India Inc says 'jet set go' to fractional ownership

Air also has a decent chunk of corporates from the energy, oil and gas and textile sectors who have membership with them. The cost of such flying could be anything between Rs 60,000-Rs 3, 00,000 for an hour.

Claims of aviation companies that corporates prefer fractional ownership of aircraft can be corroborated with a recent report authored by Ketki Mahajan, research associate, aerospace and defense practice at Frost & Sullivan which states, India is one of the strongest markets for private jets with strong economic growth, expanding business interests and increasing number of billionaires.

The report further said that the private jets market in India constitutes 12% of the global market and is bigger than Asian markets in China and Japan. India has the maximum number of private jets in Asia, around 140 against China's 93 and Japan's 76; this is expected to double by 2020.

How Kingfisher can turn around its operations – An exclusive interview with Kapil Kaul, Centre of Asia Pacific Aviation

In an interview with CNBC-TV18, Kapil Kaul of CAPA presents his views on how Kingfisher could turn around its aviation business:-

Q: What is your view on the recent turn of events where the Kingfisher management has assured the employees to pay the employees three months salary and finally employees seemed to have boxed those assurances for now?

A: I don't think that the employees have any option. Getting three months salary from no salary three weeks backs; is a good beginning. If the employees don't come into the game then there will be no future at all. I believe that the employees were insisting for four months salaries, but if the management has agreed to give three months salaries then they will be in a position to present a credible plan to the DGCA at least to start with five aircrafts.

Q: KFA is sitting on mountain of debt; lenders are waiting for the company to clear their dues, only seven aircrafts are airworthy. What kind of credible plan do you present in this context?

A: Credible plan means to have five aircraft operational which is required to keep his licence intact. Credible plan for a turnaround is all together a different ball game. The company requires a minimum USD 600 million immediately to start a revival plan and the balance USD 400 million needs to come in the near term.

Q: Do you believe that DGCA will agree to sign up to lift the suspension given the fact that they are only going to do enough to keep that licence condition afloat. Do you believe given the fact they have already seen their licence being suspended the DGCA is going to go easy?

A: If the airline has five airworthy aircrafts, sufficient cash to maintain those aircraft, have employees on board then the suspension can be revoked. Earlier, the question was that the employees were not coming on board, so the operations were suspended. Turnaround of Kingfisher is a different ball game altogether because unless and until the promoted capitalizes to the tune of USD 400 million there isn't any game.

Civil Aviation minister to propose ATF under declared good category

In an exclusive interview with IANS, Civil Aviation Minister, Ajit Singh said:  “High price of aviation turbine fuel is the biggest issue. We need to rationalise it. I have already written to the petroleum minister and I will also meet him in a couple of weeks," said Singh, referring to a proposal to notify this fuel as a declared good.

Once a product is listed as a declared good, a uniform sales tax is payable on it. In the case of aviation, airlines will have to pay a four percent sales tax across all states, as opposed to a wide fluctuation of 3?34 percent. Oil regulator will also be in a position to keep a check on prices.

At present, aviation fuel in India is nearly 50-60 percent dearer than in countries such as Thailand, Singapore or the UAE, due to the additional 3-34 percent sales tax imposed by states. This pushes the cost of operations by close to 30 percent.

Commercial aviation in stake, regional connectivity on a boom

Despite the current turbulence in India's commercial aviation space, the government sees robust growth ahead if airlines reduce tariff, induct small aircraft and connect cities beyond metros for which a policy will be announced soon.

In an exclusive interview with IANS, Civil Aviation Minister- Ajit Singh showed interest in expanding connectivity to regional cities:-

·        We need more connectivity to smaller cities. There is also the need to build low cost airports at these places. This will surely encourage a growth in passenger traffic.

·        Tier II and Tier III cities are the ones that are showing rapid economic growth. These are the places where the aviation service must improve.

·        According to the minister, even though India's overall economic growth slumped to around seven percent in the past few years, the domestic commercial aviation business continued to log a robust growth of over 15 percent, notwithstanding a dip in the past eight months.

·        As a result of this growth, India's metros are now well connected. The need now is to promote this kind of growth in smaller cities, and that will be our main focus.

·        For this, we will soon announce a major policy for regional airlines. We have already hired a consultant for this.

·        Airlines must induct small aircraft that can land on short runways, as only 90 runways in the country can handle jet operations. In fact, many out of those 90 runways are non-operational. This leaves a gap-how to connect places which have shorter runways. Airlines are in touch with the manufacturers of small aircraft that can land there.

Spain (Europe) to set up its base in the upcoming aerospace park at Bangalore

The European nation is keen on a presence in Bangalore as it views the city as a research and development hub in aerospace technology in India

One of the biggies in the aerospace industry, Spain, is looking at setting up a base in the IT city. It is eyeing the upcoming aerospace park next to Bengaluru International Airport (BIA) at Devanahalli.

The state-of-the-art 985-acre facility is being developed by the state industries and commerce department. It also has a 252-acre Special Economic Zone in its premises.

The aerospace park has already got investors and project proposals from HAL, Jupiter Aviation, Dynamic Technologies, Centum Electronics, AMADA, BEML, Wipro, Tyco and Aero Electronics Private Limited.

 Surbhi Sharma, honorary consul of Spain, told Bangalore Mirror, “With Bangalore being the centre of R&D in aerospace, Spanish companies’ priority would be to set up a base here. Spain is in the forefront in aerospace industry and its first choice of investment in aerospace sector would be Bangalore.’’

 Bangalore Aerospace Park is targeting investments up to $5 billion dollars spread over the next nine years. The Karnataka government is banking big-time on this mega-project as the aerospace industry is the highest employment multiplier. “Spain is an important part of Airbus manufacturing process and also a strong EADS player”.

