SpiceJet not desperate to raise funds, says CEO

The airline not in cash flow crisis, so not desperate for a deal at the moment, says CEO Neil Mills

Chennai: Low-fare carrier SpiceJet Ltdsaid it is not desperate to raise funds from foreign airlines or private equity (PE) investors.

“We will look at foreign investors interests or a PE investor, but we are not in cash flow crisis, so at the moment we are not desperate for a deal,” SpiceJet chief executive Neil Millssaid on the sidelines of the company’s annual general meeting.

On discounts on fares being offered by airline companies, Mills said that the company has to react to competition.

Giving a discount beyond 30 days’ advance booking is welcome, but over-discounting will push airlines into a crisis, he said.

Mills said direct import of aviation fuel is expected to happen shortly and it is only a matter of getting operational approvals. Fuel imports will lower operational costs, but it will be difficult to provide an estimate of cost savings. Jet fuel accounts for 45% of the airline’s operating costs.

Shares of SpiceJet rose 6.05% and were trading at Rs.37.70 in morning trade on BSE. The benchmark Sensex declined by 0.23% to 18,641.98

http://www.livemint.com/Companies/j4Ey4bv2rCHP3oGpYFCczI/SpiceJet-not-desperate-to-raise-funds-says-CEO.html

Inter-ministerial panel calls for fresh approach in setting airport tariffs

NEW DELHI: An inter-ministerial panel has called for a fresh approach to setting airport tariffs after three major domestic airports proposed a steep hike in user charges that threaten to push up airfares further.

The airport financing task force, chaired by Planning Commission member BK Chaturvedi, has recommended that user charges for airports be fixed "upfront" at a reasonable level. "This will not only protect user interests, but also eliminate regulatory uncertainty over tariff fixation as also the potential for gold-plating of costs," the panel said in its report.

The panel's view assumes significance as the Airports Economic Regulatory Authority (AERA) is considering the proposals of the airports at Kolkata, Chennai and Mumbai. Earlier this year, the regulator had approved a 340 per cent increase in user charges at the New Delhi airport. People with knowledge of the matter said that while Mumbai International Airport Ltd (MIAL) has proposed a 660 per cent increase in user charges, the airports at Kolkata and Chennai, which are operated by the Airports Authority of India (AAI), have sought the introduction of a steep user development fee (UDF) on passengers besides a significant increase in user charges paid by airlines.

The panel said, "In case of Delhi, Mumbai, Bengaluru and Hyderabad airports, passenger tariffs have risen significantly mainly because of a cost plus tariff structure, as well as a very high revenue share to be paid to AAI in the case of Delhi and Mumbai airports. Experience from these projects suggests that 'cost plus tariffs' should be avoided in future."

Suggesting that airport projects be structured in the same way as sectors such as power, roads and ports, where the tariff is pre-determined at the time of bidding, the panel has stressed that such an arrangement "would be welcome for all airlines and passengers".

As a case study, the panel examined AAI's tariff filings with the airports regulator for Chennai airport. The airport has sought to raise landing charges for international flights by at least 118 per cent and parking charges by 83 per cent. The Kolkata airport has proposed the same hikes, with a 6 per cent annual increase in rates thereafter. While airlines are expected to pass on these costs to passengers, the Chennai airport has also sought to impose a user development fee of Rs 667 each on passengers departing on international flights and Rs 165 on domestic passengers.

The UDF proposed by the Kolkata airport is Rs 1,000 for international flights and Rs 400 for domestic flights.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/inter-ministerial-panel-calls-for-fresh-approach-in-setting-airport-tariffs/articleshow/16565315.cms

Mallya battles angry shareholders

Confirms talks underway with strategic players

Confirms talks underway with strategic players

At Kingfisher Airlines’ annual general meeting on Wednesday, Chairman Vijay Mallya once again assured aggrieved shareholders he would get the company back into shape.

A year earlier, Mallya had uttered the same words. However, since then, the condition of the company has worsened.

Compared with aircraft strength of 66 earlier, Kingfisher Airlines now has about 40 aircraft, of which 15 are operational. It is understood the airline has lost about four slots in the Mumbai airport. The airline, which earlier operated about 360 flights a day, currently operates merely 80 flights a day.

The company’s debt has risen to about Rs 9,000 crore, on a negative net worth, and it has failed to record a profit in the six years of effective operations.

Many shareholders were critical of how the company’s debt had spiralled out of control and the fact that the management had not taken active steps to prevent this. Some even termed the management ineffective, adding it needed a change. Also, many shareholders said if the current management continued to be in place, the government’s recent announcement of allowing foreign direct investment into the civil aviation sector wouldn’t be of much help to the company. Some, however, supported Mallya, saying all businesses saw ups and downs. Mallya, they added, should turn the situation around as soon as possible.

