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Virgin Atlantic And United Airlines Are For Sale

It’s been some time since bankrupt airlines were on the top of the media’s bestseller list. However, we are now seeing a lot of these niche companies come back to life and become financially viable again.

Virgin Atlantic is one of those companies that has seen its share of struggles. Not only did it go bankrupt during the economic recession, but it also went through a power struggle between two of its most vocal promoters. When the airline merged with British Airways, it was the first time Virgin Atlantic was in a situation where it had to work with both British Airways and Air France.

Virgin and United Air Lines are probably the two best known airline bankruptcies on the market today. These two companies have had similar styles of promotion as the other. Neither of them was cheap to operate. Most of the losses came from the lower fare tiers because of the low amount of demand for those flights.

Virgin Australia had trouble because of a decision by a major American carrier to drop the Virgin brand name from their ticket prices. This decision to cut into the profits on all Virgin Australia flights but the top end of the business. Since this is the least profitable segment of the airline Virgin Australia went under.

Even when airlines merge they don’t always work out well. Virgin and United airlines made a deal that cut their losses by combining their profit margins. The combined profit from Virgin and UAL is now enough to support the costs of operating both airlines.

Fortunately for Virgin Atlantic and United Airlines, they have also been able to work with a strong investor group who saw the opportunity in a profitable and stable company with a good track record. British Airways and Air France made a deal with the investment group to sell a small portion of the company. As a result, Virgin Atlantic and UAL are now free of the large financial liabilities of the first merger.

A merger shows that one of the strongest media to invest in a new airline is an international group that can step in and provide funds to keep the business alive. The partnership will likely remain in the short term. The two companies must see some kind of return on their investment before they would consider merging with their competitors.

The takeover of Virgin Atlantic and Air France by an international investor could bring a couple of benefits to those two airlines. They would likely receive money from the buyer to help them fund some of the increased fuel costs. They also would probably get a favourable credit rating from a major credit agency that would help them finance their further expansion into the new markets and continue to attract more passengers to their flights.




Find Best Airfare Deals

Finding The Best Airfare Deals Available

We can never dispute the fact that airfare of many airline companies today are intensely costly, especially if it’s the peak season for international travel. Even cheap international flights can get too pricey if you don’t get them at the right time. Getting some savings out of your travel cost might not be possible if you are lazy and avoid searching for the best airfare deals in the market.

If you want to cut down on the total of your travel cost then you better do your best to find the best airfare deals available for you. Here are some ideas on how to do just that.

Look For Discounts On The Internet

Most airline and travel companies on the Internet offers low airfare rates and is quite convenient for consumers since they can easily book the flights they want in the convenience of their own home or at the office.

It’s quite easy to look for the best airfare deals on the Web since you can utilize search engines to make lookup much easier to deal with. You can go for travel-related companies affiliated with known airlines and have them book your flights for you. One advantage to using these services is the ability to help you which days offer lower rates in terms of departure and arrival time, or on specific dates.



You might also want to check out on other possible deals that will help minimize your travel costs with other benefits — such as travel or vacation packages that include hotel accommodations, transportation costs, and of course, your airfare.

Consult A Travel Agent

Travel agents are quite handy to have around if you need to have your flight booked according to your specifications without having to do it on your own. One advantage of getting these experts to do your work for you is their contacts in the travel industry to find the best airfare deals for you in the shortest possible time. Provide them with the details of your travel, such as the exact date you want to leave and return from your destination, budget, and the likes.

Try Out Off-Peak Hour Flights

If you want to get the cheapest airfare deals in the industry then you might want to book your flight during off-peak hours — which is to say around late in the evening or early in the morning. In most cases, these airlines offer quite a discount for last-minute deals just to get as much passenger as possible for every trip.

The only drawback to this solution is that there are many bookings for these seats in advance due to its cheap price. It is advised to consider at least 3 or 4 airline companies for this method so that you will have some seat available when you need them.

Go For Cheap Airlines

If all else fails, you can always look for the best airfare deals on cheap airlines in the market. There are quite a lot of them around since many find it affordable to opt for this method of travel than getting one from known airline carriers. They are not known for quality or luxurious accommodations and seating is a bit cramped — at least it gets you where you’re going without emptying your wallet.