Air India cancels 18 more flights to Mideast even as minister assures normalcy

Barely a day after Civil Aviation Minister Ajith Singh promised to restore the cancelled Air India and Air India Express flights from Kerala, Air India announced cancellation of 18 flights to Middle East from Trivandrum International Airport.

The airline has cancelled nine flights from Trivandrum to Dubai, six to Sharjah and three to Muscat till October 12, according to Air India Trivandrum station manager SSG Jacob.

He said that the passengers who booked tickets in these flights were being informed through phone.

The official said that the airline had also made alternate arrangements to carry the passengers to their respective destinations.

Majority of the passengers will be accommodated in the flights on the next day.

Jacob said the cancelled flights will be restored after the completion of the first phase of Haj operations.  The airline is preparing a new schedule in this regard.

It will be operating flights from October 12 according to the new schedule.The cancellations are due to diversion of flights for Haj operations. Jacob said two flights operated from Trivandrum to Gulf destinations were diverted to Lucknow for carrying the Haj pilgrims. Ajith Singh had promised to restore the cancelled flights and not to cancel any further flights in the Kerala-Gulf sector following huge protests from various quarters over the abrupt cancellation of the Trivandrum-Sharjah flight on Saturday.

He had given an assurance in this regard to member of parliament from Trivandrum Shashi Tharoor, who had pointed out that the frequent cancellation of flights were causing hardships to hundreds of passengers.

Thousands of passengers were left in the lurch as the airline cancelled as many as 168 flights from the three airports in the state to various countries in the Gulf in the last one month.

India Lifts Block On Foreign Airline Investment

The Indian government has finally given in to demands to ease restrictions on foreign direct investment (FDI) in the country’s struggling airlines. The unexpected September 14 announcement clears the way for foreign carriers to take up to a 49-percent stake in Indian operators, with the exception of government-owned Air India. However, industry and financial analysts indicated to AIN that they view the policy U-turn cautiously, warning that it won’t necessarily mean salvation for cash-strapped carriers.

“We expect FDI would be long drawn process and valuation would be concern for most of Indian promoters [airliner owners] due to poor profitability history and regulatory nature of business,” commented Antique Stock Broking analyst Vikram Suryavanshi. Foreign airlines may not invest automatically and will need to get clearance from the civil aviation ministry and Foreign Investment Promotion Board. Also, according to India’s 1937 aviation rules, three quarters of airline board members and the chairman will have to be Indian citizens.

According to Jasdeep Walia, analyst at Kotak Institutional Equities, “Chennai-based SpiceJet appears the most likely candidate to attract foreign investment. In our view, SpiceJet would be the biggest beneficiary.” Jet Airways won’t gain as it is already in violation of FDI norms, as the promoter [with an 80-percent stake] is classified as an overseas corporate body [and hence comes under FDI]. In our view, Kingfisher [because of large liabilities] and Indigo [because foreign ownership reportedly has reached 48 percent] also won’t gain. Also privately owned GoAir might stand as a good FDI target.

India-born Tony Fernandes, founder of Asia’s largest budget carrier, AirAsia, has made clear his desire to invest in India. In response to the FDI announcement, he commented via Twitter: “Fantastic news that India has opened up investment to foreign airlines. With Malaysia opening up, this is fantastic news for airlines like AirAsia.”

“While drivers for growth are already present in India, the financials of airlines are in a mess and there will be a lot of work to do, including adoption of best practices,” concluded Rattan Srivastava, a director with consultancy Frost & Sullivan.

Can the Dreamliner become AI's magic weapon?

On 12th September, Boeing's much-delayed 787 Dreamliner touched down at Delhi airport amid a water cannon salute to join Air India's ailing fleet.

An elated Civil Aviation Minister Ajit Singh, who has been upbeat that the 27 Dreamliners, all of which are expected to be delivered by 2014, would be game changers, said, "We hope that the Dreamliner will take Air India back to its good old Maharaja days."

For Boeing, Air India (AI) is just one among the 57 customers which have ordered the hi-tech aircraft. For AI, however, it represents its one shot at flying clear of the financial mess that it has found itself mired in over the years.

FDI in Aviation: Structural challenges to limit investments

India Ratings says that the government of India’s recent decision to allow the foreign direct investment (FDI) limit in aviation up to 49% is expected to improve the capital structure of airlines with viable business models. The possible equity infusion would not only deleverage the sector but also provide funds for long-term growth. However, structural challenges may limit the attractiveness for such foreign investors at least in the medium term. 

In addition to equity infusion, stronger strategic and operational ties with foreign partners with stronger credit profile, may potentially improve the credit profile of domestic airlines. This may have a beneficial impact on the funding cost of this sector known for its high capital intensity.

While the long-term growth potential of the Indian market may draw interest from International Airlines, the continuing structural weakness and regulatory risks may increase the perceived risk in such tie-ups. Other key considerations of prospective JV partners would be the lack of majority equity control in addition to specific board constitution.

The key structural weakness of the Indian airlines industry is its higher operating costs, driven primarily by a higher tax on aviation fuel, compared with that of the other emerging markets. The cost of infrastructure development is also higher for the Indian industry which usually translates into higher airport usage charges. This is in addition to the currently limited airport infrastructure which acts as a bottleneck to significantly improve scheduling efficiency - which is a direct drag on operating cost.

FDI in aviation: Etihad to invest in Jet Airways?

With the government having allowed foreign carriers to buy up to 49 percent stake in domestic airlines, India’s leading private airline, Jet Airways could be the first to receive investment from Etihad Airways.

According to reports, both the airlines have held several rounds of discussions, fuelling speculation of a possible alliance.

Last week, the Cabinet Committee on Economic Affairs approved the FDI in aviation proposal, a permit that would allow foreign airlines to buy up to 49 percent in domestic carriers and a move which would pave way for much-needed equity infusion into India's airlines passing through acute turbulence as most of them are in dire need of funds for operations.

