Technology innovation is must for Indian aviation sector: Report

HYDERABAD, MARCH 15: 

In the next two years, about 86 per cent of air passengers will want boarding passes on their mobiles without carrying print-outs.

Over 40 per cent of the passengers may prefer check-ins through their mobile phones and over two/thirds of passengers will use self-service check-in.

Social media, like Facebook, will also play important role in travel information and seat-reservation.

To cater to these requirements which are just catching up and achieve cost efficiencies, Indian aviation sector should take up technology innovation in a big way, says a report on 'Innovation & Technology: Opportunities for Transformation in Indian Aviation.'

The report, prepared jointly by the CAPA - Centre for Aviation and Air Transport IT and SITA, was released at the ongoing India Aviation 2012 here on Thursday.

Aviation businesses should adopt a hybrid-model for outsourcing 60-80 per cent of non-core functions.

"Outsourcing provides access to the latest technology, best in class providers, supports faster decision-making and implementation and reduces capital expenditure," the report said.

Indian air transport industry is set for an exponential growth. The total investment, which was estimated at $27 billion since 2000, is expected to reach $120 billion by 2020.

Out of this, $80 billion would be spent on new aircraft.

The passenger traffic had gone up from 42 million in 2000 to 150 million now while the fleet had increased from 119 aircraft to 437.

By 2020, 452 million passengers will fly each year with over 1,030 aircraft, it added.

SOURCE

Court allows Paramount to restart operations: Ajit Singh

NEW DELHI, MARCH 15: 

The Madras High Court has granted permission to Paramount Airways to re-commence operations, however, the airline has not responded further, the Minister for Civil Aviation, Mr Ajit Singh, told Parliament.

In a written reply to Parliament, the Minister said the only Scheduled Operator's permit which was suspended during the last three years was that of Paramount, which was placed under suspension from April 19, 2010, because they did not pay the lease rental and their lease was terminated by the lessor resulting in de-registration of their aircraft.

"However, due to injunction order passed by Madras High Court, it was revoked on April 30, 2010, but again placed under suspension after disposal of the writ petition by the single bench of Madras High Court.

"However, the orders were again kept under abeyance according to the order of October 22, 2010 received from the Division Bench of the High Court of Madras, in which the Court also directed the Airline not to commence flying unless permitted by the Court," the Minister said.

SOURCE

International Air Transport Association (IATA) in talks with Kingfisher on revoking suspension

The International Air Transport Association (IATA) is in talks with the crisis-hit Kingfisher Airlines to revoke its suspension from the apex body for the global airline industry, its head Tony Tyler said Thursday.

Tyler said they were discussing with Kingfisher on the terms on which it can be reinstated in to the system.

The Geneva-based IATA last week suspended the beleaguered private airline from the global carrier-to-carrier account clearing system following non-payment of dues.

"The difficulties of Kingfisher are well known. We had to suspend Kingfisher from the travel agency clearing house. It is necessary to protect the whole system. It is the system we operate on behalf of hundreds of airlines," Tyler told reporters on the sidelines of India Aviation 2012 here.

He said the suspension of Kingfisher from the clearing house was not unprecedented as the airlines failed to meet the obligations in terms of payment.

He hoped that the debt-ridden airlines would come back to normal by overcoming difficulties.

To a query, he said it was for the Indian government to decide on whether to intervene in the Kingfisher affairs.

Civil aviation minister Ajit Singh Wednesday ruled out the possibility of bailing out the airline.

SOURCE

Airlines need to review fare structure

NEW DELHI, MARCH 15: 

Airlines need to review their fare structure so as to cover the cost of operations, the Economic Survey 2011-12 tabled in Parliament on Thursday states.

The Survey adds that the Working Group headed by the Secretary Civil Aviation, which made the recommendation on need to review airfare structure, also decided that an economic regulatory framework may be formulated with regard to excessive fares/pricing by May 31 this year.

The Group also recommended that State Governments rationalise value-added tax on aviation turbine fuel, foreign airlines be permitted to invest in domestic airlines and direct import of ATF by airlines for their own consumption be allowed.

