For graduates of aviation academies, it is a good job market

Some domestic airlines might have landed in a trough in terms of profitability. But students coming out of aviation academies and institutions are getting aboard the aviation industry with relative ease.

With no let-up in hiring by Indian and foreign carriers, the demand for airport ground staff, cabin crew and airhostesses is strong, with industry players expecting it to further firm up in the coming months.

Foreign airlines such as Emirates, Lufthansa, Qatar Airways and Korean Airways have been picking up Indians as cabin crew, especially as they are looking for the added qualification of fluency in regional languages for their Indian flights.

“India has on order 400 aircraft for the next decade or so involving an investment of $30 billion. This will throw up opportunities for 19,000 cabin crew, 24,000 technicians and 36,000 ground staff,” Mr Ravi Dighe, Head of Aptech Aviation, said.

Aptech, which opened its 35th centre in Hyderabad last week, will open eight more this year and reach 75 in the next five years. Last year, 70 per cent of its total students of 5,000, who registered for placement, were absorbed by the industry.

“The entry level salaries ranged from Rs 10,000 to 15,000 for ground staff and Rs 25,000 to Rs 60,000 a month for placements inside aircraft,” he says.

Frankfinn Institute, which has over 75 centres in India, each training 200 students, also registered similar results. Last year it enabled about 5,000 students getting placed in the aviation industry in different categories.

“Our students joined as cabin crew for an entry level salary of between Rs 20,000 to Rs 25,000 in domestic airlines and Rs 45,000 to as high as Rs 1.20 lakh in an international airline,” Mr K.S. Kohli, Chairman of Frankfinn Group, said.

The institute is expanding its network in India and overseas, including West Asia and Africa, besides putting together plans to start a regional airline, ‘Air Frankfinn’.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3569411.ece

RBI says airline sector to continue facing funds crunch

The bleeding domestic aviation sector is likely to continue facing funding crunch and could also be affected by prevalent policy uncertainties, the Financial Stability Report released by the Reserve Bank said today.

Stating that these factors pose a challenge to the asset quality of banks, the report said the "asset quality of banks' credit to the airlines industry came under some stress in recent periods, driven largely by the performance of some specific airlines".

The three listed airlines -- Jet, Kingfisher and SpiceJet -- posted accumulated losses of Rs 1,698 crore in the March quarter, with the near-bankrupt Kingfisher alone reporting a massive Rs 1,151 crore loss on account of higher fuel prices, irrational taxes and mounting airport charges.

According to the report, a sharp rise in impairments and restructuring in the sector saw the share of airlines in aggregate banking system NPA and restructured assets rise disproportionate to its share in banking sector credit. There was significant concentration discernible in distribution of credit to the airline sector as 10 banks accounted for almost 86 percent of total bank credit to this sector, it said.

At the end of March, out of the nearly Rs 45,000 crore exposure of top ten banks to the airline industry, three-fourths or over Rs 33,000 crore were either impaired or restructured, it said, adding public sector banks accounted for a major share of these exposures.

http://ibnlive.in.com/generalnewsfeed/news/rbi-says-airline-sector-to-continue-facing-funds-crunch/1017864.html

Asia Pacific continues to be hot spot for airline growth: Abacus International

Airlines continue to look at Asia Pacific for growth amidst global economic uncertainty as the region's economies continue expansion in the global airline industry, Abacus International has said in its report released earlier this week. Carriers based in the Asia Pacific region will make profits of USD 2.1 billion in 2012, according to forecasts from the International Air Transport Association (IATA). The Abacus International report said that this accounts for 60 per cent of the total profits predicted for the global airline industry, making Asia Pacific a key region for aviation growth.

“We see tremendous growth potential in Asia Pacific. The Asia Pacific region is now the world’s single largest aviation market as well as a growing economic powerhouse, making it crucial for airlines to be a part of this market for increased growth.” said Robert Bailey, President and CEO, Abacus International.

The report said that of the expected global air passenger traffic increase by 2014 to 800 million, 360 million or 45 per cent of those will travel on Asia Pacific routes, with China and India being the biggest contributor. Chinese tourists made 57 million outbound trips in 2010 and this is expected to rise to 100 million by 2015 while India has been experiencing double-digit growth in the travel industry and is expected to have around 1.8 billion travellers by 2021.

The growth in traveller numbers comes as these two countries experience a burgeoning middle class who are travelling both domestically and internationally in ever increasing numbers. The trend for increased travel by the middle class will grow as Asia expects to add at least an additional 2.5 billion people to its middle class by 2030, the report said.

”Asia travel demand is not uniform and the trajectory of growth does not move in a straight line. In the first half of 2012, we have observed some softening of travel in key markets like India as evidenced by the challenges faced by Kingfisher Airlines. Such matters are more than compensated by steady growth from China as mainland Chinese airlines adopt an aggressive international expansion strategy in response to potential leakage of domestic travel demand to high speed rail. In addition, the ASEAN markets and North Asian markets including Japan, Korea and Taiwan are bubbling with optimism. Taken as an aggregate, Asia will still lead the world in travel transactions growth over the next decade,” Bailey added.

Private airlines may get subsidy for flying to north east

Government is considering a proposal to provide subsidy to private airlines operating flights on loss-making routes in the north eastern region.

Ministry of Development of North Eastern Region (DoNER) came out with the proposal after a few private airlines, including Jet Airways, sought government clearance to scale down their flights to the region to stem operating losses.