Mallya told shareholders while the situation was tough, given the operating conditions, all efforts to recapitalise the company had been made. “What can I say in such a situation, when the media is on an overdrive, writing negative stories on Kingfisher? But my responsibility is towards the shareholders and I can assure we are putting in all efforts to put the company back into shape,” he said. “FDI in aviation has been opened up, and we are engaged with a few strategic global players, in addition to few Indian investors,” he added.

A few shareholders said Kingfisher’s dismal state of affairs was affecting the UB Group. Some said it was sad Kingfisher Airlines employees were not being paid salaries since the past four to six months.

Shares of KFA on Wednesday surged about 9 per cent after Mallya said the carrier was in talks with foreign airlines for a possible stake sale.

“It is indeed an unfortunate truth that sala-ries are pend-ing,” Mallya said.

Adding the company was sensitive to this aspect, even helping employees during emergencies. “Even the top VPs (vice-presidents) haven’t drawn salaries and are leading the company from the front,” he said.

So far this financial year, promoters had infused Rs 1,154 crore into the company, he said.

http://www.business-standard.com/india/news/mallya-battles-angry-shareholders/487776/

No fresh airline licence for now

Govt to review decision after demand assessment

The euphoria over the government’s decision to permit foreign carriers up to 49 per cent stake in domestic skies will be tempered, with the civil aviation ministry deciding not to give fresh licences to set up a greenfield airline for the time being.

Speaking to Business Standard Civil Aviation Minister Ajit Singh said, “We are not giving licences for greenfield airlines.

As of now, FDI (foreign direct investment) in aviation can come only through existing airlines.” Under the current policy, a start-up airline has to get a no-objection certificate from the ministry, tantamount to a licence.

After that, it has to get a scheduled operator’s permit. The DGCA (directorate general of civil aviation) also has to clear the airline’s security preparedness.

Singh said another call would be taken once the ministry, working on an “aircraft acquisition policy”, evaluated demand for planes in relation to the estimated passenger growth and orders placed by domestic carriers.

On the one hand, the move limits the choice of foreign carriers to only three-four Indian companies looking for foreign equity — mainly, SpiceJet, GoAir and Kingfisher Airlines.

But, on the other hand, it provides breathing space to domestic carriers such as Air India to put their operations in order.

The Centre for Asia Pacific Aviation (Capa) projects the Indian aviation industry will more than treble over the next decade, emerging the third largest market in the world.

Capa’s India head Kapil Kaul says, “It takes about $100 million to start an airline.

There are many in India who would be ready to invest $50 million and tie up with carriers such as Air Asia, Jet Star and Tiger Airways.”

AIRCRAFT ORDERS BY DOMESTIC CARRIERS
Airline	Order		Delivery time
GoAir	72	A320 NEO	2016-20 (17 A320 deliveries till 2016)
IndiGo	221	A320	2015 (of which 150  A320 NEO and 30  A320 to be delivered post 2015)
Jet Airways	4	A330-300	Nov 2012 to Feb 2013
	5	A330-200	Oct 2013 to Aug 2015
	31	Boeing 737-800	July 2012 to Dec 2017
	10	Boeing 787	Feb 2014 to Aug 2015
	5	ATR 72-600	Nov 2012 to Apr 2013
SpiceJet	30	Boeing	2014-19
	3	Bombardier Q400	2012-13
Air India	27	Boeing 787	2012-16
Boeing projects Indian airlines will need 1,450 new aircraft over 2012 to 2031, valued at $175 billion Source: Companies

http://business-standard.com/india/news/no-fresh-airline-licence-for-now/487751/

AAI union leaders on hunger strike

NEW DELHI: Office bearer of Airports Authority Employees' Union(AAEU) today went on a three-day hunger strike protesting issues like "inordinate delay" in resolution of human resource matters and privatisation of some airports.
"The Airports Authority of India (AAI) management has failed to implement the common seniority for its employees, which was formed in 1994 following the merger of International Airports Authority of India and National Airports Authority of India. Due to this there is a strong resentment among the employees as they are being denied their legitimate rights," AAEU General Secretary Balraj Singh Ahlawat said.
He said over 20,000 employees are suffering due to management's "lackadaisical attitude".
The union office bearers staged hunger strike here at the Rajiv Gandhi Bhawan, the headquarters of the Civil Aviation Ministry and AAI, and at various other places in the country.
The AAEU, which is the biggest union of the AAIemployees with a membership of around 12,500, has also been protesting against the "unilateral change" in their pension option.
The employees' union is also objecting to government's plan to entrust maintenance work of the Kolkata and Chennai airport terminals, built by the AAI, through PPP model.
Besides, the AAEU is opposed to separation of Air Navigation Service from the AAI, saying it would take away the mini-ratna status of AAI.

http://articles.economictimes.indiatimes.com/2012-09-24/news/34062141_1_aai-employees-aaeu-airports-authority-employees-union

Trivandrum International Airport judged the best AAI-governed airport

THIRUVANANTHAPURAM: Trivandrum International Airport (TIA) has bested metro airports of the country to top the latest airport service quality (ASQ) survey by Airports Council International. The airport has been adjudged as the best maintained international airport of the 10 airports governed by the Airports Authority of India, with a rating of 4.48 on a 5 point scale. Calicut International Airport came second with a rating of 4.19 and Guwahati International Airport came third with score of 4.18.

