Bloomberg Businessweek - USA (2020-11-16)

◼ BUSINESS Bloomberg Businessweek November 16, 2020

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DHIRAJ SINGH/BLOOMBERG. *IN REVENUE PASSENGER KILOMETERS (PAYING PASSENGERS MULTIPLIED BY KILOMETERS TRAVELED). DATA: BOEING

THEBOTTOMLINE Pfizer’scoronavirusvaccinehasshownmore

than90%efficacyin earlytests.Buttherewillbeshortagesofany

successfulshot,somasksaren’tgoingawayanytimesoon.

● Whileothersareretrenching,IndiGois

spendingbigtoexpandin a post-Covidworld

TheAirlineFlying

AbovetheStorm

Theairlineshaveseenmorethantheirshareof

casualtiesduringthepandemic,astravelstopped

andcarriers’financesnose-dived.That’sforced

manysurvivorstoconcentrateoncuttingcosts,

trimmingpayrolls,andwalkingawayfromair-

craftorders,butIndiGo,theairlineoperatedby

InterGlobeAviationLtd.,is doingsomethingfew

ofitspeerswouldriskrightnow:goingshopping.

Sincetakingtotheskiesin2006,no-frillsIndiGo

hasgrowntocontrolmorethanhalfofalllocaltraf-

ficinIndia,consistentlymakingmoneyinthepro-

cess.It’sbettingit canbouncebackstrongeronce

thevirusis tamedandorderingbillionsofdollarsof

equipmenttobedeliveredafterthecurrentcrisis.

TheairlineisintalkswithPratt&Whitney

andCFMInternational,a jointventureofGeneral

ElectricandFrance’sSafran,toprovideenginesto

powerabout 150 newAirbusA320neojets,accord-

ingtopeoplefamiliarwiththematter,whoasked

nottobeidentifiedbecausethenegotiationsare

private.BasedonthesizeofIndiGo’slastengine

order—a$20billiontransactionwithCFMcovering

280 planesthatwasthelargestengineorderever—

theagreementcouldbeworthabout$10.7billion,

includingservice,repair,andmaintenance.

Suchboldandbigwagershavebeenthehall-

markofIndiGosince2005,whenthelittle-known

upstartsurprisedtheaviationworldbyplacinga

$6billionorderfor 100 Airbusjets.Bookingsuch

a hugepurchaseensuredthatIndiGogotnotonly

bigdiscountsonthestickerpricebutalsofavor-

abletermsonserviceandmaintenanceforyears

tocome.WhiletheIndianmarketexplodedas

thenation’semergingmiddleclassbeganflying

forthefirsttime,IndiGokeptonenlargingsubse-

quentorders,includingdealsfor 180 planesin2011,

followedbyanadditional 250 in2015,andmost

recentlyfor 300 moreAirbusjetsinOctober2019.

Aftera nationwidelockdowntocurbthevirus’s

spreadhaltedallitsflightsfortwomonthsear-

lierthisyear,IndiGoreturnedtotheskieswith

a freshmarketingcampaign—“LeanCleanFlying

Machine”—toshowcaseefficiencyandsafetytopas-

sengerswaryofgettingbackonplanes.It worked,

andbySeptember,IndiGo’smarketsharezoomed

to57.5%,upfrom48.2%a yearearlier.

ChiefExecutiveOfficerRonojoyDuttasaysthe

worstis behindtheindustry.“Thegoodnewsis,

giventhelastfour,fivemonthsofexperience,all

thosereallybadscenariosareoffthetable,”he

toldanalystsinOctober.“Thingswon’tgetgreat

quickly,butthingsaredefinitelynotasbadaswe

mighthavefearedbackinMarch,soallthatgives

usroomforsomeoptimism.”

IndiGo’s successhasbeenthe exceptionin

India,whichhadbeentheworld’sfastest-growing

majorairtravelmarketbeforetrafficstartedto

slowlastyearandthenwasputonholdbecauseof

thevirus.State-runAirIndiaLtd.,keptalivewith

ataxpayer-funded bailout, has consistently lost

money since 2005, when a slew of budget carriers

entered the market. Kingfisher Airlines Ltd., once

the second-largest domestic carrier, went belly up

in 2012. Jet Airways India Ltd., which had drawn a

major investment from Abu Dhabi’s Etihad Airways

PJSC, hasn’t flown since April 2019. Singapore

Airlines Ltd. and Malaysia’s AirAsia Group Bhd have

set up local affiliates, but neither has ever made

money in India’s hotly competitive skies.

One reason for the financial turmoil: the

country’s notoriously low fares. Base fares can

people every year, I’d go for the protein-based

shots in the long run,” says Ding Sheng, director

of the Beijing-based Global Health Drug Discovery

Institute, which has received funding from the Bill

& Melinda Gates Foundation.

Even the U.S., which has lined up hundreds of

millions of doses through the Warp Speed pro-

gram, would need all six of its suppliers to be suc-

cessful for the country to reach herd immunity by

June, according to researcher Airfinity Ltd. Because

the rollout of any shots will not happen overnight,

masks, distancing, testing, and contact tracing will

still be vital, says Ohid Yaqub, a senior lecturer at

the University of Sussex’s Science Policy Research

Unit. And since the mRNA technology used in the

Pfizer/BioNTech vaccine has never been deployed

in humans before, people who get the vaccine will

need to be monitored. “It will be crucial to track

the safety and efficacy over the coming weeks and

months,” says Kinch, the Washington University

expert. “If nothing else, we have learned that we

need to look to the long term.” �James Paton and

Robert Langreth, with Riley Griffin and Naomi Kresge

Southeast

Asia

Middle

East

China

SouthSouth AsiaAsia

AfricaAfrica

▼ Top Five commercial

air traffic flows by

projected growth* from

2019 to 2039

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