North Eastern Council to improve air connectivity in northeast

Since the 10th Plan period, the North Eastern Council (NEC) has taken an initiative to improve air connectivity in the northeastern region.

To understand the issues and problems of improvement of air connectivity in the region, NEC has initiated a study at an estimated cost of Rs 1.87 crore through the Airports Authority of India (AAI) under the guidance of the ministry of civil aviation and the report is expected in the next six months.

The report will address the issue of linking of the remote areas through helicopters and also major townships by small aircrafts.

Can Jet, already 80% owned from Isle of Man, seek FDI?

Is Jet Airways really qualified to invite equity participation from Etihad, or any other foreign carrier, for that matter, given its current shareholding structure?

The BS story clarifies that though Goyal himself is a non-resident Indian (NRI), Jet is an Indian company and is, therefore, entitled to seek a strategic foreign partner. It is widely known that Goyal holds an overwhelming 80 percent equity in the airline through a company called Tail Winds, which is registered in the Isle of Man.

So, in effect, Jet is already 80 percent owned through a vehicle abroad. Till the new norms removing the cap on foreign companies buying into Indian carriers get notified, Jet continues to operate in violation of the current FDI guidelines which cap investment by foreign institutions (excluding airlines) at 49 percent.

Air Asia may launch new Indian carrier

Malaysia-based Air Asia is considering a joint venture with an Indian partner.

Malaysian low cost carrier Air Asia is considering setting up a new carrier in India, rather than investing in an existing Indian airline, according to Asian news sources.

AirAsia may be first to enter India

Asia's largest low-cost carrier (LCC) AirAsia may be among the first global players to invest in India with the government allowing foreign airlines to invest in Indian carriers. It is learnt that instead of investing in an existing carrier, the Malaysian LCC is looking at the possibility of a start-up with a strong Indian partner.

AirAsia currently flies between Kuala Lumpur and five Indian cities — Kochi, Trichy, Chennai, Kolkata and Bangalore. Additionally it also connects Bangkok with Chennai and Kolkata. The LCC had pulled out of Delhi and Mumbai in March due to high airport charges. The Malaysian LCC already has subsidiaries in Thailand, Indonesia, Philippines and Japan. One of its other subsidiaries, AirAsia X, is possibly the only long-haul LCC in the world.

India-registered carriers at present can fly abroad only after completing five years of service and if they have a fleet of over 20 aircraft. So under current rules, a startup launched by a foreign airline will use its domestic flights to act as feeder for flights to their main hub and then offer connectivity to the rest of the world. But the aviation ministry is reviewing the 20-aircraft, five-year rule as no country applies such stringent conditions on its airlines. If that change happens, a new India-registered carrier could also be allowed to fly abroad much faster.

Apart from AirAsia, other global LCCs like Tiger (Singapore), EasyJet (US) and RyanAir (UK) are also learnt to be looking at India. Sources said that foreign airlines eying startups would look for strong local players which, at present, are not in aviation space in India. Among existing carriers, SpiceJet—which has admitted to being in talks with a Gulf carrier—and GoAir could be the first to get funding and technical expertise from foreign airlines.

Whether Kingfisher BSE 3.70 %, with debt over Rs 8,500 crore, gets an investor remains to be seen.

While India's traffic potential is mouth-watering for airlines of our neighboring areas—many of who depend solely on India to fill their wide body aircraft—they say some issues need to be sorted out to attract investment. These are rationalizing aviation turbine fuel price by tackling the twin issues of high sales tax on it and the high price set by oil PSUs.

A combination of these two factors has made ATF in India for domestic flights among the most expensive globally. The other issue is high airport charges in Delhi, which was recently allowed by the government to hike its charges by 346% in one go.

Air India pilots protest over new flight duty timings

Trouble seems to be brewing again in Air India, this time with pilots of erstwhile Indian Airlines unionised under the Indian Commercial Pilots Association (ICPA) issuing a legal notice to the airline CMD Rohit Nandan to protest against recent changes in their flight duty hours through a new flight duty time limitations (FDTLs).

The legal notice argues that the flight duty time limitations of ICPA pilots are fixed under a bilateral agreement between the union and the management and that "all these settlements are within the knowledge of the company and the government (DGCA), and therefore, no unilateral alteration is permissible"

Civil Aviation Minister Ajit Singh earlier this month had asked Air India to implement FDTL of 125 hours per month for pilots (as mandated by sector regulator DGCA), instead of 90 hours a month as per their union agreement, to increase flying-time and in turn utilisation of fleet and manpower. A recent study by the ministry had found that Air India pilots were flying just 6.5 hours a day against the laid down norm of nine hours.

Gulf airlines show lukewarm response to India’s FDI policy

None of the Indian airlines are investment ready at this stage, says analyst

Five days after India opened up its aviation sector for 49 per cent FDI (foreign direct investment), Emirates says it is not looking at acquiring a stake in any of the Indian carriers, while Etihad Airways says it will make such investments only if it’s convinced of strong commercial prospects.

A lot of it has to do with the fact that the Indian aviation sector on the whole has been ailing for a while with the country’s flagship carrier, Air India, waiting to be thrown a lifeline, and carriers such as Kingfisher Airlines barely managing to survive.

Emirates has no plans to acquire a stake in another airline in India or anywhere else. We are busy focusing on the many aspects of our own growth including the launch of flights to five new destinations in as many months.

However, Emirates President, Tim Clark, had said in June that for Emirates it would make sense to invest in an Indian carrier if only Emirates would get a complete management control along with the 49 per cent stake. “I should think all of them [the Indian carriers] will be very happy if Gulf money came in to the tune of 49 per cent. But Emirates is not keen on it — not at the moment. If I was to say, I will come in but these are the rules of the game — 49 per cent and we have complete management control, we decide where, what and when. Have you seen that working in India? You have to have the management control to make it work.