Ask The Expert: Why is Spicejet in a Hand-to-Mouth Situation?

India’s budget carrier airline, SpiceJet, presently operates nearly 630 daily flights to various domestic and international destinations. It has an impressive fleet size of 118 aeroplanes, comprising 82 Boeing 737, 32 Bombardier Q-400s and four B737 freighters.
 
SpiceJet has recently signed a codeshare agreement with the Gulf carrier, Emirates. Code-sharing enables an airline to book its passengers on its ally carrier and present seamless travel to destinations where it does not operate.
 
Also Read: Jet Airways pilots look to join SpiceJet, IndiGo pilots see injustice
 
This is the first-ever codeshare agreement signed by SpiceJet. The codeshare will permit opening of new routes and destinations for the passengers of both the air carriers. An initial agreement between the two airlines was signed in April 2019. Thus, travellers from all over the world can book a single ticket with lucrative rates to any of Emirates’ nine points across India and connect onwards to 172 domestic routes on which SpiceJet operates. 
spicejet
However, the overall financial health of SpiceJet does not present a rosy picture. The company is facing a liquidity crunch. It has very low amounts of cash shown on its books. Media reports have said that the SpiceJet is bolstering its balance sheet with a fundraise through a qualified institutional placement (QIP), it is in talks with potential investors. SpiceJet has denied such reports. The so-called potential investors are missing too.
 
The fact of the matter is:
-As on 30 September, SpiceJet had cash and cash equivalents worth ₹93 crore. 
-It had a net worth of about ₹850 crores (negative). 
 
On the other hand, Spicejet’s competitor, IndiGo run by InterGlobe Aviation Ltd had cash and cash equivalents worth about ₹18,736 crores and a net worth of about ₹6,200 crores. SpiceJet’s free cash flow was ₹115 crore compared to IndiGo’s ₹3,111 crores for the first half of FY20. 
 
IndiGo is India’s largest airline by market share. SpiceJet is India’s second-largest airline by market share after IndiGo. 
 
Also Read: SpiceJet considers taking over Jet Airways’ aircraft, staff
 
In six months ending 30 September, SpiceJet lost ₹200 crores. It did not expect such a loss. It had assumed that the operating environment will not remain bad. When Jet Airways shut operations in April 2019, other airlines like Spicejet assumed that they will benefit greatly. However, that did not pan out as per their expectations, yields did not show any marked improvements. SpiceJet expanded rapidly in recent times, taking advantage of Jet’s closure to take up over 30 of Jet’s former 737 NG planes, flying more passengers and raising fares. SpiceJet has also received some of Jet’s domestic and international airport slots.
 
In SpiceJet’s case, the grounding of Boeing 737 MAX planes did hurt to some extent. SpiceJet seems to have placed very high hopes on the so-called virtues of the MAX, like 12-15% lower fuel consumption and 10% lower maintenance costs. It made the cardinal sin of assuming this as the key to profitability. 
 
Most aviation analysts view this as an almost a hand-to-mouth situation for SpiceJet. Things may worsen further if Spicejet does not apply a course correction. A saving grace is a fact that the fuel prices haven’t increased too much.
 
When a company is viewed as financially strong, it is in a better position to get better deals from suppliers, vendors and aircraft makers. Even for a fundraising exercise, the investors investigate its finances and then invest. 
 
indigo
SpiceJet and other airlines like SpiceJet are not presently able to pass through such rough weather. They invariably have low cash on their books because they allow their businesses to heavily depend on variables beyond their legitimate control like fuel prices and competitive pressures. They are neither aware of the true value of their net worth nor they are able to make the optimum utilisation of their resources – which is quite strange. Most of the time, they find themselves very difficult to sustain. 
 
Also Read: Indigo worst performing airlines for consumers; Air India’s luggage policy best: Parliamentary panel
 
IndiGo has much higher cash holdings, it can sustain longer, it need not resort to lame excuses when things (fuel prices, currency fluctuation, or competition) become severe for the aviation sector. IndiGo’s secret is open. Its business model is different from others. Apart from generating revenue from aircraft operations, it also has additional sources of revenue. Sale-purchase and leaseback of aircraft form a major source of revenue for IndiGo. A robust cash holding position enabled IndiGo to order over 100 aeroplanes in 2006-07.



