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Last Updated : Oct 06, 2020 01:24 PM IST | Source: Moneycontrol.com

SpiceJet’s London Heathrow flight gamble — what you need to know

Why is SpiceJet launching flights to London from Delhi and Mumbai, which planes are it flying, will the bet work and other questions answered.

 
 
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On October 5, SpiceJet said it launched non-stop flights to London Heathrow from New Delhi and Mumbai from December 4, 2020. The move caught few by surprise. The low-cost airline has been applying for slots at multiple airports in the UK over the last few scheduling seasons. But little had moved beyond slot approvals until the announcement on Monday. Below are the vital details of what you need to know about SpiceJet’s long-haul flight ambitions.


What planes are SpiceJet using?


The A330 aircraft was SpiceJet’s preferred choice of equipment in all the filings for slots. The airline will deploy the A330neo, which features 371 seats in a two-class configuration, on the route. SpiceJet may be a low-cost carrier, but the aircraft is fitted with 18 business class seats. Note that even economy class seats have In-flight entertainment.


SpiceJet has been handling the marketing of certain charters lately with A330neos from Hi Fly, an airline that describes itself as a wet-lease specialist operating worldwide. (Wet lease is a leasing arrangement in aviation in which one airline (lessor) provides aircraft, crew, maintenance, and other services to another airline for a fee).


 What exactly is the flying arrangement between SpiceJet and Hi Fly?


While the airline drew some flak in the past for claiming to operate a flight when it clearly wasn't the operating carrier, the operations to London are different because the flights are being sold as SpiceJet coded flight.


 While Hi-Fly will be the operating carrier, SpiceJet will be the designated and marketing carrier. In all probabilities this will be, what is known as a damp lease whereby the cockpit crew belongs to the airline that operates the aircraft and the cabin crew is a mix of both carriers. SpiceJet has operated under such arrangements in the past with A320 and B737s.


 However, there will be some paperwork involved for the airline with the regulator since the A330neo will operate for an Indian carrier for the first time and will also be a new type for SpiceJet.


 Why did SpiceJet choose London-Heathrow airport?


London has six airports but the jewel in the crown is Heathrow because the airport, one of the busiest in the world, has traditionally seen over 99 percent capacity being allocated and multi-million dollar deals for leasing and selling of slots.


 But these are COVID-19 times and airlines have pulled back frequencies and cut city pairs. That also included flights to Heathrow, one of the most sought after airports in the world.


 For the very same reason, Vistara, which was denied a slot at London Heathrow in the summer schedule of 2020, started operations to Heathrow.


 SpiceJet has to thank the air bubble arrangements — flights that are a little more evolved than the repatriation flights but have not yet reached the 'normal' stage — along with capacity reductions have made slots at Heathrow possible.


 Can SpiceJet get multi-million dollars from the Heathrow slots?


No. Worldwide, most airports do not allow trading of slots. Heathrow is one of the few that do, but it comes with rules. You can sell or lease a slot only when you have grandfather rights on the slots —which is after two full seasons of operations. More often than not, such slot allocations like the one to SpiceJet are temporary in nature and not eligible for historic claims when the allocation is done the next time.


 Will London flights work for SpiceJet?


SpiceJet has timed its flight in the afternoon from Mumbai and Delhi, which will help passengers across the network to connect to London. The arrival is at a time where most destinations will get to their destination the same day.


 The flights will operate twice a week from Delhi and once from Mumbai, possibly to gauge the demand and keep crew costs on the lower side. The airline will compete with the likes of British Airways and Virgin Atlantic on the route in addition to Air India and Vistara.


 However, the current rules mandate that under the air bubble arrangement, airlines are not allowed to connect passenger onwards to other destinations —a game which is mastered by British Airways and Virgin Atlantic. In fact, Heathrow is designed in such a way that airlines are allocated terminal based on the global alliance they are part of to ensure better passenger transfer. But those were in good times.


 Currently, the airport is operating with limited terminals and gates due to the sharp drop in capacity.


 Tail note


For an airline which had less than Rs 50 crore in bank balance at the end of last year, this is a big gamble. A gamble which even IndiGo, India’s largest airline, has refused to take up, just yet.


 While IndiGo have time and again filed for slots at airports in the UK they were based on one-stop narrow-body operations and not on wide-body planes. IndiGo has also been candid about admitting that the trip cost on a wide body is too high a risk.


 With flights open for sale, SpiceJet will see its register ring with some cash. The UK in general and London in particular are known to be very attractive for the cargo operations and SpiceJet’s focus has been cargo in recent months.


While prima facie, the plan looks exciting, the word of caution is that both rules and COVID-19 situation is changing by the minute. A second wave, vaccine, quarantine and many more things remain uncertain.


 Will the air bubble arrangement continue and how long? If it doesn't, how will SpiceJet be a choice of carrier between the city pairs? Partially a wet or a damp lease is a secure way of coming out of that arrangement quickly but everything comes at a cost and the airline's balance sheet shows that it is not in a position to incur setbacks.

 Ameya Joshi runs the aviation analysis website Network Thoughts.

First Published on Oct 6, 2020 11:56 am
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