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Analysis: What to make of SpiceJet’s US and UK flight announcements

Time will tell if SpiceJet can sustain the operations with the current state of its finances.

July 24, 2020 / 01:09 PM IST

Indian low-cost carrier SpiceJet informed the stock exchanges that it has been designated as Indian scheduled airline between India and the US. This was followed the next day with similar designation between India and the United Kingdom. This set social media abuzz with SpiceJet’s plans for flights to the USA, especially in current times when scheduled international services have been suspended and only limited repatriation services have been functional.

There has already been a buzz about SpiceJet inducting a wide body aircraft coming in from a carrier in the Gulf to possibly operate to the UK. After a few months of efforts around repatriation of Indians — first with Air India and later with even the private carriers joining in— the Indian government has come up with a concept of Transport Bubbles or Air Bridges. These are temporary arrangements between two countries aimed at restarting commercial passenger services when regular international flights are suspended as a result of COVID-19.

These inbound flights will be allowed to carry Indian and foreign nationals who meet the criteria laid down by the ministry concerned from time to time. Outbound flights have been classified differently by region. Indian and US carriers are allowed to carry Indian nationals holding valid US visas, US citizens, legal permanent residents and foreign nationals holding valid US visas.

As for flights to France and Germany, Indian nationals who are permitted to travel abroad as per MHA guidelines and destined for the EU, along with seamen of foreign nationalities or Indian origin, stranded nationals or residents of the EU or foreign nationals destined for the EU and transiting through France or Germany are allowed.

What does getting designated mean?

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Countries sign Air Services Agreements (ASAs), popularly known as bilateral rights. This lays down the services which are allowed, points to which the services can be launched and capacity by seats. However, not every carrier can start services. Each country has its own rules. India, for example, requires an airline to have 20 aircraft in its fleet before it can be allowed to fly international.

So each country decides on which carrier is eligible to fly international and once an airline gets rights to fly international, the airline has to submit its wishlist or a plan on where it intends to fly. If the ASA is not utilised, then the government can “designate” the carrier. The last one to have been through this process in India was Vistara.

A designation means that the airline can formally start the process to comply with the rules of the country where it intends to fly and informally start talking for slots at the airport. Typically, this involves the commercial side as well, where the airline would tie up for sales and partnerships.

While India and the USA have open skies agreement, there is similar agreement in place for flights to the United Kingdom except to London Heathrow from/to Mumbai and Delhi. This essentially means that there can be unrestricted number of flights between India and the US and likewise to any point in the UK except London Heathrow or to London Heathrow if the origin is not Mumbai or Delhi.

Widebody really?

Spicejet has not been in the pink of health lately. The airline’s ambitious plan of re-fleeting with B737 MAX8 got grounded for no fault of the airline. While 13 remain grounded across the country, there has not been a final work on compensation, just yet.

However, the grounding of scheduled commercial aviation due to COVID-19, let the airline play a bigger role with its cargo operations which started over two years ago with dedicated freighters. The airline now operates more aircraft - with three Q400s being dedicated to carry cargo and few B737s operating as cargo only flights in addition to the freighters. But widebody is a different ploy! The airline has in the past filed for flights to the UK with A330s but it was a plan which never materialised.

Widebody drains far too much per flight as compared to a narrow body. The airline could well be looking for wet-lease operations or what is known as ACMI (Aircraft, Crew, Maintenance, Insurance). The airline is not new to this model and has worked with quite a few ACMI operators in the past.

What does it take to go to the United States or the UK?

Getting the tag of the designated carrier is just the first step of the many steps to indeed fly to the United States. The country has one of the toughest policies and processes in place to let a new airline fly.

Foreign air carriers or operators that want to conduct passenger or cargo operations to or from the United States, must obtain a permit issued by the Department of Transportation (DOT). US regulator Federal Aviation Administration (FAA) and International Field Offices (IFO) are responsible for issuance and amendment of foreign air carrier operation specifications.

The foreign carriers need to adhere to standards related to Personnel Licensing, Operation of Aircraft, Airworthiness of Aircraft and Safe Transport of Dangerous Goods by Air. Regulations outlining the acceptance, handling, transport of dangerous goods and required training are found in the Hazardous Material Regulations (49 CFR Parts 100-185) and the International Civil Aviation Organization (ICAO) Technical Instructions (TI) for the Safe Transportation of Dangerous Goods by Air. Compliance with the ICAO TI (including US State Variations) as well as 49 CFR 175 regulations is mandatory.

For the UK, the regulations are nearly as complex as those to the USA but have to be redone!

Tail Note

While typically wet-lease operations are costly, these are unprecedented times and there are airlines the world over that could be looking to have their aircraft wet-leased just for the cash flow and not profits.

SpiceJet would not have thought of getting designated without a reason. In the background, the airline must be looking for ways to launch an operation at the earliest and exploring ways to see if DOT can waive off requirements if the operator has been flying to the United States and SpiceJet will merely be the designated carrier while everything else remains on the licence of the operator.

While most bets would be towards break and not make, to think that any entity would have a plan in place without its own calculation is fool-hardy. Time will tell if SpiceJet can sustain the operations with the current state of its finances.
Ameya Joshi runs the aviation analysis website Network Thoughts.
Ameya Joshi
first published: Jul 24, 2020 01:09 pm

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