Ancillary Services Rescue Airlines

Airlines in India are succeeding to some extent in milking a few millions of additional rupees from their customers for “extra” services that are now used to be included in their fare prices. 

The Role of Ancillary Services

Ancillary Services

Airlines all over the world are on their way to rake in nearly $110 billion in revenue this year from the sale of so-called “ancillary services”. These services have nothing to do with the operations of the aircraft: fuel consumption, maintenance, landing, parking or navigation charges. They are simply the extras best described as marketing gimmicks. These extras range from a choice of the seat to the volume of leg-space. Depending upon the way an airline fancies its marketing strategies, these may also include the ability to check one or more bags, chose an aisle seat, select seats together and/or in advance, to get reduced ticket change fees or additional frequent flier mileage points, or to get favoured check-in and security clearance procedures. Airlines clearly have today established the practice of charging more for such ancillaries.

Also ReadSilly Gimmicks Used by IndiGo for Marketing

The latest trend for the airlines has been:

to present a fully-stripped down, seat-only “Basic Economy” fares as well as various higher-priced “branded fares” that include various combinations of additional services.

But in the process, airlines have found in their customer feedback notes that they have disappointed more than half of their customers and left as many as 75% of them unhappy with their airline adventures. Such services historically were included in the price of the air-ticket. The airlines are yet to learn how to use customer data effectively to present fare options specifically tailored to the preferences of individual consumers. The skills required for revenue optimization (how a company dynamically adjusts the prices of its services to get, ideally, the highest revenue from a customer who is ready to pay for a service or product) have not yet been developed.

Also ReadAAI’s Unused Airfields Yet to be Put on Use

More and more evidence is coming up which shows that  a large segment of travellers:
– leisure travellers,
– less frequent travellers,
– high mileage business travellers and/or 
– very frequent fliers

are surely not very happy with the kind and constituents of various fare price options that the airlines offer. There is indeed a visible sense of hopelessness across the spectrum of airline patrons.

Ancillary Services


Despite that impediment, despite the still-not-well-defined way of unbundling and re-bundling service packages in their unpredictably priced fares, airlines’ efforts at raising ancillary revenues are setting new records with every passing year.

Ancillary revenue now signifies 12.2% of global airline revenue. That’s more than double considering the industry’s forecasted 5% operating profit margin in 2019. In other words, ancillary revenues have impacted greatly on airlines’ profitability.

The global industry’s $109.5 billion in ancillary revenue now is more than half of the industry’s total amount spent on fuel. In 2019, the fuel bill is expected to be around $206 billion. This trend reveals that the rapidly evolving ancillary revenues have become a vital hedge against escalating fuel prices.

The Role of ATF Prices


Airlines in India have long rued the high cost operating environment and high fuel prices. On November 20, 2019, the Parliament was informed through a written reply by the Civil Aviation Minister Hardeep Singh Puri in the Rajya Sabha that four domestic airlines including Jet Airways and JetLite, have shut their operations over the last three years for want of funds and unavailability of aircraft. The government has said that it is conscious of the financial difficulties being faced by the airlines and is responding to the industry situation.

The Minister listed out a slew of measures taken by the government to enable growth in the aviation sector. He said that the government was coordinating with all the stakeholders to resolve their issues.

As a result:
– the central excise duty on aviation turbine fuel (ATF) has been reduced,
– 100 per cent FDI has been allowed under the automatic route to ensure modernisation of airports and establish high standards,
– foreign airlines are allowed to invest up to 49 per cent in Indian carriers under the automatic routes and liberalisation of domestic code-share points in India within the framework of the Air Service Agreement (ASA).

However, the Minister made it clear that the government has no role in raising funds for private airline companies as it is an internal matter of the airline and each airline has to prepare its business plan on the basis of its own market assessment and liabilities.

The Aviation Sector Elsewhere.

 
In Thailand, Thai AirAsia, Thai Smile Airways, Thai Airways International, Nok Air, Bangkok Airways, Thai VietJet Air and Thai Lion Air have submitted a request to the government to cut the excise tax on jet fuel to avoid downsizing or shutting down operations. They said they have been badly affected by the weak economy, the local currency’s strength, and intense competition. This has reduced tourist inflows.
 
