Business In Aviation
IndiGo Becoming a Global Player?
IndiGo is set to lease wide-body planes for increased capacity in the upcoming travel season. The airline has over 275 planes and operates more than 1,600 flights daily.
IndiGo will soon lease Boeing 777 wide-body aircraft to cover the shortfall in its international operations, officials said. The company has only been operating narrow-body Airbus planes, ATRs, and freighters and was fully a domestic player fulfilling the needs of India.The airline said the wet-leasing of “certain aircraft” will be done as an interim measure, news agency PTI reported.IndiGo currently has over 275 planes and operates more than 1,600 flights daily. The airline will induct up to four Boeing 777 aircraft on a wet-lease basis. Boeing 777-200 LRs and Boeing 777-300 ERs will be deployed especially on international routes, during the winter schedule, airline officials were reported as saying on Wednesday.
The airline has been exploring several solutions to enable it to continue operations smoothly and to provide customers with efficient and affordable travel, especially as the aviation industry continues to experience significant supply chain disruptions globally.
We have received in-principle approval from the regulators for the same and the induction of these aircraft remains subject to further requisite regulatory approvals. We are committed to exploring every opportunity possible to overcome these capacity challenges and provide our customers with efficient and affordable air travel,” the spokesperson was quoted as saying.
Meanwhile reading through the new updates about the airline, let’s see what an avgeek thinks about IndiGo. Will they capture the international market as a low-cost airline, will they make customers happy when it comes to international travel? Will know after seeing a video by noel.
“I can see many airline companies are starting, resuming, or expanding their network to India. A key market (India) for the region and the rest of the world,” IATA’s Regional Vice President for Asia Pacific Philip. On Tuesday, IndiGo announced the launch of direct flights between Mumbai and Istanbul as part of expanding its overseas network.As a avgeek I am happy to see an not only profitable but expanding there fleet to long haul operation which is fascinating.
Airlines of the World
The Secret Behind Indigo’s Profitability
Have you ever wondered how India’s largest airline operator IndiGo operated by Interglobe Aviation flies high despite the turbulent nature of the airline industry? Well, the answer is the business model on which the airline operates. The business model, known as the Sale and Leaseback Model, has been one of the consistent reasons for the carrier’s profits year by year.
What’s this business model?
Simply stated, the Sale and Leaseback model is a transaction wherein a person can lease (rent) the asset to himself after selling it. In other words, an asset that was earlier owned by the seller is sold to someone else after which it is leased back to the first owner for the long term. One who grants the use of the asset to the other party is known as the lessor, while one who uses the asset in return for periodic payments is known as the lessee. This has precisely been the business strategy of the airline ever since it commenced its operations.
How does this model work?
- The airline operator signs an aircraft purchase agreement say for ten aircraft for $40 million.
- After the delivery of the aircraft is undertaken, the airline will undertake to sell the plane to the leasing companies. For instance, the aircraft is sold at $45 million. In that scenario, the airline makes a profit of $5 million after which it asks the new owner to lease back the same aircraft.
- The lease is for 5 to 8 years after which the aircraft is transferred to the leasing companies.
Advantages of the Lease Back transaction
- Benefits of an existing brand name to the lessor
The lessee (IndiGo Airlines) pays the lessor from the income earned by the airlines using the aircraft. The leasing company also agrees to such an arrangement because it provides an asset and an established customer base without having to buy a brand-new plane.
- Cash Flow Generation
The Lessee when it sells the aircraft generates cash which could be used to relieve the balance sheet of the company from debt. Also, when the company sells the plane to a lessor/lender, obviously the original aircraft owner (IndiGo airlines) will be able to earn some cash which could be reinvested elsewhere.
- Reduction in Tax Liability
Under the sale and leaseback model, the company does not have to pay any taxes on the appreciation of the asset. Further, the lease paid on the asset is recorded in the profit and loss account, which reduces the net profit, which will, in turn, reduce the tax liability.
- Safety from Maintenance Repairs
In a Lease Back agreement, it is the responsibility of the lessor to bear the maintenance repairs. This, as a result, significantly reduces the cost of the airlines.
Why not see a short clip of Indigo’s first Airbus 320 departure from Begumpet Airport – Hyderabad? Indigo Airlines’ & Asia’s first Airbus A320neo (VT-ITC) takes off at Begumpet Airport (VOHY), also known as the old Hyderabad airport for the very first time on the first day of India Aviation 2016 event.