"The Working Group has also decided that airlines should be asked to prepare their turnaround plans, which would be examined by the concerned departments of Government separately for each airline," the Survey states.

It adds that air traffic continues to register significantly higher rates of growth averaging 18.5 per cent in the last seven years.

"Domestic passenger traffic handled at Indian airports reached 108.1 million during January-November 2011 from 90.5 million in the corresponding period in the previous year registering a growth of 19.4 per cent. Domestic cargo throughput during January-November 2011 stood at 0.75 MMT, the same level as the previous year," the Survey said.

The Government also gave 'in-principle' approval for setting up of greenfield airports at Karaikal in Puducherry and Shirdi in Maharashtra.

SOURCE

Mallya says investments in Kingfisher may be stymied by FDI rules

NEW DELHI, MARCH 15: 

The Chairman of Kingfisher Airlines, Mr Vijay Mallya, on Thursday assured the agitating pilots of his airline that their unpaid salary dues will be cleared soon.

The Chairman, however, refused to share details about where the funds for paying salaries and other dues will come from, especially as several banks have declared the airline as a non-performing asset.

The meeting had been called as pilots and other employees have not been paid for the past three months.

"That (where funds come from) is between the pilots and the management. I had a good productive, very interactive meeting with the pilots. Obviously, the salary issue was addressed. I have assurances that the pilot community will fly," Mr Mallya told the media after a three-hour-long meeting with pilots.

The Chairman said that in the next two or three days you will hear the full plan. "Our plan is to make sure we get the confidence of the guests who fly with us return. That there is 100 per cent schedule integrity and reliability. That the authorities are happy all this will be worked out in the next three days." Mr Mallya said.

INVESTOR INTEREST

He also indicated that one international airline and two non-airline investors were interested in investing in the airline.

Mr Mallya, however, claimed that the Foreign Direct Investment (FDI) rules did not allow the investment to be made at the moment.

Meanwhile, Mr Mallya will meet with Director-General of the International Air Transport Authority (IATA) here on Friday.

"Financials will be discussed. But you should not forget the money that IATA is already holding," Mr Mallya said when asked whether Kingfisher will make any payments to IATA at the meeting.

The airline has been suspended from the IATA booking settlement plan for not settling its financial dues, a move that made it impossible for travel agents globally to sell its tickets

Source

Fix cost issues, IATA tells Centre

The International Air Transport Association (IATA) has urged the Indian government to address the issues of high fuel and service tax as well as cost and infrastructure, to remove the shackles of the aviation sector.

Equally important is giving a go-ahead to the Civil Aviation Ministry's proposals to allow up to 49 per cent direct investment by foreign carriers in Indian airlines. Such strategic tie-ups have strengthened airline groups in other parts of the world, IATA Director-General and CEO Tony Tyler said on the second day of Indian Aviation 2012 here on Thursday.

At the same time, Mr. Tyler cautioned that allowing foreign airlines to invest in Indian aviation was not a panacea. Without addressing the other three pillars - airport costs, taxes and infrastructure - FDI might only end up as a theoretical exercise.

"Jet fuel constitutes 48 per cent of airlines' expenditure while it is 30-32 per cent around the world. The problem is not about the fares but the cost," he said while referring to the 340 per cent hike in charges by the Delhi International Airport. "The sector should become competitive to sustain itself," he added.

The Civil Aviation Ministry's intent for resolving these issues could be addressed only through coordinated effort among all ministries - Tourism, Finance, Environment and others - and a common vision. Mr. Tyler made these candid remarks during his key note address and later at the media interaction.

"The industry is now in crisis. Air India, the national carrier is on life support, the difficulties of Kingfisher are well known and the sector, as a whole, is not generating sustainable profits even in the high growth market of 12 per cent domestically and 9 per cent internationally," he said.

On the potential of the Indian aviation sector, he said that against the average air travel of 1.8 times a year by people in the U.S., in India it was 0.1 trip a year, that is, one trip every ten years. Aviation was responsible for 0.5 per cent of India's GDP as it was the backbone of trade and tourism and supported 1.7 million jobs. With a huge middle-class advantage, aviation sector's growth would boost Indian economy, Mr. Tyler said.

