Edition 47
With the IndiGo widebody order, it seems everything that could have been on order has been possibly ordered. IndiGo, Air India group and Akasa Air have their orders locked in for a few years. The focus has now shifted on pilots, allied infrastructure, training, simulators amongst others. The industry (and media) has to look beyond pilots, for that is not the only or even the biggest challenge for an airline for years to come. It is one of the top challenges, amongst others.
Aviation is cyclical and the current good days of profitability are led by shortage of capacity in the market along with the compensation from OEMs or Engine manufacturers. Some day, this will end. There will also be a time when the economy – which today may not be at its best, will be under pressure. This will also have its impact on aviation, either in terms of demand or yields or both. Those who have seen the industry in 2008, know this the best.
So what exactly can airlines do? It’s time to build the war chest and that comes not just from cash balance but building assets on books. IndiGo’s ATRs made hops to Singapore during COVID, flying out from Kolkata on the non-ETOPS route via a refuelling stop. The reason? Sale and Leaseback. The airline had started taking the ATRs on its book as finance lease instead of operating lease, which came in handy during COVID to raise cash. Jet Airways continued as a going concern until it could monitise its planes and kept receiving proceeds from the sale of loyalty program. Once that tap dried, the fall was steep.
While Air India goes through various phases of its transformational plan and IndiGo builds on what would be its best ever profits, it’s time the country puts the focus back the financial aspects and the talk moves beyond the usual – delays, pilots, peeing and slots.
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