If the proposal is approved, private airlines may get a subsidy of Rs 35 crore annually for operating flights to the routes in the north eastern states, which are economically unviable but socially important, officials said.

DoNER Ministry has been providing Alliance Air, an Air India subsidiary, an annual subsidy of Rs 35 crore for operating flights in the region but as services of the airline were not found "satisfactory", government was rethinking on continuing the assistance.

"We are considering giving the subsidy to those private airlines which operate flights to non-commercial destinations in the region. We will talk to Civil Aviation Ministry before taking a final decision," DoNER Minister Pawan Singh Ghatowar told reporters while briefing on the outcome of 61st Plenary meeting of the North East Council here yesterday.

After posting a loss of Rs 298 crore in the last quarter, Jet Airways sought government clearance to scale down operations to the north eastern region by about half.

Operations in the north east are guided by the government's Route Dispersal Guidelines (RDG) which entail that all Indian carriers fly to the north east and other remote parts of the country, more so as a social obligation.

Demanding better connectivity, DoNER and NEC have been urging Civil Aviation Ministry to review RGDs as air connectivity has remained neglected in these far-flung areas inspite of them.

http://www.dnaindia.com/india/report_pvt-airlines-may-get-subsidy-for-flying-to-north-east_1707798

Agitating Air India pilots seeks PM, Sonia's intervention

Agitating pilots of country's national carrier Air India on Thursday urged Prime Minister Manmohan Singh and the Congress top brass to step in to resolve the impasse over the 52-day long strike, as the condition of some of them on protest fast worsened.

The Indian Pilots' Guild (IPG), which is spearheading the agitation and the five-day-old hunger strike, shot off letters to Singh, Congress president Sonia Gandhi and general secretary Rahul Gandhi, seeking their "urgent intervention to resolve the prolonged agitation".

With three pilots, who were on hunger strike since Sunday, being hospitalised on Wednesday following deterioration in their health, the condition of a few more in Delhi and Mumbai worsened.

Over 400 IPG pilots, who are on strike since May 7, launched an indefinite hunger strike from Sunday to demand withdrawal of sack orders against 101 pilots and better career progression prospects. Air India is estimated to have lost about Rs 530 crore due to the agitation.

While the agitators have accused the management of not being keen to resolve the impasse by "steadfastly refusing" to talk to them, the government has made it clear that they should return to work unconditionally.

With their indefinite hunger strike in Delhi and Mumbai continuing since Sunday, two among 12 pilots in Mumbai and one of the 15 in Delhi were hospitalised yesterday, with pilots saying that the physical condition of a few more had worsened.

http://ibnlive.in.com/news/air-india-pilots-seeks-pm-sonias-intervention/268406-7.html

More talk of aerospace industry mergers and acquisitions

Armed with significant cash on their balance sheets, U.S. aerospace and defense (A&D) executives are looking at strategic company acquisitions as the highest-priority investment area to spur growth, according to a recent survey released by KPMG LLP, an audit, tax, and advisory firm based in New Jersey.

The KPMG survey follows a report released in March by Deloitte LLP that predicts the A&D industry is on the brink of a mergers and acquisitions boom.

In the 2012 KPMG A&D Industry Outlook survey, nearly three-quarters (71 percent) of A&D executives say their companies will be involved in a merger or acquisition in the next two years. In addition, 64 percent of A&D executives indicate that their companies have significant cash on their balance sheets, and more than half (53 percent) say they will increase capital spending this year.

Armed with significant cash on their balance sheets, U.S. aerospace and defense (A&D) executives are looking at strategic company acquisitions as the highest-priority investment area to spur growth, according to a recent survey released by KPMG LLP, an audit, tax, and advisory firm based in New Jersey.

The KPMG survey follows a report released in March by Deloitte LLP that predicts the A&D industry is on the brink of a mergers and acquisitions boom.

In the 2012 KPMG A&D Industry Outlook survey, nearly three-quarters (71 percent) of A&D executives say their companies will be involved in a merger or acquisition in the next two years. In addition, 64 percent of A&D executives indicate that their companies have significant cash on their balance sheets, and more than half (53 percent) say they will increase capital spending this year.

"This may spur an industry response similar to what drove major industry consolidation in the 1980s and 1990s, or perhaps an even more dramatic response," said Martin Phillips, U.S. and global leader of KPMG's aerospace and defense practice.

Phillips adds that U.S. government contracts are dwindling. In fact, when asked about the biggest drivers of revenue growth over the next three years, A&D executives most frequently cited acquisitions and joint ventures (50 percent).

Foreign customers

"Companies must find a way to break through to new customers and markets," said Doug Gates, partner in KPMG's aerospace and defense practice. Nearly half (43 percent) of executives surveyed by KPMG say that non-U.S. operations or customers will account for more than a quarter of their companies' revenues.

"We continue to hear about India and Brazil, but look at it realistically and you see that foreign military orders have been minimal to date," Phillips added.

Supplier acquisitions

The Deloitte report released in March says “the era of mega-mergers of large defense contractors is likely behind us. However, there remain hundreds of suppliers to these large defense contractors that could gain scale and cost efficiencies by merging."

Last month, Blackland Aerospace, LP, announced it had acquired Lewis Machine Company of East Hartford, Conn. Lewis specializes in manufacturing complex precision-machined components for clients in the commercial and military jet engine, airframe, missile and power plant industries.