There are a lot of ‘firsts’ associated with this aircraft
# Indigo Airlines’ first A320neo aircraft –
# Asia’s first A320neo aircraft
# World’s first A320neo female pilot, Capt. Karuna Singh operated this aircraft to/from the event at BPM. On 11th March 2016, Indigo received its first-ever Airbus A320neo.
The Sale and Leaseback model is called as the golden goose for IndiGo Airlines. Apart from excellent services, this model is the prime reason behind IndiGo’s success story. IndiGo Airlines continues to perform well, reporting net profits worth Rs 1200 crore in the first quarter of FY 2020, despite subdued demand. However, we believe that this model is not purely free from disadvantages.
This is because, in the wake of uncertain circumstances, such as a surge in the price of aviation turbine fuel or merely a weakening demand, lease payments certainly increase the pressure and become a burden on the company
It is therefore important for every company in the aviation industry to avoid being complacent and take lessons from the crash of Jet Airways and create a business model that is both dynamic and can withstand any misfortune.
Business In Aviation
What is this Aircraft?
It’s known as the “Sky Whale,” and I can see why: it’s massive. Before we even get into it, the plane’s design is impressive, and more importantly, it prioritizes safety.
Seriously though, what is this? The concept is stunning and appears to be too good to be true. It’s known as the “Sky Whale,” and I can see why: it’s massive. Before we even get into it, the plane’s design is impressive, and more importantly, it prioritizes safety.
What makes this aircraft so unique? Aside from the fact that it looks like it came straight out of a science fiction film, it has three decks that divide passengers into three classes. The first class has “sky views” as well as “all conceivable luxuries for an aircraft trip.” The business class follows, followed by the tourist class at the bottom. However, as impossible as it may sound, it will be very comfortable with “good” legroom. It can transport 755 passengers, making it ideal for any airline.
Oscar Vials, the man behind the concept of this aircraft, stated that the Sky Whale would be constructed of advanced materials such as ceramic or fibre composites. It will have advanced ‘active wings’ powered by a hybrid turbo-electric propulsion system, as well as a self-healing skin with adaptable opacity designed with current and future technologies in mind. Furthermore, the engines could be tilted up to 45 degrees, allowing it to land on any runway in the world.
What makes this concept even more impressive is that the Sky Whale, once built, will be the “greenest aircraft imaginable,” according to aviation enthusiast and designer Vials. Its technology will aid in the reduction of drag, fuel consumption, and weight. Micro solar cells on the wings help charge the four large hybrid-electric engines.
It may seem far away, but we will get there eventually. The design and concept of this aircraft are, in my opinion, flawless. In this thing, you’d feel like you’re on an intergalactic mission to save the world. Oscar Vials’ vision for aviation includes not only safe and comfortable travel, but also a more “green” future.
Reports: Emirates & United Airlines are Set to Announce a Codeshare Agreement
United Airlines and Emirates Airlines will announce a codeshare agreement in the coming weeks.
Several years ago, there was a major battle between the “big three” US carriers and the “big three” Gulf carriers over the two countries’ Open Skies policy. Fortunately, the situation has since been resolved. And nowadays, and according to Reuters, United Airlines and Emirates Airlines will announce a codeshare agreement in the coming weeks.
While nothing has been confirmed, The Air Current reports that Emirates and United Airlines are planning to form a partnership soon. The two airlines appear to have confirmed this on Twitter, with an announcement scheduled for September 14, 2022.
The anticipated announcement was first reported by The Air Current. The airlines will make “a joint statement” on September 14 in Washington, according to an Emirates representative, who declined to provide further details.
What is expected from this agreement?
This codeshare agreement would provide customers of both airlines access to additional routes that neither airline presently serves after getting governmental approvals. The agreement will probably help United compete more effectively for passengers flying to the Gulf region. This collaboration is expected to include widespread cooperation, as the agreement will include reciprocal mileage earning and redemption, elite perks, and possibly some new routes.
Emirates’ partners in the US
Emirates already has an agreement with JetBlue. Emirates also had a partnership with Alaska, which ended in 2021 when Alaska Airlines joined oneworld and began working more closely with Qatar Airways.
While the details are yet unknown, United Airlines and Emirates are expected to announce a partnership that will include codesharing and other benefits. We can probably expect an official announcement on September 14, 2022. We know that Emirates has been wanting this for quite some time.
Cover Photo credits: Wuthiwong Wimolsakcharoen (for Emirates Aircraft) & BIGGY (for United Aircraft)
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