rate. However, it is expected that the premium payout for getting an insurance cover for Air India and Air India Express would be around USD 15 million during the current year.

The airline has sought an insurance cover for over five million passengers and an aircraft fleet of more than 50 this year, up from 44 aircraft last year. It has also taken an insurance cover for the six new Boeing 737-800 aircraft that are scheduled to join Air India Express fleet during the year and for the five new Boeing 777 aircraft that are scheduled to join the Air India fleet as per the original delivery schedule drawn up with the aircraft manufacturer.

The current insurance cover has estimated that the average fleet value would increase to USD 4 billion from USD 2.8 billion during the previous year. The AI insurance cycle runs from July 1 to June 30

Comments(0)

INDIAN national carriers operating from Doha are likely to increase their seating capacities by early next year, a top airline official said yesterday.

Speaking to Gulf Times, Thiruvalloor Vinod Kumar, country manager of Indian said India’s airline sector is expected to gain significantly from the merger of Indian and Air-India, scheduled for March 2007.

“Benefits from the merger would be manifold and both the Indian airline industry and passengers would have numerous advantages once the procedures are completed,” said Kumar. Besides avoiding the duplication of services seen at present in some sectors, it would also help considerably increase the seating capacities, he said. “Also, the move would help the airline cut fuel costs.”

Kumar said that with the merger, the airline would have a combined strength of over 100 aircraft. “It would help us overcome many of our present hurdles and we would be able to honour a number of bilateral agreements that India has made with civil aviation authorities in some Far East Asian countries and Europe.” Indian would be able to operate new services to destinations in Europe, especially Germany, Hong Kong and Beijing.

After the merger, the new company would be able to compete much better with private airlines, he said.

Kumar said with Indian acquiring the first of its new aircraft in November, things would change considerably for India-bound passengers from Qatar.

“From November, we would start taking possession of at least one new aircraft every month in the next three years,” he said. Indian has placed an order for 46 aircraft with Airbus.

The official said he has already asked the head office to explore the possibility of running daily services to Mumbai and Chennai once the new aircraft start arriving.

“As of now, owing to the shortage of equipment, Indian is unable to meet the ever increasing requirements of passengers on the Doha -India sector,” he admitted. He said he is optimistic of the introduction of new services to the two cities next year.

Kumar, who has completed his stint of more than three years in Doha, is leaving the country shortly. He has been promoted as deputy general manager (commercial) at the Indian Airlines Training College in Hyderabad, his home city.

Talking about the revenues from Qatar, Kumar said the airline carried more than 22,000 passengers on its daily Kozhikode-Kochi schedule in 2005-06.

“It was our all-time record from Qatar,” he said. On its Bahrain-Doha-Kozhikode-Kochi daily flight, only 60 seats are allotted to Doha. Compared to the previous year, there was a growth of 8.5% in revenues. While 2003-04 was a lean year, operations in 2004-05 saw a 13.5% growth, he recalled.

Kumar said by the end of 2009, the company would have phased out all its old aircraft and the new environment would give the airline a much better image. “It would not only be the issue of a new brand image, the acquiring of new aircraft would perhaps also give a new identity to India’s airline sector.”

With the commencing of operations by new aircraft starting from November, Indian would be able to introduce in-flight entertainment, said Vinod Kumar.

While agreeing that India’s national carriers could not do much to promote tourism from the Middle East, Kumar said, the private had a more important role to play.

“None, it seems, has explored the enormous potential of India’s health tourism among the nationals of the GCC states,” he said. There are a number of medical institutions of international standards in India, he pointed out. “Qualitatively, they can provide unparalleled services to the visitors and costs would also be very low compared to the expenses elsewhere.”

Indian’s airport manager R Ravishankar will be in charge of the Doha office until a new country manager takes over.

Comments(0)

The Air-India Board sub-committee, which is considering the appointment of consultants to prepare a roadmap for merger of Air-India and Indian, on Tuesday shortlisted three consortia for the purpose.