The fact is that none of the Indian airlines are investment ready at this stage. Secondly, as huge as the Indian market is, the rights that the Gulf carriers have may allow them to access most of the big markets directly, making the need for an investment more remote.

Etihad Airways, meanwhile, said while it welcomes the Indian government’s decision to allow foreign investment in Indian carriers, such investments will be made where Etihad Airways believes the “commercial prospects are strong, where there are like-minded business philosophies, and where such commitment will be welcomed”.

Small airlines to get a boost from more FDI in aviation

Regional connectivity is likely to get a boost after the government's nod to foreign airlines to invest in non-scheduled airlines, or carriers that operate without a fixed schedule.

Experts said the decision could open up opportunities for about a dozen small regional players that have sprung up in the domestic aviation sector, even as the bigger airlines have been ailing. Such airlines can harness the seasonality of air traffic to their advantage and do without deploying a dedicated aircraft, they said.

"It will give an airline the flexibility to come in as an operator where it can press aircraft into service when the seasonal traffic for a Dubai shopping festival or any such event is there for the taking," said Amber Dubey, a partner at KPMG.

Who will benefit the most from FDI

The change in FDI policy is unlikely to solve problems of debt-laden Indian carriers and banks because more reforms are needed to rationalise taxes on ATF to make the sector operationally viable. But given the current situation, SpiceJet, or Wadia Group-promoted GoAir from the unlisted space, could be the biggest beneficiary of the new development

SpiceJet can provide an attractive entry point for a foreign airline given its over 18% share of the domestic market as relatively unimpaired balance sheet. After a spell of five consecutive quarterly losses, the carrier posted a net profit Rs 56.15 crore in the first quarter due to significant growth in operational and financial parameters.

Naresh Goyal, a promoter of second largest Indian carrier Jet Airways (a complex network of companies and financial arrangements) -and Rahul Bhatia's InterGlobe Enterprises-owner of IndiGo which already have the US-based Caelum Investments as its 48% shareholders have never been keen on allowing foreign airlines to invest in Indian carriers.

Jet Airways will not gain as it is already in violation of the FDI norms as the promoter (with 80% stake) is classified as an overseas corporate body. Kingfisher because of large liabilities and IndiGo with 48% foreign ownership as per media articles will not gain anything from it.

Views on FDI reform: How could FDI benefit the aviation industry?

The government’s move to allow foreign carriers to invest in cash-strapped domestic airlines is unlikely to usher in benefits unless issues of high-taxes and infrastructure cost are addressed, says global airlines body IATA. The decision, however, is positive and opens up wider opportunities for overseas players.

Allowing foreign direct investment by global airlines by itself is not a panacea. The critical problems of a high cost environment, insufficient infrastructure and crippling taxes must also be addressed within a co-ordinated government-wide policy framework.

Centre for Asia Pacific Aviation said the government should rationalize the very high cost structure for airlines for FDI to become a real success. Aviation turbine fuel price tops the list of areas that need focus.

Some foreign carriers were planning to launch startups here with local partners if FDI is cleared. IndiGo and Jet Airways, that already have substantial foreign ownership, may not benefit immediately from FDI.

SpiceJet in talks with a Gulf airline for investment

SpiceJet has held "preliminary discussions" with a Gulf airline for potential investment in the Indian budget carrier, a news report has said.

"There have been preliminary discussions to check in principle whether there is interest on both sides and the confirmation there would be 'yes there is'," SpiceJet CEO Neil Mills told Arabian Business.

Any such tie-up depends on a policy shift in India's aviation industry, which currently prohibits foreign direct investment (FDI) in the sector.

Mills said as the framework for FDI in Indian aviation is not yet in place, overseas carriers were reluctant to enter more formal negotiations.

"(Talks have) been on a preliminary basis, because they've quite rightly said what's the point in investing money in due diligence if the rule to enable (an investment) doesn't even exist," Mills was quoted as saying.

Mills, however, declined to reveal whether UAE-based Etihad Airways, which owns minority stakes in airberlin and Virgin Australia, and Qatar Airways were among the interested parties.

SpiceJet has a network of 41 destinations across South Asia and the Middle East.

Any future tie-up, Mills said, would provide reciprocal benefits.

"We've got a good network and we're carrying 36,000 people a day (and) about one million people a month now, so we've got good feed and good catchment," he said.

A partnership with an international carrier would give SpiceJet access to economies of scale on procurement contracts and long-haul options for its passengers, he added.

On the possibility of any change in India's aviation policy, Mills said a part of the issue is that the majority of carriers have realised "they cannot use (FDI) anyway".

"Either their debt burden is so large that nobody would want to take a stake in them because you inherit a stake of the debt, and other carriers are already owned up to 49 per cent on an offshore basis anyway," he said.

SpiceJet will begin a daily service to Riyadh from its hub in Delhi by October, he said, adding that the airline is currently not assessing any other Gulf routes.

Don’t look for the gainers

The announcement on aviation gives the go-ahead for foreign airlines to own up to 49 per cent stake in domestic passenger airlines. Expectation of this has sparked off a rally in all listed airline stocks from the distressed Kingfisher Airlines to Jet Airways and Spicejet. But that seems irrational.

If you were a foreign airline company looking to buy into the India story on air travel, where you would choose to deploy your capital today? Would you sink money in order to revive Kingfisher, with its depleted operations, huge debt burden and high cash burn?

Or would you rather bet on the other listed airlines which stand to gain from the forced consolidation in the sector, by way of less capacity, higher airfares and better load factors? That points to Spicejet or Jet Airways as the only likely choices for these foreign investors. Similarly, hopes that global retailers will rush to sew up deals with Pantaloon, Shopper’s Stop or other cash-strapped players owing to liberalised FDI seem misplaced. Reading through the announcement shows that these new foreign players will have to jump through many hoops to get their India investments off the ground.

