Fascinating International Airlines Updates - February 2022

Air India goes private with the completed sale to Tata Sons

Tata Sons, India's oldest and largest conglomerate, has regained ownership of Air India, the country's debt-laden national carrier. Tata pioneered commercial aviation in India when it launched the airline in 1932. It was taken over by the government in 1953. Tata Sons chairman N. Chandrasekaran met with prime minister Narendra Modi on Thursday ahead of a meeting with Air India officials. In October, Tata's 180 billion rupees ($2.4 billion) bid for the carrier prevailed over a smaller bid by India SpiceJet chief Ajay Singh. "We are delighted that this process is complete. Happy to have Air India back and we hope to create a world-class airline," Chandrasekaran told reporters. Tata will absorb 153 billion rupees ($2 billion) of the airline's more than 615 billion rupees ($8.2 billion) debt burden, a government statement said. It takes control over a fleet of 121 Air India aircraft and 25 planes of its subsidiary Air India Express, which operates low-cost flights to more than 30 destinations in India, the Middle East, and Southeast Asia, the Press Trust of India news agency said. As part of its economic reform agenda, the Modi government has pledged to sell more than a dozen loss-making government-run companies. An initial sale attempt by the government in 2018 failed to attract any bidders for Air India. The Tata group is a sprawling collection of nearly 100 companies that includes the country's largest automaker, the largest private steel company, and a leading outsourcing firm. The companies employ more than 350,000 people around the world. Tata bought Jaguar and Land Rover for $2.3 billion from Ford in June 2008. Tata also runs a budget airline, Air Asia India, in cooperation with Malaysian carrier Air Asia Berhad, and a full-service carrier, Vistara, with Singapore Airlines. Air India serves 101 destinations including 57 domestic routes and has flights to 33 countries on four continents.

American Airlines orders more Max jets, defers Dreamliner deliveries

American Airlines has exercised contract options to purchase an additional 23 Boeing 737 Max aircraft. The carrier also plans to exercise seven more Max contract options later this year. Of those 30 planes, 15 are scheduled for delivery in 2023 and 15 more are scheduled for 2024 delivery, the company said in a Feb. 2 regulatory filing. Meanwhile, Americans will defer deliveries of Boeing 787 Dreamliner aircraft that had been scheduled to start in January 2023 until the fourth quarter of 2023 and beyond. The Dreamliner deferrals come as Boeing struggles through a company-wide suspension on deliveries of the craft due to manufacturing defect issues. American curtailed its international schedule for this summer as a result of not yet receiving up to 13 Dreamliners it had expected before spring. The carrier's decision to buy 30 more Max aircraft reflects anticipated growth in short-haul leisure flying, even as long-haul flying remains diminished by pandemic-era travel restrictions. American currently has 42 Max planes in service. The 30 new purchase options leave it with 89 Max on order.

Frontier Airlines, Spirit Airlines' plan to merge

Spirit Airlines and Frontier Airlines, the two largest U.S. ultra-low-cost carriers, plan to merge into a unified airline. Under an agreement announced early Monday, Denver-based Frontier would control 51.5% of the combined carrier. The deal values Fort Lauderdale-based Spirit’s shares at $2.9 billion and has a transaction value, including debt and liabilities, of $6.6 billion. The companies expect the agreement, which must first receive anti-trust approval from the Justice Department and a final vote of approval from Spirit stockholders, to close during the second half of this year. The carriers said the combined airline would offer more than 1,000 daily flights to over 145 destinations in 19 countries. Based upon scheduled first quarter departures, the merger would make the carrier the fifth largest in the U.S., behind only American, Delta, United and Southwest. The combined company would have annual revenues of $5.3 billion based upon 2021 results. The merger, the airlines’ said, would deliver annual operating cost efficiencies of $500 million once complete. “This combination is all about growth, opportunities and creating value for everyone – from our guests to our team members to the flying public at large,” Spirit chairman Mac Gardner said in a prepared remark. “We’re a perfect fit – our businesses share similar values, including our longstanding commitment to affordable travel. At the same time, we have complementary footprints and fleets, including one of the youngest and greenest fleets worldwide. Bill Franke, who is Frontier’s board director and managing director of the airline’s largest shareholder, Indigo Partners, would become board chairman of the merged company. The board is to feature seven appointees named by Frontier and five appointees named by Spirit. The name of the combined company, as well as its branding and the location of its headquarters, are to be determined by a committee led by Franke prior to closing. The pending merger has been predicted by airline industry analysts for years, given the similar business models and mostly complementary networks of Spirit and its smaller competitors, Frontier. In addition, Indigo Partners, led by Franke, controlled Spirit until 2013. The deal comes less than a year after Frontier went public and at a time when ultralow-cost airlines are exploiting their reliance on leisure flyers, rather than the slower-to-recover business travel market, to increase U.S. market presence. Among the networks of the 10 primary mainline U.S. carriers, Spirit and Frontier are scheduled to operate 5.5% of the flights this quarter compared with the 3.9% they operated in the first quarter of 2019, Cirium flight schedule data shows. Both carriers operate Airbus fleets.