The shortlisted consortia are: Accenture with Ambit Corporate Finance; ICICI Securities in association with Deloitte Touche Dohmatsu, N M Rothschild, Centre for Asia Pacific Aviation and M V Kini; and JM Morgan Stanley and AT Kearney with Amarchand Mangaldas.

The three parties would be given the detailed terms of reference to enable them to submit their final technical and financial bids, sources said.

Comments(0)

U.S. air travelers ranked JetBlue Airways Corp. (JBLU) as their favorite low-cost airline and Continental Airlines Inc. (CAL) as the best of the traditional network airlines, according to a study from J.D. Power & Associates released Thursday.
Many financially strapped U.S. airlines continue to cut costs, but that doesn’t mean they’re slacking on good service for customers, Linda Hirneise, executive director of the travel practice at J.D. Power, said in a prepared statement.
“Airlines that have high customer satisfaction have two things in common: They have processes in place to ensure a consistent, positive travel experience, and they have the right people working for them, who make the flying experience a pleasurable one for their passengers.”
In partnership with Aviation Week Magazine, the research company polled nearly 10,000 airline passengers who flew between January and May of 2006.
“JetBlue is true to its model,” Hirneise said, delivering on a promise to give passengers “a comfortable seat with a television monitor, peanuts, and service with a smile.”
Southwest Airlines Co. (LUV) ranked second in customers’ satisfaction with low-cost airlines.
Passengers said Continental excels in the check-in, in-flight service, and cost and fees factors. The Houston airline ranked particularly high among business travelers, the survey found.
Delta Air Lines Inc. (DALRQ) was close behind Continental, according to passengers polled, with American Airlines, a unit of AMR Corp. (AMR), coming in third.
Las Vegas McCarran Is Favorite Airport
The survey also asked passengers to rank U.S. airports. Among the largest airports, McCarran International in Las Vegas came in first, followed by New York’s John F. Kennedy International and Philadelphia International, which tied for second place.
Dallas/Fort Worth International ranked third of 17 major airports included in the survey.
New York’s LaGuardia International ranked first among medium-sized airports, followed by Chicago Midway International and Baltimore Washington International.
Dallas Love Field tied for first among small U.S. airports, ranked equally with Houston Hobby International. Orange County John Wayne ranked second behind the Texas airports.
-Contact: 201-938-5400

Comments(0)

The Chennai-based private carrier, Paramount Airways, will increase its daily flight operations out of Chennai Kamaraj Domestic Terminal to 25 from the present 14.

Giving details of the increased frequency of services out of Chennai with effect from June 29 (Thursday), the Managing Director of Paramount Airways, M. Thiagarajan, told The Hindu that the airline would fly thrice daily services to Bangalore and Hyderabad from June 29.

“The new services to Hyderabad and Bangalore would be a boon to link conveniently all the three major Information Technology hubs in South India”, Mr. Thiagarajan said.

Embraer jets

Speaking on the expansion of the airline, which currently operates with two 72-seater Embraer jets, Mr. Thiagarajan noted that with the arrival of the third Embraer jet from Brazil on July 7 to Chennai, the airline will introduce flights to Thiruvananthapuram and Mangalore.

The increase in fleet would also facilitate the airline to re-introduce flights to Delhi, increase frequencies to Kochi, besides introduce services to Mumbai from Chennai.

Presently, the airline flies to Coimbatore, Madurai, Bangalore, Hyderabad and Kochi.

Mr. Thiagarajan said recently the airline had signed an agreement with the Amadeus Reservation System, providing hassle free bookings to be made by over 1,600 travel agencies across the country.

Dual seating

The Managing Director said with the arrival of the third Embraer jet from Brazil, the airline which was currently an all “Business class airline” would provide dual seating configuration with 11 First Class seats being introduced.

Comments(0)

Mobissimo, Inc. (www.mobissimo.com), the world’s most comprehensive travel search engine, today announced the launch of its UK site www.mobissimo.co.uk, to give British consumers direct access to the latest travel deals from the widest range of online travel agencies, major air carriers, low cost airlines, car rentals and hotels available with a single click.