Civil aviation ministry seeks transparency in ATF pricing

The civil aviation ministry has written to the petroleum and natural gas ministry for transparency in pricing of aviation turbine fuel (ATF) to bring down prices of air tickets and improve connectivity.

"We have written to petroleum ministry for regulating the prices of ATF manufactured by oil PSUs through Petroleum and Natural Gas Regulatory Board, which at present are not transparent at all," Civil Aviation Secretary K N Srivastava told reporters here on Saturday.

The ministry has also urged for open access to oil infrastructure at airports for private and foreign players to store imported ATF which is less expensive than the domestic jet fuel.

Lufthansa not to buy stakes in domestic airlines

Bangalore: German airline Lufthansa has said that it would not pick up equity in any airlines in India even though the Government has opened up the sector for FDI.

Lufthansa’s head of corporate communications for Asia Pacific, Frank Puttmann said, while India continues to be the top market for the airline, there are no plans to pick up equity. “At this moment, our strategy is to build up a strong presence in India. India is the top market for us worldwide. It is a strong message for the market,” he said.

Puttmann said airport companies in India should work along with the airlines because they are partners in their business. Hence, the decision to impose heavy airport charges would be counterproductive.

FDI in Civil Aviation Sector a win win situation

Reacting to government’s decision to allow foreign airlines to pick up stake in domestic carriers, Mr. R V Kanoria, President, FICCI said “this long overdue measure has happened at a time when the domestic aviation industry is going through rough weather and is starved of funds and technology for fleet modernization and improvement of operational efficiency.”

“Allowing foreign players in the airline sector is expected to lead to a win win situation. It will not just help the beleaguered airlines but will be good for the Indian consumer as well. The possibility of new joint ventures entering the market with the help of foreign strategic partners will result in greater competition and more choices for the consumer. Improved customer service standards and reduced tariffs will follow as has been the experience in sectors such as telecom and manufacturing”, he added.

Jet fuel price hiked by 2%

Days after diesel rates were hiked by a steep Rs 5.63 per litre, Jet Fuel price was on Saturday raised by about 2 percent to Rs 73,711 per kilolitre.

Today's increase in aviation turbine fuel (ATF), or jet fuel, price comes on the back of the biggest ever hike in rates effected from 1st of this month.

ATF at T3 terminal in Delhi has been hiked by Rs 1,429 per kilolitre (kl), or 1.97 percent, to Rs 73,711 per kl with effect from midnight tonight, according to Indian Oil Corp (IOC), the nation's largest fuel retailer.

Long awaited FDI in aviation finally got a green signal

The cabinet finally decided to allow upto 49 percent overseas investments in aviation sector, giving wings to cash-strapped Indian carriers.

These measures were pending for a long time and the government has now shown political courage to push things through. The process of clearing all these got delayed and it is just that all are coming together.

"As an immediate impact, business and consumer sentiment will improve, stock market will improve. But I don't think RBI will cut rates after these measures because the impact of these steps on supply side will only be in the medium term.

Views from Sharan Lillaney, Aviation Analyst, Angel Broking, Mumbai

"FDI in aviation has always been approved, this is just an approval for foreign airlines. This was not something out of the extraordinary, so there is no question of it being reversed."

"I don't think there will be a flurry of investments, but airlines in better shape will definitely see interest from foreign airlines, such as SpiceJet, Indigo or Jet."

"There are a lot of people interested."

 

Aviation minister keen to extend industry's mass reach

For a long time, Indian aviation was regarded as a rich man's mode of travel. A host of low-cost airlines changed that perception in the last decade. But more recently, with most airlines in deep financial trouble and airfares rising sharply, it is once again turning into a rich man's preserve. But the civil aviation ministry looks determined to stop this reversal.

"It is a vital sector for economic growth, and not just some rich man's play," union civil aviation minister Ajit Singh said on Tuesday.

Addressing the media post the meeting of the consultative committee for the civil aviation ministry in Bangalore, Singh said, "Despite the current financial troubles, one thing is clear, this sector is bound to grow as our middle class keeps growing."

But he cautioned about the pace of growth: "Our country's middle class cannot compete with the middle class of Britain, USA, or for that matter Australia."

The ministry is planning a slew of initiatives to help revive the industry. It is looking at a comprehensive civil aviation policy that will also focus on regulatory standards.

"The DGCA (Directorate General of Civil Aviation) needs to be revamped and strengthened. We are planning to replace the DGCA with a Civil Aviation Authority by bringing in a new bill in the winter session of Parliament," Singh said.

He said when the DGCA and AAI ( Airports Authority of India) were set up, the civil aviation environment was very different. "The technology has changed, the requirements of civil aviation has gone up in terms of number of customers and the kind of planes. There are issues such as navigation problems, congestion, because in India over 60% of the airspace is controlled by the defence services."

The ministry also plans to restructure the Bureau of Civil Aviation Security (BCAS) and to constitute a dedicated security force.

The minister said the main issue hurting the balance sheet of airlines is that ATF (aircraft turbine fuel) costs account for over 45% of an airline's operating cost. "ATF cost in India is about 60% to 70% more than that in our neighbouring countries as well as the US, partly because it's not a notified product." He added the imposition of taxes ranging from 4% to 30% by state governments on ATF is an added burden.

"We are trying to make it a notified product and are in dialogue with the oil ministry," said the minister.

The minister said there was a need to develop India as an international hub of passenger traffic and that his ministry had initiated action in this regard, including revisiting the policy regarding bilateral air service agreements with different countries.

On allowing international carriers to invest in Indian airlines, the minister said, "FDI in aviation will happen as soon as we have talked to all of our allies." At present FDI in aviation is allowed up to 49%, but restricts international airlines from participating.

Aerospace

Addressing a meeting of a group of manufacturers of aerospace products, the minister said that the aerospace industry in the country is still in its infancy. But he expressed the hope that the Indian aerospace industry would compete in the global market and would be capable of attaining international standards.