Reducing state tax on aviation fuel will create more jobs

If state governments across the country reduce the quantum of sales tax they levy on Aviation Turbine Fuel, the country will be able to generate 5,000 direct jobs and about 25,000 indirect jobs in the aviation sector.

The said calculation on the tax-job equation appeared in a report released last month by the civil aviation ministry. It explored the steps the government could take to turn India's major airports into hubs. One of the measures advocated to increase domestic air traffic was the reduction of state sales tax on Aviation Turbine Fuel (ATF). Currently, sales tax on ATF varies from state to state and it can range from four percent to 30 percent. India is notorious for taxing heavy. Globally, Bangladesh charges the heaviest sales tax on ATF with an average levy of 27 percent. In India, according to the aviation ministry report, the average sales tax works out to 20 per cent. Consequently, in India, fuel costs account for close to 40 per cent of total operating cost. And it is the one grievance that airline CEOs weep about.

Now, the ministry report looks at the changes the aviation sector would go through if the state governments were to be less brutal. A reduction in state sales tax from an average of 20 percent to 4 percent will bring down the fuel cost for domestic flights by around 13 percent, the report said. Assuming that airlines will pass on the benefit of this reduction in cost to the passengers in full, airfares on domestic sectors will come down by 6 percent and that in turn will boost travel. ``Using price elasticity studies of air travel demand, it is established that a 6 percent drop in airfare will lead to a 5-8 percent increase in air traffic on domestic sectors,'' the report said. That would lead to two kinds of employment: Direct/Indirect Employment (those employed in the airport and by ancillary industries like fuel companies, retail etc) and Induced Employment (jobs created due to spending by new employees in the above category). The ministry report summarises that a 3.3 to 5.2 million increase in annual domestic traffic will translate to creation of 3,150 to 5,150 direct/indirect jobs and 16,000 to 26,000 induced jobs. It would have an annual economic impact of Rs 700 to 1000 crore.

http://timesofindia.indiatimes.com/business/india-business/Reduce-the-state-sale-tax-on-aviation-fuel-to-create-more-jobs-civil-aviation-ministry-report/articleshow/14435668.cms

SpiceJet announces Dubai take off

SpiceJet, India’s most preferred low fare airline, announced the launch of its Dubai operations with daily flights connecting the shopping hub of the Middle East to Delhi and Mumbai as part of the carrier’s continuing strategic expansion into international markets.

Addressing a press conference on the day SpiceJet’s new generation Boeing 737-800s took off its debut flights from Dubai’s Terminal 1 to Delhi and Mumbai, senior officials of the airline said they were working on opening up more new routes to offer a wider choice of flights to customers.

“Opening up Dubai is a milestone for us as it will offer us an opportunity to serve the large Indian and Western expatriate community along with the UAE citizens with an affordable flying option,” said SpiceJet Chief Executive Officer Neil Mills.

Mills said Dubai is a significant addition to its portfolio of destinations and complements the airline’s strategy to connect more Asian points to SpiceJet routes. “Dubai is a key destination and connecting to this bustling cosmopolitan city will also add more value to our global prospects as the emirate’s busy airport is a corridor to Europe and Asia for global passengers,” he said.

SpiceJet currently operates in two international routes – Delhi-Kathmandu and Chennai-Colombo and Dubai is the third global destination of the airline. In the Indian domestic market, SpiceJet connects 34 points with a fleet of 42 aircraft flying over 40,000 passengers a day.

Mr. Salah Sharaf, Chairman of Sharaf Travel, General Sales Agent of SpiceJet in the UAE said: “We are delighted that SpiceJet has chosen Dubai as their 3rd international destination. We offer our congratulations to Spicejet. We are very proud to be associated with the quality airline which has renowned reputation for its customer satisfaction and punctuality, we have no doubt that SpiceJet will spice up our market and win over support of traveling public."

Affordable Pricing

Mills said that as a low fare airline, SpiceJet’s pricing philosophy is to ensure affordable flight fares to its passengers. “Our endeavor would be to offer and maintain a competitive and affordable price structure throughout the year to make SpiceJet a preferred carrier for inbound and outbound passengers.”

Bookings for SpiceJet had kicked off earlier this month with an introductory inaugural fare starting from AED 377 excluding taxes. The airline has partnered with Dubai-based Sharaf Travel for bookings and ever since the opening of bookings; SpiceJet has received robust response to its offer.

   

New destinations, facilitation

SpiceJet is working on new destinations in India as well as in the GCC as the carrier has set its sights on expanding its coverage in phases. “Some of the destinations we are looking to connect with Dubai at the Indian end are Kochi, Chennai and Hyderabad while in the Gulf we have Saudi Arabia as new point on our radar,” Mills said.

http://www.traveldailynews.com/pages/show_page/50108-SpiceJet-announces-Dubai-take-off

Soaring fare prices need to be reworked – says DGCA

Airfare has gone up on domestic as well as international routes in the past two weeks despite the warning of the Directorate General of Civil Aviation (DGCA) regarding a disproportionate spur in the price of tickets.

In the domestic sector, the airfare has increased by 30-40% on the routes where Kingfisher used to operate flights. Major routes like Bangalore to New Delhi and Bangalore to Kolkata have seen a gradual increase in fare. On the international routes, a few carriers have increased the fare following the suspension of some Air India flights in wake of the pilots’ strike.