The British are traditionally savvy travellers who travel often both domestically and abroad. Mobissimo covers well-known domestic travel suppliers such as Active Hotels, British Airways, Easyjet, Ebookers, Hotel Pronto, Lastminute.com, Monarch, Opodo.co.uk, Ryanair, Skoosh, Sterling, and features the largest selection of low cost airlines available in one convenient location.

Mobissimo is the only travel search engine to specialize in international travel and offers unparalleled depth in travel resources for deals to three foreign destinations favoured by UK residents: the U.S., continental Europe and India. Continuing Mobissimo’s trajectory of organic growth and international expansion, Mobissimo UK is the second European site operated by the company. Mobissimo launched its (French) site in September 2005.

Beyond Europe, Asia has quickly developed into a white-hot market for online travel search, due to the Indian economic boom and the emergence of a new generation of low cost airlines to meet increasing demand for travel options. Last month Mobissimo became the first travel search engine to specifically target India with the launch of its Indian site (www.mobissimo.in) bringing Indian consumers the largest selection of travel deals available both domestically and worldwide.

“We focus on entering the fastest growing travel markets globally to propose the best choices and recommendation tools to our users. The UK leisure travel market is very active and the UK has always represented a significant source of traffic for Mobissimo,” said Beatrice Tarka, Mobissimo’s CEO.

Mobissimo searches prices directly from 166 different travel suppliers across the world, based on visitors’ search criteria, and displays them with one simple search. Just like a Virtual Travel Concierge, Mobissimo’s innovative recommendation tools make it easy for travellers to discover new destinations and routes, particularly useful in summer and winter holiday seasons when fares to popular destinations tend to sell out. Users can enter queries with Mobissimo OneBox natural language search, tap PowerSearch for multiple city searches, consult MobiCombo for dynamic ticket combinations, and run ActivitySearch for theme-based travel planning, directly on the Mobissimo home page.

About Mobissimo
In Italian, Mobissimo means the “ultimate in mobility.” For consumers, Mobissimo is the ultimate travel search tool because it saves time and money and improves the way people discover travel information. Mobissimo is a travel search engine that simultaneously searches 166 different travel sites in 30 countries and five continents, including major global airlines, low-cost carriers, consolidators, and hotel/car rental sites, to find the best fares and rates online. Travelers from 188 different countries take advantage of Mobissimo’s powerful Travel 2.0 search tools including OneBox natural language search, PowerSearch for multiple city searches, MobiCombo for dynamic ticket combinations, and ActivitySearch for theme-based travel planning. Launched in 2004, Mobissimo continues to be the leading travel search innovator. The company is headquartered in San Francisco, California and is privately held. For more information and to experience Mobissimo, please visit http://www.mobissimo.co.uk/.

Note to editors:
UK residents made 64.2 million visits abroad and spent GBP 30.3 billion in 2004. Two thirds of visits by UK residents were for holidays. Europe was the most popular destination for UK residents, accounting for 80 per cent of all visits and 64 per cent of overall spending.

In 2004 UK residents made 50.4 million visits abroad by air, 79 percent of all visits. This compared with 8.9 million visits by sea (14 per cent) and a further 4.6 million via the Channel Tunnel (7 per cent). Those travelling by air spent proportionally more than those travelling by any other means: 85 per cent (GBP 25.9 billion) of all expenditure was by those UK residents travelling by air, compared with 10 per cent (GBP 3.0 billion) by sea and 5 per cent (GBP 1.4 billion) through the tunnel.(Source: UK Government International Passenger Survey -Travel Trends 2004).

Discuss this press release here.

Contact
Mobissimo Inc.
Beatrice Tarka, CEO
984 Folsom St.
San Francisco CA. 94107 USA
Tel +1 4154255638

Comments(0)

TIRED of hearing about 99p flights that end up costing you £100? If the answer is yes, then you are in good company.