Ancillary Services
The Excise Department has proposed the seven low-cost and full-service carriers to increase the frequency of flights to second-tier provinces to enhance tourism there in return for a reduction in the excise tax on jet fuel. The Excise Department will cut the excise tax provided the airlines offer proposals that benefit the public, including more frequent flights to second-tier provinces.
”The government support is surely required if airlines are expected to take part in stimulating tourism in particular provinces,” the airlines say. “Promoting travel in second-tier provinces is crucial for Thailand’s tourism.”


The United Arab Emirates’s (UAE) is home to two of the biggest global airlines, Emirates and Etihad. The share of the aviation and tourism sector in UAE economy is set to double to $128 billion; is likely to support 1.4 million jobs in the next 20 years, from 800,000 jobs now as per International Air Transport Association (IATA) observations.


Also Read: ATF Price Cut Is Steepest In Last Two Years





Virgin Atlantic Could Not Grow In India Due to Jet Airways Collapse

New Delhi: The closure of Jet Airways (India) Limited changed the India growth plans of Virgin Atlantic. The British airline, which had a code share partnership with Jet Airways, then started its own services between London and Mumbai, as per the airline’s country manager (India) David Hodges.

“We had a code-share partnership with Jet Airways, and we planned to grow that,” Hodges said adding, “Unfortunately, the grounding of Jet Airways changed our growth plans.”

Also Read : Explainer: Jet Airways crisis

One airline books its passengers on its partner carriers and provide seamless travel to destinations, where it has no presence by virtue of Code-sharing.

Virgin Atlantic will now start its own daily flights between London and Mumbai from 27 October to utilize the space vacated by Jet Airways, which operated three daily flights on this high demand sector. Jet Airways also flew a daily flight between Mumbai and Manchester.

“There was a lot of capacity (between Mumbai and London/Manchester). We were looking to increase our presence in the partnership with Jet Airways and probably fly one Virgin Airways flight between England and India (of the flights flown by Jet Airways),” Hodges said. “We need to be quick and nimble (after Jet’s grounding). So, we decided to start our own services between London and Mumbai.”Virgin Atlantic

Virgin Atlantic currently also has a daily flight between London and New Delhi.

Jet Airways suspended operations in April because of a severe cash crunch. A consortium of 26 banks led by the State Bank of India (SBI) has approached the National Company Law Tribunal (NMCLT) to recover dues worth more than 8,500 crore.

As things stand, Jet Airways has run a loss of more than 13,000 crore in the past few years. Its total liabilities amount to more than 15,000 crore even as lenders have been trying to sell the beleaguered airline as a going concern, but without much success.

Hodges said Virgin Atlantic was looking at forging new partnerships with Indian airlines, which could help the airline get traffic from smaller Indian cities and town. The airline, which already has an interline partnership with Vistara, is looking to forge more such partnerships or code share agreements with other Indian airlines.

“Now, the plan is how we grow in India. Having a code-share with Vistara is definitely an option for us,” Hodges said. “Interline with Vistara has given us great connections from Mumbai and New Delhi. It’s however not very simple. Lots of commercial considerations and decisions will have to be made for this alliance.”

An interline agreement is typically signed between two or more airlines to handle passengers when their itinerary involves travelling on multiple airlines. Such agreements allow passengers to change flights to one on another airline without having to check-in again.

Interlining agreements differ from code-share agreements as the latter usually refers to numbering a flight with the airline’s code even though the flight is operated by another airline.

Meanwhile, going ahead, Virgin Atlantic could look to operate between cities other than New Delhi and Mumbai, and London as the airline plans to tap the number of passengers traveling to England and Europe from other Indian metros.

“I have spoken to a number of Indian airports, and this is an interesting opportunity. There are also other high growth cities across South and North India,” Hodges said. “Bangalore is the next natural city we want to fly from in future, and one that we are currently not flying from.”

Virgin Atlantic will operating its Boeing 787-9 (Dreamliner) fleet between London and Mumbai. The airline currently operates Airbus 330 aircraft on its London-Delhi route. The airline hopes to also provide onward connections to destinations in Europe, South America, North America and South Africa from London for its passengers flying from India.

