Finance Outlook India’s Post

Right before boarding, you find out that your seat has been reassigned. Even worse, your ticket was in business class, but now you’re reassigned to economy. So, why do airlines do this and what can you do to get your money back? Fortunately, you do have rights for involuntary downgrades, and you can even get compensated up to 70% of the ticket price for the inconvenience. In this new guide, we explore these issues and other important facts related to airline downgrades. #AirAdvisor #FlightCompensation #AirlineCompensation #Flightdelays https://lnkd.in/gtCxwAe9

Turbulence for SpiceJet: Unpaid Employee Dues Spark Financial Concerns ✈️ SpiceJet, the Indian budget airline, is facing fresh financial turmoil after revelations of unpaid employee provident fund (PF) dues. An RTI query revealed that SpiceJet hasn't deposited PF contributions for its 11,581 employees for nearly two and a half years, with the last deposit made in January 2022. This news comes as a blow to the airline, already grappling with ongoing financial struggles. The Employees' Provident Fund Organisation (EPFO) has reportedly issued notices and summons to SpiceJet regarding the unpaid dues, but the airline has yet to respond publicly. This situation raises concerns about the airline's financial health and its ability to meet employee obligations. Industry analysts point to this incident as another sign of SpiceJet's ongoing financial woes. The airline has faced delays in salary payments and is entangled in legal disputes with aircraft lessors. These issues, coupled with the unpaid PF dues, paint a picture of a company under significant financial strain. The impact of this situation remains to be seen. SpiceJet's employees are understandably concerned about their financial security and retirement benefits. Additionally, this incident could damage the airline's reputation and potentially lead to further difficulties in securing funding or leasing aircraft. SpiceJet needs to address this issue transparently and urgently. A swift resolution with the EPFO and a clear communication plan for employees are crucial to regaining trust and ensuring stability. #SpiceJet #FinancialCrisis #EmployeeDues #ProvidentFund #EPFO #IndianAirlines #FinancialHealth #Transparency #EmployeeRelations #AviationIndustry #FinancialStruggles

KILLER BLOW to REGIONAL AUSTRALIA. Regional Express Airline, has been placed into voluntary administration Without Rex, regional communities will be left behind, again. We all knew we were in for a bumpy landing. So, while our seatbelts were firmly fastened for the descent to an update about the future of Regional Express, the voluntary administration announcement was no less unsettling when it landed late on Tuesday night. The nervously-awaited, yet largely expected, news of Ernst & Young Australia being appointed administrators came via a statement on Rex's website and a video message on its Facebook page. Rex's domestic 737 services between major cities have been grounded, but its Saab 340 flights - which service regional areas including Wagga Wagga, Griffith and Leeton-Narrandera - are unaffected and continuing to operate. The long-term future of those services remains unclear. Rex's heart, as its tagline says, is in the country and those 36-seater Saab 340 aircraft are more than just aeroplanes. They are lifelines and potential life-savers for some. For some communities, like Leeton and Narrandera (which share an airport), it is the only commercial airline they've got. So, while much focus has been on the cancellation of major metro-to-metro domestic connections, we must not lose sight of just how significant this announcement is for those in country areas. Regional services are the reason Rex was born. Rex and its subsidiaries employ about 2000 staff, including many in Wagga. Some of those jobs will likely go. The Transport Workers Union has said 250 positions will be axed from the airline's regional arm. All options must be considered to keep Rex in the air. As NSW Premier Chris Minns put it on Wednesday, this administration is a big threat and the stakes are massive for regional NSW. The Premier rightly warned if Rex was to cease operations tomorrow and disappear, then major regional economies and currently-thriving communities, including Wagga, could suffer real damage. We can't let that happen. The federal government cannot - and must not - turn a blind eye. Serious questions need to be asked about how we landed here in the first place and whether this turbulence could have been avoided. In June 2020, Rex announced plans to aggressively expand its wings to already-dominated capital-city routes, and began flying them in March the following year. Resulting profitability struggles and significant losses have now clipped those wings, leaving the very communities Rex was set up to serve as collateral damage. Edited: Andrew Pearson.