"We are hopefully that in the next decade or so the aerospace industry will be the driver of economic growth in India," said the minister and added, "Bangalore is way ahead of the rest of the country as far as this industry goes."

The minister assured the manufacturers that the specific recommendations of the Aerospace Promotion Council would be taken up with the concerned ministries and departments for speedy action and redressal of grievances.

http://timesofindia.indiatimes.com/city/mumbai/Aviation-minister-keen-to-extend-industrys-mass-reach/articleshow/15021613.cms

Civil Aviation Authority to replace regulator DGCA: Ajit Singh

Aviation regulator Directorate General of Civil Aviation (DGCA) would soon be replaced with a Civil Aviation Authority (CAA) to regulate the troubled sector, which has been facing mounting financial and operational issues, Civil Aviation Minister Ajit Singh said Tuesday.

"As the DGCA has not been able to effectively regulate the growing needs of the industry, including state-run and private airlines, we propose to replace it with the CAA by amending the relevant act through a bill in the winter session of Parliament," Ajit Singh told reporters here.

To strictly reinforce safety and security of millions of passengers, state-run and private airlines, their aircraft and operations, the minister said that time had come to redefine the regulator's role and strengthen it to meet the challenges of the growing sector.

"Flying is no more a luxury but a necessity in a growing economy. It is not only the rich, but also a growing number of middle class people are opting to fly to fulfil their needs and commitments. Civil aviation is a part of the infrastructure," he observed.

Admitting that the civil aviation sector was going through turbulent times due to multiple factors such as huge financial losses, higher cost of operations, high cost of aviation turbine fuel and heavy taxation, Ajit Singh said the ministry was drafting a comprehensive policy to set regulatory standards and create an eco-system for an early turn around.

"All airlines are having acute financial stress with a cumulative loss of Rs.10, 000 crore in the last fiscal (2011-12), face large credit exposure to (state-run) banks, pay more for fuel and bear multiple taxes," he lamented.

Earlier, Ajit Singh chaired a meeting of the parliamentary consultative committee of his ministry here.

AgustaWestland signs Key Supplier agreements for AW609

AgustaWestland, a Finmeccanica company, is pleased to announce that it has signed agreements with three key suppliers for its AW609 TiltRotor programme. These three major agreements form part of a succession of contracts signed with AW609 TiltRotor component suppliers since AgustaWestland acquired the tiltrotor programme in November 2011.

These latest agreements signed with Pratt & Whitney Canada, Rockwell Collins and BAE Systems are a major milestone in the programme for development and certification of the AW609 TiltRotor.

AgustaWestland remains committed to certification of the AW609 TiltRotor through FAA and EASA within the first half of 2016 with deliveries immediately thereafter.

Pratt & Whitney Canada will provide an upgraded version of the PT6 engine for the AW609 TiltRotor which will include the latest in technological developments and provide the aircraft with increased performance capabilities as well as the latest safety enhancements.

Rockwell Collins will provide a fully integrated cockpit for the AW609 TiltRotor based on its Pro Line Fusion system, allowing AgustaWestland to adopt the very latest in commercial aircraft cockpit technologies.

BAE Systems will provide an upgraded Flight Control Computer at the heart of the AW609 TiltRotor’s triple redundant fully digital fly-by-wire flight control system.

Is removal of DGCA chief Bharat Bhushan a political tiff?

India’s Civil Aviation Ministry sprang a surprise by removing the country’s aviation regulator E.K. Bharat Bhushan from his post barely a week after his tenure was extended to December.

Sources said Mr. Bhushan was in the midst of preparing a report recommending that ailing Kingfisher Airlines Ltd. be closed down. In the report, he said that Kingfisher did not have adequate number of aircraft, was finding it difficult to acquire aviation turbine fuel and had not paid salary dues for six months. Other than not keeping the promise of running the airline according to the schedule submitted to the DGCA, the airline was a danger to its passengers as pilots were flying under immense stress.

Bhushan had built a reputation as a tough administrator in his 20-month tenure. From computerising licensing exams in response to the fake pilots scam to focussing strongly on aircraft safety, he had taken a number of steps to clean up an industry that badly needed it.

The job of the civil aviation ministry is to look after the safety of air passengers. On no account must Singh compromise it in response to pressures from the airline lobby.

Ajit is expected to discuss the removal with Manmohan Singh tomorrow. The ministry has written a letter to the Prime Minister explaining why the step was taken. The secretary has also informed the cabinet appointments committee.

Jet Airways plans to launch aviation academy

Private carrier Jet Airways plans to set up a marketing services firm and launch an aviation training academy, with a total investment of Rs one crore.

The proposal is, however, subjected to regulatory approvals, including those from the Foreign Investment Promotion Board and the Reserve Bank of India, Jet Airways said in a notice to its share holders ahead of the company annual general meeting scheduled early next month.

The Naresh Goyal-owned airline would be the second domestic carrier to foray into the aviation education segment after Kingfisher started a similar training institution in 2007.

The proposed academy would be based in Mumbai and offer certificate courses in in-flight services, ticket reservation and check-in services, according to a brochure brought out for the institute.

The move to set up a training academy and marketing services centres is aimed at boosting the Jet group's revenue through ancillary activities at a time when high taxes and jet fuel prices are resulting in mounting losses of the domestic carriers, a source said.

http://www.business-standard.com/generalnews/news/jet-airways-plans-to-launch-aviation-academy/31053/

Air India Dream liners grounded by bureaucracy

Three of Boeing’s cutting-edge 787 Dreamliners painted in Air India colours are parked in South Carolina, waiting for the ailing state carrier to pay for them and take possession.

The 787, which promises to help modernise Air India’s ageing fleet, has instead been a source of several headaches for the money-losing carrier.