“Ultimately, we want to be able to compete with bigger airlines like British Airways in terms of network and network size,” Hodges added.




Thomas Cook Collapsed, Other European Airlines on Brink

Thomas CookA sad story of Thomas Cook: being reported only for the sake of reporting.

Its official now. By 23 September 2019, the 178-year-old company, Thomas Cook (TCG.L) along with a trio of subsidiary airlines has collapsed. Its stores across Northamptonshire have shut their doors. Thomas Cook branches in Weston Favell and Northampton’s Abington Street have also closed for good. Two travel stores in Kettering in Lower Street and at Asda, stores in Wellingborough’s Swansgate Centre and Corporation Street in Corby have also closed.

Hitherto known as a travel giant, its thousands of employees have been rendered jobless. This includes about 1,000 workers at their nearby Peterborough HQ.

Today, the grand old travel firm finds itself being put into compulsory liquidation. A weekend of frantic talks could not save Thomas Cook. Tens of thousands of its holidaymakers have been left in the lurch around the globe.

The closure of Thomas Cook and the subsequent cancellation of all its flights has forced the launch of an operation by the Government and the Civil Aviation Authority (CAA). It is one of the largest repatriation in recent British history. This has been codenamed Operation Matterhorn.

This repatriation is hugely complex and the CAA and the government are working around the clock to support the Thomas Cook customers. All such passengers currently overseas who are booked to return to the UK over the next two weeks will be brought home as close as possible to their booked return date by providing new flights to return to the UK.

A CAA spokesman clarified:

“The Government and the Civil Aviation Authority are now working together to do everything we can to support passengers due to fly back to the UK with Thomas Cook between September 23 and October 6. Depending on your location, this will be either on CAA-operated flights or by using existing flights with other airlines.

If you are already abroad you will find all the information you need about your arrangements to get home on this website. If you are due to depart from a UK airport with Thomas Cook Airlines, please do not travel to your UK airport as your flight will not be operating and you will not be able to travel.

These repatriation flights will only be operating for the next two weeks (until October 6). After this date you will have to make your own travel arrangements. From a small number of locations, passengers will have to book their own return flights.”

Also ReadJet Airways pushed further to the brink of collapse

Virgin Atlantic is one of the airlines taking part in the CAA scheme. A Virgin Atlantic spokesperson stated: “We’re sorry to learn that Thomas Cook has ceased trading earlier today and recognise the impact on its customers and staff in the UK and abroad. Virgin Atlantic is working closely with the CAA to repatriate Thomas Cook customers impacted in Cuba, Jamaica and the United States, to ensure they will be able to complete their journey as planned. We have allocated available space on our scheduled flights, and are also providing special flights to repatriate Thomas Cook passengers abroad.”

Similarly, a representative for the easyJet airline stated: “We are sorry to see the news about Thomas Cook and appreciate the anxiety that their customers will be facing now. easyJet is working with the CAA to provide a fully crewed A320 aircraft to support the repatriation efforts over the coming days.”

Besides, British Airways is also offering flights for Thomas Cook passengers returning to the UK from destinations like New York, Los Angeles, San Francisco, Las Vegas, and Cancun.

Aviation analysts observe that the strains that sank Thomas Cook weigh on other European airlines as well. Several such companies are struggling with similar problems.

Two small operators, Aigle Azur and XL Airways, are before the French bankruptcy courts today. The list of similar bankruptcies is long: Monarch, Air Berlin and Alitalia failed in 2017, Primera and Cobalt in 2018, and Germania, Flybmi and Iceland’s WOW so far in 2019.

Today in aviation sector, there is very little left for cheer. Larger European carriers are not immune from the threat of collapse. Regional operator Flybe’s sale to a Virgin Atlantic-led consortium just managed to avoid its closure. Third-ranked low-cost operator Norwegian Air (NWC.OL), which has bled cash while making inroads in the transatlantic market, somehow managed to get a reprieve from creditors last week, postponing repayment on $380 million in debt for up to two years.

Customers can find out how to book on to the repatriation flights through the CAA website: www.thomascook.caa.co.uk.