Maqsood Ahmed of Voyages and Vocations said this is that time of the year when many students from India travel abroad for higher studies. He said it was because of this that the far had doubled. He said the normal fare to the US is in the range of Rs50,000-Rs60,000, but currently a ticket would command anywhere between Rs1.15 lakh and Rs1.2 lakh. On the domestic front, he said, airfare to some destinations had increased by Rs1,000 as the holiday season was coming to an end.

According to many travel agencies in the city, the fare for the Bangalore-New Delhi and Bangalore-Mumbai routes is in the range of Rs8,000-Rs10,000.

Normally, a ticket for these routes comes for Rs5,000-Rs7,000. A frequent flyer to Kolkata said the fare for Delhi and Mumbai has always been high, but now the fare for Kolkata too had increased by Rs2,000-Rs3,000.

The DGCA had asked the domestic airlines to rework their prices to control the exorbitant rise in airfare.

http://www.dnaindia.com/bangalore/report_you-too-feeling-low-over-high-airfare_1707275

SpiceJet launches Dubai operations

SpiceJet, India’s second largest budget carrier by market share, has launched its Dubai operations with daily flights connecting the shopping hub of the Middle East to Delhi and Mumbai as part of the carrier’s continuing strategic expansion into international markets.

The low-cost carrier currently operates in two international routes — Delhi-Kathmandu and Chennai-Colombo and Dubai is the third global destination of the airline. In the Indian domestic market, SpiceJet connects 34 points with a fleet of 42 aircraft flying over 40,000 passengers a day.

SpiceJet is working on new destinations in India as well as in the GCC as the carrier has set its sights on expanding its coverage in phases. Some of the destinations the airline is looking to connect with Dubai at the Indian end are Kochi, Chennai and Hyderabad while in the Gulf Saudi Arabian capital Riyadh is under the plan. To support the expansion plan, the airline continues to add more aircraft in the fleet.

“We get 5-6 aircraft per year and in the last 18 months got 20 aircraft,” SpiceJet chief executive officer Neil Mills told Khaleej Times at a news conference in Dubai on Tuesday. Spicejet has acquired seven new Bombardier Q400 aircraft for enhancing connectivity to Tier II and Tier III cities.

Mills mentioned that seven new international sectors under the plan are Kabul, Hong Kong, China, Bangkok, Riyadh, and more frequencies to Colombo. “Opening up Dubai is a milestone for us as it will offer us an opportunity to serve the large Indian and Western expatriate community along with the UAE citizens with an affordable flying option,” said SpiceJet chief executive officer Neil Mills.

Mills said Dubai is a significant addition to its portfolio of destinations and complements the airline’s strategy to connect more Asian points to SpiceJet routes. “Dubai is a key destination and connecting to this bustling cosmopolitan city will also add more value to our global prospects as the emirate’s busy airport is a corridor to Europe and Asia for global passengers,” he said.

Mills said that as a low fare airline, SpiceJet’s pricing philosophy is to ensure affordable flight fares to its passengers. “Our endeavour would be to offer and maintain a competitive and affordable price structure throughout the year to make SpiceJet a preferred carrier for inbound and outbound passengers,” he added.

Bookings for SpiceJet had kicked off earlier this month with an introductory inaugural fare starting from Dh377 excluding taxes. The airline has partnered with Dubai-based Sharaf Travel for bookings and ever since the opening of bookings; SpiceJet has received robust response to its offer.

Mills said that there is huge demand for these two sectors from India to Dubai and SpiceJet flights are around 85 per cent booked.

http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/aviation/2012/June/aviation_June10.xml&section=aviation

Etihad, Qatar Air Eye SpiceJet Stake

Indian budget airline SpiceJet is in talks with Etihad and Qatar Airways about the two Middle Eastern carriers taking a stake in the business, according to a report in the Business Standard newspaper.

The talks come amid expectations that the Indian government is going to lift the ban on foreign airlines investing in Indian ones.

A SpiceJet spokesman quoted in the report sad that there were discussions with foreign airlines but refused to confirm the identity of any individual airline.

Neither Etihad nor Qatar Air have commented on the Business Standard report.

http://news.airwise.com/story/view/1340712164.html

IndiGo lands India's first plane using fuel-saving technology at Kochi

Low cost carrier IndiGo last week became the first Indian airline to carry out a landing at the Kochi airport using a system that allows an aircraft to be guided by a sophisticated on board navigation system instead of ground-based radars. In carrying out this precision landing, an Airbus A-320 aircraft used the Required Navigation Performance (RNP) approach, which provides accurate and shorter flight paths and secure trajectories.

RNP, by allowing the use of an on-board systems and satellite-based Global Positioning System (GPS), frees the plane from dependence on conventional ground-based navigation installations. An airline spokesperson said the first regular RNP flight was 6E-345 from Bengaluru to Kochi. RNP approach would continue to be applied by IndiGo whenever its aircrafts land at Kochi, with its entire fleet being equipped with the system. Such landings would lead to the saving of 75 km of distance on each approach, amounting to the saving of approximately 400 kg fuel per landing and therefore lesser emission of greenhouse gases, she said.

IndiGo collaborated with Airbus subsidiary Quovadis and the Directorate General of Civil Aviation (DGCA) to develop and implement the RNP procedure, after it was successfully validated on Airbus simulators and the planes.