Many people ignore the small print when it comes to travelling with low-cost airlines — but it is these extra charges that are leading to the high price customers eventually pay for a flight.

For as well as the taxes and charges added to ticket prices — quite often the cheapest fares are restricted to certain flights leaving or returning at times which suit few people.

One Ryanair recently found themselves forking out more than £117 on their trip — despite the ticket being advertised at just 99p.

They said: “I logged onto Ryanair’s website to be greeted with a flashing yellow sign offering 99p flights. One of the routes on offer was London Stansted to Kerry Airport. The notice said I had to travel in July so I decided to book the flight.”

But instead of getting the 99p offer the final bill for a return weekend in July was £117.29. This involved leaving Stansted at 4.50pm on a Friday and flying back from Kerry the following Sunday at 6.45pm.

The disgruntled passenger said: “Although this journey could have been done at a cheaper rate if I had for example decided to fly out on Thursday evening and fly back early Sunday morning it highlights the point that we are paying far more than the price initially advertised.

“It’s ridiculous, customers are constantly being misled.” Another frequent traveller between Ireland and England Mairead Collins said: “With most airlines you just don’t know what other charges exist.

“My husband recently took golf clubs over to Ireland on Air Lingus and was charged €60. On top of what he’d already paid it just seems that they’re cashing in.” Airlines like Ryanair have never claimed to be luxury carriers.

Instead what they do say is that they will get you to your destination at the lowest possible price, safely and in over 90 per cent of cases on time. And to some that’s all that matters.

Frequent traveller Sean James said: “I’ve used Ryanair about four times this year for short breaks and overall I’m very happy with the service that they provide. To be honest I’m not expecting premium grade travel when flying for less than £100 return.

“Providing you’re able to book your flight within a given time period you can get some real bargains.

“But I do find it a bit frustrating with what initially seems a good price is then subject to airport taxes in each direction together with additional charges for each item of luggage and even for paying by credit card.

“I’d prefer to see just the one price for a flight as opposed to being made to feel that I’m being squeezed for every bit of cash possible.” In a bid to compete with Ryanair Ireland’s national airline Aer Lingus has launched its own series of cheap flights.

When logging onto their website customers will once again be greeted with a series of offers. But again finding those elusive best fares is not always easy.

After opting for an offer of £5 flights from London Heathrow to Cork one weekend we found the actual total in at a staggering £220.14.

And the flight times were not the most expensive options available for those days.

So where is all our money going? Basically the price initially advertised by the airlines is the fare price.

Fares apply only for carriage from the airport at the point of origin to the airport at the point of destination. Fares do not include hidden charges which are made up of among other things government taxes, air duty and airport tax. Taxes such as British Air Passenger Duty are levied on the carriage by air of passengers from a British airport. The fee of £5 is applicable for European Economic Area destinations.

The government tax is an airport departure or arrival tax payable to the government. These taxes vary from country to country in Europe. Airport taxes are charges made by the airport authority to an airline for the use of the terminal, runway, emergency services and security facilities.

This non-refundable charge is made on a per passenger basis and varies from airport to airport. The Aviation Insurance Levy meanwhile is an insurance surcharge that was introduced after the September 9 terrorist attacks in America.

The charge is £3.15 per passenger, per flight.

These taxes and charges account for the majority of extras but airlines can also impose their own charges. These include baggage charges, extra charges for children and a wheelchair levy.

These airlines also claim they cannot afford to accept credit cards without adding and extra surcharge due to the low cost of the fare price. Ryanair also recently imposed a charge to check-in baggage. They now charge £2.50 per bag, per flight.

The airline said this was a move to reduce the overall cost of flights. The best advice is to study what you are paying for with each flight.

The airline may have included travel insurance that you may already have or you may be paying for checking-in bags when all you’ll have is hand luggage. Don’t pay more than you have to — after all the most recently recorded profits of the airlines in our survey totals over £260million.

Comments(0)