The three planes, the first of which was ready for delivery at the end of May, are caught up in a dispute between the U.S. planemaker and India over compensation to the airline after production was delayed by four years.

India has not yet signed off on an undisclosed package agreed between Air India and Boeing, according to a senior government official directly involved in the process.

“We still do not have inputs from several ministries, including departments like expenditure secretary in the finance ministry. So the process is getting delayed,” the official said on Wednesday, declining to be identified.

Air India has ordered 27 Dreamliners in total and was to be the first non-Japanese carrier to take possession of the long-haul plane, whose carbon-composite construction makes it more fuel-efficient than earlier models.

At list prices, the three planes have a combined value of about $580 million, although discounts are common. They are being financed by Standard Chartered Bank.

“Three Dreamliners are ready for delivery and are parked at Charleston, South Carolina. We are just waiting for Air India to receive those,” said Dinesh Keskar, Boeing’s vice president of sales and marketing for Asia-Pacific and India.

The Dreamliners are part of orders totalling $6 billion made by Air India in 2005, stretching already constrained finances that subsequently required a $5.8 billion government bailout.

More recently, the right to fly the 787 was at the heart of a 58-day strike by a group of about 500 pilots.

The striking pilots had demanded that their colleagues from the former Indian Airlines, the domestic state-run carrier that merged with Air India, not be trained to fly Dreamliners because they worried it could hurt their own career prospects.

The first of the three planes, showcased at an air show earlier this year in India, was ready for delivery in late May, and Air India sent a group of pilots to take delivery.

Those pilots flew back as passengers after Air India and Boeing could not agree on compensation, two sources with direct knowledge of the matter said.

India’s Cabinet Committee on Economic Affairs must approve the compensation but has been without a head since Pranab Mukherjee stepped down as finance minister last month to run for the largely ceremonial post of president.

“I hope we will have a decision within this month,” said another senior government official, declining to be identified.

http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/aviation/2012/July/aviation_July18.xml&section=aviation

Bharat Bhushan removed as DGCA

Aviation regulator E K Bharat Bhushan was on Tuesday abruptly removed from his key position in the backdrop of his tough stance against debt-ridden Kingfisher Airlines over its failure to pay salaries to its employees.

In a swift move by the Civil Aviation Ministry, Bhushan, who has been the Director General of Civil Aviation for nearly two years, was replaced by Prashant Narain Sukul, a Joint Secretary in the Ministry who would be holding the position as an additional charge, official sources said.

While there was no official word on the reasons for his removal as DGCA by the Civil Aviation ministry, there has been speculation that his stern warnings to Kingfisher and Air India to pay dues to their employees may have gone against him.

As the chief of India's aviation regulatory body, Bhushan had brought in stringent measures to prevent airlines from compromising on safety on account of their financial trouble.

He had bluntly told both the loss-making carriers to pay up employees' dues soon enough so that their performance was not affected. Both the airlines have faulted on timely payment of salaries and allowances for several months.

He had said that safety could be adversely affected by a demotivated staff, particularly a pilot, an engineer or a cabin crew, if they were not paid their dues on time.

During his 20-month tenure as the head of the aviation regulatory body, 57-year-old Bhushan handled a series of major cases of flouting of aviation rules, including the fake pilots scam and fudging of records by flying schools.

Air India selects Rockwell Collins’ Dispatch Program to provide long-term B787 avionics support

Air India has selected Rockwell Collins to service and support its fleet of Boeing 787 Dreamliner aircraft through the company’s DispatchSM Program. The program is scheduled to begin upon delivery of the first Boeing 787 to Air India.

Under the agreement, Rockwell Collins will provide Air India with guaranteed spares availability, systems configuration updates, technical repairs, and performance monitoring on Rockwell Collins’ comprehensive suite of communications, surveillance, displays and pilot controls systems onboard the 787. The total life cycle solution is coordinated by a dedicated program manager.

“Air India’s selection of Rockwell Collins’ Dispatch Program provides the airline with the most proven, cost-effective global service and support solution for our avionics and pilot controls,” said Scott Gunnufson, vice president and general manager, Service Solutions for Rockwell Collins. “We’re the most prepared in the industry to deliver fast, reliable service to Air India and other airlines adding 787s to their fleet.”

“As the Asia Pacific airline market segment continues to grow, we are positioned to provide swift, highly reliable service to our customers that keeps downtime to a minimum and cost predictable,” said TC Chan, vice president and managing director, Asia Pacific for Rockwell Collins.

Rockwell Collins’ global network of more than 80 locations provides repair and overhaul of avionics equipment for more than 6,000 commercial, business, corporate and military operations. Additional logistics capabilities include on-board services, service parts, training and simulator systems and services, technical information services and technical services.

http://weather.aviation.ca/content/view/11897/117/

Kingfisher dues may ruin Mallya’s profitable UB group

In total, Kingfisher has accumulated losses of about Rs 6,000 crore. It has not paid employees’ salaries for months and has defaulted on tax payments and vendor bills. Even the airline’s lessors have taken back a number of planes because the company had reportedly defaulted on lease rentals.  Its operations have reduced dramatically as it is flying less than 20 aircraft and its market share has crashed. It’s only rescue option is the foreign direct investment in Indian aviation, which is taking a long time for approval. Further, to stabilize its financial burden, Kingfisher is seeking loans from banks and other financial institutions.

The reason why banks are still trying to humour him relates to the collateral he has pledged: shares of parts of his liquor business. The vultures are descending not on his airline, but his pledged shares: his cash-generating liquor businesses. There is a good chance that whoever is now lending money to Mallya is buying not the airline – which is anyway a dead duck – but his liquor business.”

In a September 2011 report on Kingfisher Airlines, Canadian investment research firm Veritas had stated that both the airline and Mallya’s holding company UB Holdings (UBH) were effectively insolvent and that the two were at the mercy of Indian financial institutions.