Commenting on the achievement, Aditya Ghosh, President, IndiGo said, "We are excited about partnering in this significant step towards improving air traffic management in India and making it an even safer and greener environment to fly in. The development of more such approaches in India will also go a long way towards improving safety and efficiency."

IndiGo had organised the first test flight with RNP approach at Kochi on December 8, 2011.

http://www.travelbizmonitor.com/indigo-lands-indias-first-plane-using-fuelsaving-technology-at-kochi-16816

Kingfisher Airlines' woes worsen as lessors take back 34 planes

With cash-starved private carrier Kingfisher Airlines defaulting on lease rentals of around Rs 1,000 crore, the lessors have taken back 34 aircraft, sources said today even as the company maintained that it has returned the aircraft voluntarily.

Besides, another 15 aircraft of the company are also aground due to want of spares, and the airline is now left with only 15 planes to carry out its operations, they said.

"Lessors have taken back as many as 34 aircraft from Kingfisher between March and June, owing to non-payment of lease rentals, which stand at around Rs 1,000 crore," sources told PTI here.

The airline, however, said it has returned these aircraft voluntarily and that no aircraft was taken back by lessors by "force".

"There have been no forced returns of the aircraft to the lessors. Whenever we have returned planes, we have voluntarily done so," a Kingfisher spokesperson said in a text message.

It has also grounded another 15 planes as they require spares but due to paucity of funds it has not been able to replace them, sources said.

"The airline currently has just 15 aircraft worth flying and a majority of them are ATRs," they said. According to the sources, the 15 aircraft in service include eight ATRs, one A319, four A320s and two A321s.

The airline today operates only around 100 odd flights with these aircraft, and has withdrawn from international operations.

The liquor baron Vijay Mallya-promoted airline, which is sitting on a debt pile of over Rs 7,500 crore, had reported a loss of 1151.5 crore for the quarter ending March.

The cash-strapped airline, which has not reported profit since launch, has not been able pay salaries since February nor it has managed to pay its dues to oil companies and airports. It has also defaulted on payment of service tax and TDS to the government.

http://timesofindia.indiatimes.com/business/india-business/Kingfisher-Airlines-woes-worsen-as-lessors-take-back-34-planes/articleshow/14413187.cms

GMR to pick up stake in airports, offer consultancy

Mumbai: GMR Infrastructure Ltd, which builds and operates airports in India and abroad, is planning to offer consulting services to international airports and is considering buying as much as 15% stake in some of them.

The Bangalore-based infrastructure company is in talks with international pension and sovereign funds to form partnerships so that it can jointly bid to offer services, including project management consulting, operating and management, bidding assistance, financial closure and advisory services, to airports.

 “The decision to partner with international funds and offer consultancy services is a part of shifting our growth model of airports to include a services profile,” said Subba Rao Amarthaluru, GMR group’s chief financial officer (CFO). “We will be picking up a stake of up to 15% in those airports, which is mandatory in certain cases.”

“This will boost our return on equity without investing big capital. We are likely to finalize a few deals shortly,” Amarthaluru said. He, however, did not disclose details of the funds his company is in talks with or the names of airports he is keen to offer advisory services to.

Citing the example of Frankfurt Airport Services Worldwide, a global airport operator, which offers airport management services including terminal and traffic management, baggage and cargo handling, aviation ground handling, aviation security and consulting at GMR Infrastructure’s Delhi international airport for a fee, Amarthaluru said: “We will reverse the role in other airports like Frankfurt is to Delhi.”

GMR Infrastructure has developed and commissioned the greenfield international airport in Hyderabad. The company, besides operating the existing Delhi International Airport, also built Terminal 3 which was commissioned in time for the Commonwealth Games in October 2010. It also upgraded and is operating the Istanbul Sabiha Gokçen International Airport and has acquired the Ibrahim Nasir International Airport.

http://www.livemint.com/2012/03/22224927/GMR-to-pick-up-stake-in-airpor.html?d=1

Govt draft on small airports can upset Aera’s authority, say experts

The ministry of civil aviation’s draft approach paper on economic regulation of non-major airports could potentially challenge the airport regulator’s authority on many fronts, according to experts and lobby groups.

The draft suggests that non-major airports adopt the so-called hybrid till method to calculate charges. In this method, 30% of the revenue from aeronautical-related commercial activities is taken into account for determining aeronautical charges.

The Airports Economic Regulatory Authority, or Aera, has adopted the single till model, stating in a 12 January 2011 order that this is the most appropriate way to decide airport charges. Private airport operators have challenged this in an appellate tribunal, preferring the double till model. A decision is pending.

While the draft is for non-major airports, which fall under the ministry, experts point out that the proposals could interfere with the rules set for the major airports, which are governed by Aera.

The airports in Mumbai and Delhi determine tariff based on the hybrid model as their modernization in 2006 predated Aera that was constituted two years later.

Airlines the world over prefer the single till model as airport charges are lower under it. In this model, followed by the Heathrow and Gatwick airports in the UK, all principal airport activities including aeronautical and retail are taken into account to determine the airport charges, so airlines are charged lower.

In contrast, only aeronautical or flying-related activities are considered under the dual till principle, which private airport operators and their investors are keen on since it will help them increase revenue.