SOURCE

Airbus eyes big in India

Expressing optimism over the growth of the Indian air travel sector in the coming years in spite of the current turbulence, Airbus has forecast that Indian carriers will require 1020 new passenger and 20 freighter aircraft valued at US $ 145 billion between now and 2030.

Addressing a press conference at the India Aviation 2012 here on Thursday, Joost van der Heijden, head of airline marketing of Airbus for India and Southeast Asia, said that India was expected to be the fastest growing country for air travel over the next 10 years. The international passenger traffic would grow by 8.8 per cent during the next decade as (global average 7.7 per cent) and domestic traffic by 10 per cent,

To accommodate the growth driven by the growing middle class and urbanisation, as many as 1020 new aircraft would be required to be added to the existing fleet of 327, making India the fourth largest market in terms of number of aircraft and value. They would include 646 single-aisles like A320 and A 320 neo family, 308 twin aisles like the A350XWB and A330 and 66 very large aircraft such as A380. He said while the company globally targetted 50 per cent of the market, the position was stronger in India and the same was expected to continue. Since 2005, Airbus received over 70 per cent of the total orders placed by Indian carriers.

EMBRAER OPTIMISTIC

Leading commercial jet manufacturer Embraer, too, sees huge opportunities for private jets in India in the next decade.

Industry estimates project the number of new jets during 2012-21 at 1,363 at an estimated $40 billion with China accounting for $17 billion to $20 billion.

Embraer Vice-President Jose Eduardo Costas said given the projected growth in the demand, the company could not overlook India as it was the second largest market for the airline after China.

Mr. Costas said the company was looking at opportunities here on the lines of Singapore Airlines' Jet Suite tie-up wherein private jets catered to the local transport needs of high-end business customers arriving in the United States.

SOURCE

Foreign airlines' investments in domestic carriers finds favour

The Economic Survey 2011-12 appeared to be favourably inclined to grant permission to foreign airlines to invest in domestic airlines.

"The FDI policy currently does not permit foreign airlines' investments that denies them access to potential sources of capital and expertise," said the Survey.

HAILS ATF IMPORT

The Survey lauded the government's decision to allow airlines to import aviation turbine fuel (ATF) directly, as "it will improve operational economies."

However, it said that in the long run, "airlines will need to improve their internal accruals, access to domestic and international capital, and their overall operations to remain vibrant and viable. Air carriers have been affected by high ATF prices because of high incidence of taxes. The recent decision to allow them import of ATF will hopefully improve their operational economies."

MAJOR CHALLENGES

Listing the major challenges for the sector, which is facing turbulent times, the Survey said airlines were bogged down by high and growing debt burden.

"The airline industry in India suffers from huge debt burden - close to $20 billion (estimated for 2011-12). Half of this debt is aircraft related and the rest is for working capital loans payments to airport operators and fuel expenses."

Even though air traffic was growing, averaging 18.5 per cent in the last seven years, the financial performance of airlines had not kept in sync, and it necessitated more injection of money into the sector, it noted.

CONTINUOUS INVESTMENT

"High growth rates for the past few years in aviation, particularly in the passenger segment, are not getting reflected in the financial health of the carriers. To manage the next growth phase safely and efficiently, significant and continuous investment will be required," it said.

The domestic passenger traffic handled at Indian airports grew by 19.4 per cent during January-November, 2011 touching 108.1 million. Further, international passenger traffic and at Indian airports grew by 7.7 per cent during January-November 2011.

GREEN-FIELD AIRPORTS

It said the government gave "in-principle" approval for setting up green-field airports at Karaikal in Puducherry and Shirdi in Maharashtra. The upgrading of the Kolkata and Chennai airports, including construction of new terminals, were at advanced stages of completion.

"In another 18 non-metro airports, various upgrading works like expansion of terminal buildings, aprons, taxiways, and aerobridges have been taken up. For improving air navigation services, the Airports Authority of India has installed the new ATS automation system at Chennai," the Survey pointed out.

SOURCE