Analysts have time and again said that the UB Group minus Kingfisher Airlines could well benefit the company’s cash cows. But the fact remains that in its efforts to support Kingfisher, the group pledged the shares of other group businesses such as United Spirits and now faces the risk of losing his only profitable business too— all thanks to his unexplained love for the airline.

Two flights return due to low visibility

Two private carrier flights returned to Madhurapudi airport here on Monday as the visibility levels dropped drastically after a thick blanket of clouds covered the entire area. The flights circled the sky for about 30 minutes before going to Hyderabad as the visibility did not improve.

The Jet Airways from Hyderabad hovered for over half an hour before the pilot took a decision to return causing inconvenience to scores of passengers. "Due to the harsh weather and poor visibility, the flights could not be landed. We could not put the passengers' lives in jeopardy as the visibility levels were very low," an airport official told TOI. The Jet Airways flight was to land at 12 pm.

Earlier, a SpiceJet flight, which was scheduled to land here at 10.40 am, also returned as the runway visual range (RVR) dropped to the lowest level. The airport has a new terminal building, which was inaugurated recently.

Jet Airways to focus on non-ticket revenues to boost bottom lines

With competition making it difficult to hike fares, Naresh Goyal-owned private carrier Jet Airways is looking at increasing revenues from ancillary activities to help it in the face of mounting losses, a senior official said today.

"Currently, ancillary revenue or the non-ticket revenue accounts for only 3 per cent of our total revenues. We are aiming to enhance it to a sizeable proportion," Jet Airways' vice president, marketing, Manish Dureja told reporters on the sidelines of an event here.

He said that the ancillary revenue business world-over across airlines stands at USD 33.5 billion but in India, it is almost negligible.

Dureja said that currently, Jet Airways receives USD 3.5 to USD 4 revenue per passenger from ancillary activities, but if efforts are put in, this may go up to USD 10 per passenger.

He said the airline has recently taken several steps to boost the non-ticket revenues, such as charging for second baggage, levying of convenience fee, charging for printing tickets at Jet kiosks, increasing on-board meal charges and going for tie-ups with various companies interested in co-branding.

Meanwhile, it tied up with Disney Channel India, as part of which, it unveiled a Disney-themed aircraft wrapped with images of Disney's Mickey Mouse, Minnie Mouse, Donald Duck, Daisy, Goofy and Pluto.

Dureja said the airline is in talks with seven more players from various sectors for similar co-branding opportunities, but declined to name the companies.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/jet-airways-to-focus-on-non-ticket-revenues-to-boost-bottom-lines/articleshow/14780521.cms

Jaipur airport ranked No 1

In a survey conducted by Airports Council International this year, the Jaipur airport has emerged as the first among the 126 airports run by the Airports Authority of India.

Jaipur airport got its Terminal 2 having international facilities only two years ago.

Paul Manickum, director of Jaipur airport, talking to TOI on Monday, said: "The Airports Council International had conducted a survey of 126 airports which are being run by the AAI in India. This survey was based on 33 parameters in which our airport has been rated as No 1 in the country."

The 126 airports include Delhi, Mumbai, Kolkata, Goa and Chennai airports.

The 33 parameters include airport safety and security, immigration and customs, cleanliness, runways, facility of parking, catering etc, said Manickum.

"Since 2009, when Terminal 2 became operational, various teams including air traffic control (ATC), immigration and security officers were burning midnight oil to give the best of facilities to air travellers. This is a result of team effort and we will continue to provide the best of facilities," said Manickum.

On Tuesday, various stakeholders, whose contribution fetched good results to the AAI, Jaipur, would be felicitated.

"Jaipur MP Mahesh Joshi and officials of Rajasthan government would be present at the felicitation ceremony," Manickam added.

The authorities of AAI, Jaipur have already started working the extension of runway work to bring international flights to Jaipur which would also help gemstones and jewellery exporters who have their offices in Singapore, Malaysia and Hong Kong. The work is expected to be completed within 18 months paving the way for landing of big aircraft including Boeing 747 and Airbus A 380. Presently, the Jaipur airport has a runaway of only 9,000 ft on which big aircraft including Boeing 747 and Airbus 380 can't operate.

http://timesofindia.indiatimes.com/city/jaipur/Jaipur-airport-ranked-No-1/articleshow/14790701.cms

Malaysian Airlines to increase frequency in India

Malaysian flag carrier Malaysia Airlines is all set to increase frequency on its India route by offering day time service connecting its India hubs of Mumbai, Delhi, Chennai, Bengaluru and Hyderabad to the capital city of Kuala Lumpur. The airline will start these day time flights beginning September 1, it said.

To promote these flights Malysian Airlines is offering special rates for purchase of tickets from its website at discounted rates with an economy seat return fare of Rs 20,611 - Rs 25,816 from India to Malaysia.

The airline currently operates daily flights from Mumbai and other Indian cities. For the benefit of consumers, the new frequencies are timed to offer further improved connectivity options to Australia and New Zealand as well as destinations in the ASEAN countries, the airline said.

Together with the above services as well as 12 weekly services from New Delhi and daily service from Hyderabad, Malaysia Airlines provides a total of 50 weekly direct and full service flights between India and Malaysia, offering a total capacity of 14,456 seats in each direction, it said.

Malaysia Airlines' Regional Senior Vice President for South Asia and Middle East Mr Azahar Hamid said, "These are exciting times for those who regularly patronise our flights from Mumbai, Bengaluru and Chennai. As part of our Business Plan strategy to win more customers, we have identified vast growth potential in the Indian routes and are now set to increasing our services offering more flight choices. With new aircraft, authentic Indian in-flight cuisine and Malaysian Hospitality delivered by our award winning crew as well as competitive pricing, we invite customers to take advantage of this winning proposition and cherish their travel experiences with us."

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/malaysian-airlines-to-increase-frequency-in-india/articleshow/14778302.cms