The hybrid model is a combination of these two principles, proving cheaper for airlines than the dual till model but slightly more expensive than the single till.

The civil aviation ministry’s draft paper adds that non-major airports can file their charges with the ministry without having a regulator. Only when they become major airports will the civil aviation ministry give a case-to-case direction to Aera.

Experts point out that “case-to-case basis” is arbitrary and does not offer any predictability in decision making or for investments.

“It is repeating the mistakes of Delhi and Mumbai airports’ privatization all over again. Also, it does not take any note of recent proceedings in Parliament on similar issues, or of the concerns expressed by CAG (Comptroller and Auditor General),” said an aviation consultant, requesting anonymity. The proposed regulatory framework suggests multiple accounting treatments to arrive at airport charges for major airports, non-major airports and the Delhi and Mumbai airports.

Airports with an annual passenger throughput greater than 1.5 million qualify as major airports and are regulated by Aera. At present, 15 major airports are under the ambit of Aera and the remaining ones are regulated by the ministry of civil aviation.

The ministry’s draft proposes that airports that handle between 500,000 and 1.5 million passengers a year be regulated under the hybrid till by the civil aviation ministry.

The paper adds that any new airport built should be covered by the “light-handed regulation”, wherein these airports will file their charges based on the investment and expenditure without the interference of Aera.

“This is going to create conflict as an airport in Navi Mumbai would begin as non-major airport with less than 1.5 million passengers a year and soon graduate into major airport,” said another aviation consultant, also requesting anonymity.

An executive with a private airport company, who also declining to be named, said that while it makes sense for non-major airports to have fewer regulations and complications, “it seems that the government is addressing the needs of private airport lobbies to negate the Aera order on single till.”

The civil aviation’s draft paper also suggests that cargo, ground handling and fuel services be treated as non-aeronautical revenue, differing with the Aera Act.

“We are not saying anything. We have come up with a draft approach paper. Let people react. This is not the final paper. After stakeholders’ reaction, it may undergo change,” said Nasim Zaidi, secretary, ministry of civil aviation.

Yashwant S. Bhave, Aera chairperson, was not available for comment.

Officials of the Association of Private Airport Operators said the body will shortly file its response.

The Federation of Indian Airlines (FIA), a lobby group for airlines, has argued for the single till approach as it treats an airport as an integrated business and sets tariff without making any distinction between aeronautical and non-aeronautical services.

“Single till is closer to maximizing welfare than the dual till approach as this approach takes all airport assets and costs into account while determining the tariff,” it said, adding “non-aeronautical revenue enhances as it can lower airline costs,” FIA paper said.

Mint reviewed the paper submitted to the civil aviation ministry.

The FIA paper also supports a single authority to deal with all airports to secure consistency. “Aera should be the appropriate authority to determine tariff for all airports... since an independent regulatory mechanism with transparency and accountability is desirable,” it said.

http://www.livemint.com/2012/06/11230454/Govt-draft-on-small-airports-c.html?h=B

IATA Director General view on FDI in Indian aviation sector

Business Line: - Are you in favour of foreign direct investment in the Indian aviation sector?

Tony Tyler, Director General, IATA: - I am in favour of liberalising access to capital everywhere. Almost every country I can think of allows foreign investment in its airlines, although most countries have a limit. In India it is zero, and that is clearly out of line with international practice. Just allowing foreign direct investment will not make it happen because any investor is going to ask: ‘where is my return for the risks on my investment? Will the returns justify those risks?’

Frankly, the Indian Government needs to adopt policies that will de-risk those investments before it makes much of a difference — airport charges, taxation and fuel.

An exclusive interview with IATA Director General on increasing airport charges in Indian metros – A Business line media report

The Director-General of the International Air Transport Association (IATA), Mr Tony Tyler, is coming to India next month to convince all the stakeholders of the need to reduce airport charges. In an exclusive interview with Business Line on the sidelines of the SITA IT Summit in Brussels, Mr Tyler explained why this is important.

Excerpts from the interview:

Has the increase in charges put paid to Delhi airport’s chances of becoming a global hub?

Delhi airport’s prospects of becoming a hub are very poor. You cannot be a hub if you are a very expensive airport. The study which the airport sent to IATA to show that it is not a very expensive airport actually confirms that it is… their own numbers show that it is the most expensive long-haul airport in the world. I do not want to pick a fight with Delhi airport, but want to talk to all the stakeholders which include airports, the Government, the Airports Economic Regulatory Authority and the Ministry and see whether we can find a solution to bring down costs for airlines.

How will you do this?

One opportunity seems to be that the Delhi airport operator has to give 46 per cent of all the revenue that it collects to the Airports Authority of India (AAI).

Perhaps the Government can somehow find a way of rebating some of the money to the airlines or find some way of reducing that income stream to reduce the airlines’ cost of operations.

You are not talking about changing the contract? Is IATA now saying that the increase in costs for airlines must be offset with some other costs?

That will be one opportunity. I am going to India in July. This is really important to the industry.

Increasing costs 346 per cent is a problem, especially in India where, if you look at purchasing power parity — that is a lot of money … it is an expensive place. We need to find a solution.

Let us work together to make it a win-win for everybody. Being a hub is a great ambition. Geographically, it is well located, the facilities are excellent. It has all the ingredients to make it a good hub; it is just that it is not cost-competitive.