REX Airlines entered voluntary administration earlier this week! With Bonza's recent collapse, I've had doubts about REX's viability for quite sometime now and have outlined my views in this post. 𝗔 𝗯𝗶𝘁 𝗼𝗳 𝗵𝗶𝘀𝘁𝗼𝗿𝘆 REX initially sought and received tens of millions of dollars (possibly even >$100 million in total) from the Australian Government and jurisdiction governments to maintain operations in regional areas during the peak of the COVID-19 pandemic in 2020. It concurrently sought and secured private capital to expand into the intercity market in Australia. This expansion involved adding jumbo jets to its fleet, a type of aircraft that REX had no experience in managing throughout its history. This situation is somewhat analogous to a taxi operator suddenly starting a private bus service because it acquired funds to buy/rent some buses. I suspect REX was only able to secure private capital for its expansion because its cash flow position and balance sheet improved at the time due to the level of support it was receiving from the Australian taxpayer. Over the next few years, it pitted jurisdictions against each other (which appears to have been a common tactic used by airlines) to get even more financial support from Australian taxpayers to bolster its expansion. 𝗠𝘆 𝘃𝗶𝗲𝘄 𝗼𝗳 𝘄𝗵𝗮𝘁 𝘄𝗲𝗻𝘁 𝘄𝗿𝗼𝗻𝗴 𝗳𝗼𝗿 𝗥𝗘𝗫 From a strategic perspective, REX didn't sufficiently invest in its marketing or customer experience. It failed to build sufficient customer loyalty by developing a functional loyalty program. On the discount traveller-side, its pricing often placed it in direct competition with Qantas and Virgin, which offered a better service. On the premium traveller-side, it essentially offered a limited service by maintaining 3 lounges in the major cities (Sydney, Melbourne and Adelaide) since its foray into the intercity routes in 2021. It's treatment of business class passengers at airports without a REX lounge was also poor. I once got a $15-$20 meal voucher to spend at 'selected outlets' at the Brisbane Airport while flying business class, which is a far cry from the well equipped lounges offered by Qantas and Virgin at the same airport. 𝗠𝘆 𝘃𝗶𝗲𝘄 𝗼𝗻 𝗥𝗘𝗫'𝘀 𝗼𝗻𝗴𝗼𝗶𝗻𝗴 𝘃𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 I think REX can survive if it is able to negotiate a deal with its largest single creditor, HK-based private equity firm PAG, or acquire support (possibly a concessional loan) from the Australian Government and/or any of the jurisdiction governments. However, it may need to curtail its intercity ambitions. The only intercity route that I think REX should try to hold onto is the lucrative Sydney-Melbourne route. There could also be some regulatory concerns with a proposed PAG buyout, given the Australian Government's general reluctance to Chinese-backed investment in critical infrastructure projects/firms in Australia. With so many moving parts, it will be interesting to see what eventuates!

PRIMAL SCREAM: After six hours of delays in Chicago, I discovered at 2 am this morning, after finally getting to my Washington DC destination, that United Airlines managed to leave my bag behind in the Windy City. United then didn’t bother to tell me and about forty other passengers about the mishap until almost an hour after we landed and figured out our bags weren’t coming out of dormant carousel #4. I can handle travel hassles, but I can’t get over the fact that U.S airlines got $54 BILLION in Covid bailout money in 2020 and somehow managed to get worse! The Transportation Department estimates 21% of US carrier flights were delayed in 2023 through October, compared to less than 19% in each of the five years before Covid. This week United reported $2.6 billion in earnings in 2023. CEO Scott Kirby said in United’s earnings release: "Our plans really came together in 2023, and I want to thank the United team for all of the hard work it took to get us there. Despite unpredictable headwinds, we delivered on our ambitious EPS target that few thought possible.” Here are some links underscoring my point: https://lnkd.in/ewj4a2pE https://lnkd.in/eye4sUSb https://lnkd.in/eAwXF5TJ).

While aircanada pilots negotiated a 42% increase in pay over 4 yrs appears comparable to what pilots in the United States have obtained, a salary gap remains. New Air Canada pilots now earn CA $87.48 (US $63) per hour, compared to US $91 at United, US $116.05 at American Airlines , US $125.52 at Delta Air Lines and a Southwest Airlines first officer earns the equivalent of approximately US $133 per hour. The first-year Air Canada pilot annual pay comes out to CA $78,732 (US $57,071),compared to US $70k to US $100k earned by new pilots at major airlines in the USA. The gap is similar on the higher end of the pay scale as well. A Boeing 787 pilot at Air Canada with 12 years or more earns CA $389.96 (US $283) per hour or approximately CA $350,964 (US $254,405) annually. American Airlines 787 pilots with the same amount of company seniority earn base salaries of US $447.24 per hour, or over US $400,000 per year. New Air Canada pilots are also subject to a 2 year (was 4 years) fixed pay scheme referred to as flat pay. Unlike their US counterparts, Air Canada pilots have a pension plan. New pilots participate in a defined contribution plan, with benefits depending on market growth. However, more senior pilots are grandfathered into a defined benefit pension, which offers a fixed annual payout after retirement. The new contract puts Air Canada 787 captains eclipsing the top pay for a WestJet 787 senior captain.

Ok, let’s get to the core of Ialpa v Aer Lingus dispute ie TRUST. Personally, I had 30yrs with Aer Lingus before retiring due work injury. The lead up to this strike started in the run up to the Aer Lingus IPO and subsequently with other crisies due both internal and external economic/ political and management changes. Various pay tribunals and agreements have been made and then breached by Aer Lingus. Key commitments on rest / holidays / pensions and insurance have all been eroded or denied upon application or interpretation. The current demands for flexibility / efficiency are a consistent thread from management over last 20years but without cognisance of the daily and historical good will and flexibility across all work practices. Current behaviours of Aer Lingus management are a coercive partner escalating demands / threatening retribution to underlings. I have experienced this personally on contract and legal grounds with Aer Lingus. They don’t care about the staff / pax or impact on Irish business and economy. They want short term profits / bonuses for board / shareholders &management. Unfortunately I had hoped for sense to prevail but the aggressiveness and intransigence that is evident by Aer Lingus management does not bode well for Ireland Inc. Hope I’m wrong.

Airline fees are out of control. Major airline carriers might actually deserve more investigation for carrier surcharges. Let's hope Congress will investigate this anti-consumer behavior and these increasing and not random surcharges.