JetBlue is ready for when business travel rebounds

JetBlue Airways' corporate travel was about 50% recovered compared with 2019 levels prior to the Covid-19 omicron wave, JetBlue president and COO Joanna Geraghty said Thursday during the carrier's fourth-quarter earnings call. "We believe corporate travel will recover in a nonlinear path, similar to the shape of leisure demand," Geraghty said. "We were encouraged to see corporate bookings recover to roughly half of 2019 levels prior to the onset of the latest wave compared to approximately one-third at the start of the quarter." As other carriers have reported, JetBlue said omicron hampered recovery at the end of the fourth quarter and will continue to have a dampening effect through January and February. But based on surveys and conversations with corporate customers, JetBlue expects business travel to accelerate in the second quarter and beyond. The airline anticipates its Northeast Alliance with American Airlines will play a key role in that uptick. "Through the [Northeast Alliance], we intend to gain a larger share of business travel as we are able to offer an expansive network, robust schedule as well as a superior product and service," Geraghty continued, adding that corporate customers "are very encouraged by the network offering that we have and in terms of the ability to drive more competition into the region. Since the launch of the Northeast Alliance, which Geraghty said in its early stages has brought in about $100 million in codeshare revenue, JetBlue announced the largest expansion of its network in the past 15 years with nine new JetBlue cities and 32 new routes. "While business travel may have been pushed out further with this latest wave, we see a strong business recovery on the horizon for this region," she added. JetBlue sees the launch of its transatlantic service to London as "disruptive," and it plans to further "bolster relevance and competition" in the Northeast by expanding its London service from New York and adding Boston transatlantic service later this year, said CEO Robin Hayes. Most current business travel is by individuals visiting clients, "going to build new relationships, to close the deal," said JetBlue head of revenue and planning Dave Clark.

Korean Air launches digital documentation overhaul

Korean Air has launched a full-scale digitalisation of travel documents by introducing an e-Document system (e-DOC). As such, the flag carrier becomes the first airline in the world to implement such a system. Customers will be able to fill out 23 types of documents, including pet transportation declaration, unaccompanied minor, and health condition declaration forms, on their digital devices. In addition, information gathered upon reservation, such as email address, contact information and frequent flyer number, will automatically be reflected on the documents, further facilitating the document fill-out process. Data shared by customers will be safely managed in a secure server. Information stored in the server will be accessible in real-time through dedicated terminals at domestic and overseas branches. Rapid information processing will significantly reduce customer wait time, and the security of personal information will be strengthened as documents are automatically stored and deleted in a managed server. “The introduction of the e-DOC system is the result of Korean Air’s efforts to enhance customer-centred services as a leading global airline,” said Seungbum Lee, Korean Air's chief customer service officer. We plan to actively engage in ESG management and further improve customer convenience by providing innovative solutions.

Virgin Atlantic to launch new flights to Austin, Texas

Virgin Atlantic is to introduce a new route from Heathrow to Austin in Texas from May 2022 – the airline’s first new destination in the US for seven years. The new US route will operate four times per week from 25 May using Boeing 787-9 Dreamliner aircraft featuring economy, premium economy, and Upper-Class cabins. Austin is the fourth largest city in Texas and is home to a growing number of technology businesses, including big names such as Apple, Tesla, Facebook, IBM, and Oracle, which has helped it to earn the nickname “Silicon Hills”. Virgin’s joint venture partner Delta Air Lines offers connections to 10 US cities from Austin, while KLM is also launching a new service from Schiphol to Austin in March 2022, which will operate three times per week. Juha Jarvinen, Virgin Atlantic’s chief commercial officer, said: “We are incredibly excited to launch this new service to Austin, Texas. With an impressive food, arts, and music scene, we know it’s a destination our customers will love to explore. “There are so many synergies between Virgin Atlantic and the city of Austin. We love their philosophy and desire to celebrate local brands, businesses, and communities and we cannot wait to welcome customers, both existing and new onboard, flying them safely to explore this fabulously quirky city.” Virgin Atlantic’s new Austin service will operate on Monday, Wednesday, Friday, and Sunday. Flights will go on sale from Wednesday (12 January) with the airline offering Delight, Classic, and Light fares. Jacqueline Yaft, CEO of Austin-Bergstrom International airport, added: “We are thrilled to welcome Virgin Atlantic to Austin and Central Texas. “This exciting new partnership helps meet our goals of continued recovery from the impacts of the pandemic and furthers our commitment to being the gateway of central Texas for both leisure and business travellers alike.”