If the Government can find a way of making it cost-competitive and perhaps foregoing a bit of direct revenue, there are huge amounts of indirect benefits, in terms of job creation, high quality and value add to many industries. 

http://www.thehindubusinessline.com/industry-and-economy/article3555437.ece

Airline hub may create 30,000 jobs

A blueprint, which is being considered by the ministry of civil aviation, promises to create around 30,000 jobs in aviation and related sectors in the six metros. Along with that, it also promises an economic benefit of over Rs40,000 crore, if brought into action.

Out of the 30,000 jobs, Mumbai alone will have space for 8,100 additional jobs.

The civil aviation ministry is taking desperate measures and amending policies to develop airline hubs in India, comparable to those in Dubai, Singapore, Frankfurt and Heathrow. Prime Minister Manmohan Singh recently called for the Airline Hub Policy.

“Indian airports are in a good position to establish them as a preferred hub for neighbouring countries,” said a civil aviation ministry official.

According to the blueprint being considered for implementation by civil aviation ministry for creating hubs in India, a major factor affecting the airline industry is the mounting price of fuel.

If the metros (Mumbai, Delhi, Chennai, Kolkata, Bangalore and Hyderabad) drop sales taxes (ranging between 16-29 % for different metros) and charge just 4% service tax on fuel, it will increase passenger traffic by around 5.2 million domestic passengers at the six metro airports, creating around 30,000 jobs in the process.

The paper adds that the reduction in fuel tax will also bring around 6 million additional international passengers as well as additional revenue per annum.  

http://www.dnaindia.com/mumbai/report_airline-hub-may-create-30000-jobs_1701590

Air Works entering aircraft engine maintenance (MRO) segment

Indian maintenance, repair and overhaul provider Air Works has invested INR 120 crore in Dubai-based business aviation services company Empire Aviation Group (EAG). This investment is part of a wider strategy by the two companies to expand their footprints with each other's lucrative home markets.

Set up in Dubai in 2007, Empire Aviation offers sales, management, charter, finance and insurance of aircraft. EAG co-founder and executive director Steve Hartley says: “This partnership will help EAG to broaden our business base and service offering in the Middle East and India and beyond. The timing is absolutely right as the global aviation sector recovers and this move will help accelerate EAG's growth and development as a regional and international player in private aviation”.

Air Works, which is qualified to maintain 50 aircraft types, offers services to commercial and private planes. In February 2010, it had acquired 85% stake for INR 70 crore in Air Livery UK Plc to be able to offer aircraft painting, refurbishing and refinishing.

“The only missing link is aircraft engine MRO (maintenance, repair, and overhaul). Our next target would be that”, says Air Works managing director Vivek Gour. “The aim is to make Air Works an end-to-end aircraft solutions company”, he added.

Airlines losses fuelled by higher taxes

Taxes and duties levied by governments—central and states—increase jet fuel cost by 50% in India, compared with neighbouring countries like Pakistan

The airline industry in India is in the doldrums today. While there are several issues, including politics, which are obstructing the smooth flights in the country, one of the major problems are higher taxes and fluctuation in the prices of aviation turbine fuel (ATF) or jet fuel.

For any airline, fuel cost constitutes about 30%-40% of its total expenditure. However, it is higher taxes levied by the central government and state governments, which increases prices of ATF to one of the steepest across the world. In addition, there is huge fluctuation in ATF prices.

 Earlier, while speaking with PTI, civil aviation minister Ajit Singh had said that jet fuel costs in India are about 50% higher compared with cities like Singapore and Sharjah. "Most of this is partly because ATF is not a 'notified product' which the oil regulator can check. Therefore, the pricing is not transparent," he had said.

Notified products or declared goods attract a uniform sales tax of 4% as against 20% to 30% levied by the governments.

Pricing mechanism, especially for ATF is influenced to benefit the government. The ATF price is calculated after adding freight charges from Gulf to India, countervailing duty of 8% (as the customs duty on ATF is abolished), Basic CENVAT (excise) duty of 8% and sales tax from state governments ranging from 16% 30%. In addition, there are refinery margins, domestic transportation charges, marketing margins of oil companies and throughput charges paid to the airports.

Last week, Indian Oil Corporation (IOC) reduced ATF prices by 5%, one of the steepest cut since February 2010. This brought the ATF prices to December 2011 levels. At present ATF in Delhi costs Rs62,409.95 per kilolitre, while the same costs Rs63,178.34 in Mumbai. Earlier, in August 2008, jet fuel prices hit its highest rates owing to the record crude price of $147 per barrel in international markets.

IOC, along with two other state-run companies, Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) revise ATF prices every fortnight on 1st and 16th, based on average international prices of crude oil in the preceding fortnight.

Every day, IOC alone caters to over 1500 flights, from bustling metros to remote airports in the country.

http://www.moneylife.in/article/airlines-losses-fuelled-by-higher-taxes/26425.html

Monsoon season hit landing at Patna Airport

PATNA: The onset of monsoon might have brought relief to the denizens of the state capital but the authorities at the Jayaprakash Narayan International Airport here are a worried lot. Reason: The height of trees at the adjoining Sanjay Gandhi Biological Park, popularly known as Patna zoo, will reduce the visibility of the runway during rainy season, making it difficult for the aeroplanes to land at the airport.

According to sources at the airport, landing of flights could be impossible if heavy rain lashed the city during monsoon period. The officials of the zoo stopped pruning of the 2917 trees last week after CM Nitish Kumar's concern over the depleting greenery. It is likely to add to the problem of short runway at the Patna airport, despite the fact that it is equipped with the Instrument Landing System, ILS CAT-1, that helps aeroplanes land safely during poor weather conditions when visibility is reduced below 1,600 metres.

According to an official at the meteorological department, monsoon has reached Bihar and the visibility at the airport is likely to go down in the days to come. "Heavy rain is expected in the coming days and visibility could be reduced to 500 metres during monsoon season. Cloud formation also reduces visibility," he said.

An airport official said the minimum visibility of 2800 metres is required for an aeroplane to land at any airport. During rainy season, the visibility sometimes drops to as low as 500 metres. An airport runway should have a standard length of 8,000 feet. But the Patna airport runway is only 1954 metres long. The approach funnel of the runway is further reduced due to the big trees at the zoo, he explained.

As the airport has a railway track on the one side and Patna zoo on the other, there is no room for error. Last year, it was declared one of the most dangerous airports in the country.

Ravikant, principal secretary, state civil aviation department, said, "There is no official communication so far from the Airports Authority of India (AAI) or Directorate General of Civil Aviation (DGCA) regarding the closure notice to the Patna airport."

It may be mentioned that the DGCA had set June 15 deadline for the Patna airport to get things in place for the safe landing of aeroplanes.

http://timesofindia.indiatimes.com/city/patna/Patna-airport-fears-monsoon-wading/articleshow/14286569.cms

Air India to hire 100 new pilots

Troubled national carrier Air India has set up a committee to review its global operations to find out how many pilots are required to operate its flights. This committee would advise the management on the actual number of pilots needed to run Air India’s international operations, airline officials said, adding that it was felt that the carrier had far more pilots than it needed.

Since the strike began on May 7, Air India has sacked 101 striking pilots and de-recognised the Indian Pilots’ Guild which has been leading this agitation.

The Air India management is contemplating dismissing 300 pilots owing allegiance to the Indian Pilots Guild.

Pilot utilisation quotient

Maintaining that the Air India’s pilot utilisation quotient worked out on an average of 1.4 hours a day, they said the cockpit crew could be utilised for at least 2.7 hours a day as per the guidelines issued by the aviation regulator.

The less number of hours they put in was because of the fact that the airline was overstaffed, the officials claimed, adding that the airline would need about 100 fresh pilots to run its curtailed international operations.

Air India has recently issued an advertisement for recruiting fresh pilots, both expats and locals.

'Doors open'

Taking a tough line on the continuing strike, the officials said, “We have kept the doors open for them for far too long but they don’t appear in a mood to get back to work.”

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3514882.ece

Air India facing trouble due to pilot fatigue

In further trouble for the strike-hit Air India, 22 of its around 120 Executive pilots have reported 'sick' at a time when the national carrier is struggling to maintain its international operations.

Air India Chairman-cum-Managing Director Rohit Nandan on Tuesday said while 22 pilots have reported 'sick', three don't have passport and three others have applied for emergency leave like illness in family.

He stated this after a delegation of Executive pilots met him to press for early resolution to the 44-day strike by 400 non-Executive pilots.

There are about 120 Executive pilots in Air India and they have been complaining of stress because of increased workload in the wake of the strike by their colleagues.

Nandan said prior to the strike, an Executive pilot was doing 72 hours in a month and now they are doing 64 hours only.

"We have said to the CMD that this problem (strike) should end. He assured he was ready to take back the pilots but the matter is stuck with taking back of the 10 executive committee members of the now de-recognised Indian Pilots Guild," said a pilot.

About AI 400 pilots, owing allegiance to the IPG, are on strike since May 7. The airline management has terminated the services of 101 pilots, including 10 executive committee members.

The airline has been operating its 38 out of 45 flights on truncated international schedule with the help of 120 executive pilots.

The Executive pilots had last week written to Civil Aviation Minister Ajit Singh saying that operating flight was now taking a toll on them as they were stressed and flight safety could be affected.

Putting up a brave face, Nandan said "we are following the flight duty time limitation (FDTL) guidelines."

http://ibnlive.in.com/news/air-india-crisis-22-executive-pilots-report-sick/266930-7.html

Air India pilot strike entered its 40th day

As the Air India pilots’ strike entered its 40^th day on Monday, civil aviation minister Ajit Singh reiterated his readiness to take back the sacked pilots, provided they called off their agitation unconditionally and resumed work immediately. “We are still open to talks, but the pilots are not ready for that. They can be taken back on a case-to-case basis if they call off the strike and come to the negotiation table,” the minister told media persons after meeting officials from the Airport Authority of India here.

Around 400 AI pilots — under the banner of the Indian Pilots Guild (IPG) — went on a strike on May 7 to protest the airline management's decision to allow the erstwhile Indian Airlines pilots to train on the newly inducted Boeing 787 Dreamliners.

After the strike was declared illegal by the Delhi high court, the management sacked 101 striking pilots and also de-recognised the pilots’ guild.

Singh said his ministry had held three discussions with the protesting pilots, but they were reluctant to budge.

With no solution in sight, the management is forced to make new arrangements to tackle the situation.

http://www.hindustantimes.com/India-news/Mumbai/Pilots-can-return-if-they-end-strike/Article1-874289.aspx