ASQ survey measures the levels of service delivered by an airport in comparison with other airports. The key performance indicators are waiting time during check-in, security measures, number of baggage carts available, flight information display, ease in connecting with other flights, walking distance inside the terminal, waiting time at immigration, friendly staff.

The average rating of the ten participating airports at Jaipur, Goa, Kozhikode, Ahmedabad, Guwahati, Thiruvananthapuram, Pune, Lucknow, Kolkata and Chennai is 3.89, while the global average is 4.08. The current ASQ rating is for the April-June (2012) period. TIA received a 4.15 rating during the Jan-March survey. Guwahati was top airport during the first quarter.

"We are very happy and honoured by this recognition. I feel there is room for improvement with respect to particular requirements of the airport. The endeavour is to maintain the standard," said airport Director VN Chandran.

http://timesofindia.indiatimes.com/city/thiruvananthapuram/Trivandrum-International-Airport-judged-the-best-AAI-governed-airport/articleshow/16565736.cms

Kingfisher Airlines in stake sale talks: Mallya

BANGALORE: Vijay Mallya, chairman of the beleaguered Kingfisher Airlines (KFA), on Wednesday said he was in talks with foreign carriers for a possible stake sale, amid protests by some shareholders and edginess among bankers over steps to recover their dues.

Lenders are keeping close tabs on progress of FDItalks after the government allowed foreign airlines to buy up to 49% in Indian carriers. A section of lenders is pushing for a quicker decision on the issue, especially because they are losing money every quarter by setting aside funds for potential losses. The bank chief said that the airline had told them several months ago that it was in talks with a foreign carrier but there is little to show by way of movement on the issue.

"Suffice it to say that we are having conversations (with foreign carriers). As for how close we are (to concluding a deal), the policy on FDI in aviation was announced only ten days ago. You can go so fast and not faster," Mallya told reporters a day before a meeting with bankers.
Mallya needs an investor to turn around the company. Kingfisher Airlines has a debt of nearly Rs 9,000 crore and the company has not been able to pay its employees' salaries because of widening quarterly losses.

Even the consortium of bankers, who cumulatively have a 24% stake in Kingfisher Airlines, have been pressing Mallya to raise capital through a stake sale in any of the group companies. "We have regular meetings with our banking consortium. I can confirm that there is a meeting tomorrow and we will make a presentation to them as requested," Mallya said on the sidelines of the annual general meeting of United Breweries, the flagship company of the UB Group.

Later in the day, at the AGM of Kingfisher Airlines, many shareholders vented their frustration. "We need God's blessings and good luck to save the company," one shareholder said.

Some others asked Mallya to change the management team of the airline in order to infuse investor and shareholder confidence. "Even if FDI or any other form of investment were to flow into the company, the management needs to change," said Raghuraman, a Kingfisher Airlines shareholder. He said Mallya did not respond to the issue of management change.

He remained belligerent and told shareholders that it was wrong to say that some domestic airlines were profitable. "Some airlines use international revenue to show profit, while one airline uses the sale and lease back of aircraft every month to show profit," he said.

Responding to reports that only seven Kingfisher aircraft were flying, Mallya said 15 aircraft were in operation, flying on 80 routes each day. An airline spokesperson told TOI that another 40 aircraft continued to have their air operators permit. During the same period a year ago, the airline had 66 aircraft flying.

Mallya said at the AGM that promoters had infused Rs 1,154 crore into the airline since April 2012. "We don't know how this money has been utilized though," a shareholder said.

http://timesofindia.indiatimes.com/business/india-business/Kingfisher-Airlines-in-stake-sale-talks-Mallya/articleshow/16564750.cms

Malayalee Association protests against Air India Gulf flight cancellations, fares

Protesting against cancellation of international flights without advance information and exorbitant fares being levied by Air India on the Gulf-Kerala sector, the Capital’s Malayalee Association on Wednesday submitted an appeal to Union Civil Aviation Minister Ajit Singh asking for his urgent intervention.

Association president V. C. Mathookutty said: “The entire Middle-East Malayalee community has been facing great difficulty in travelling, whether it is the international or the domestic sector, due to frequent flight cancellations and delays by Air India. Poor passengers are treated unfairly because maximum fares are levied on sectors operating to and from Kerala. Considering the heavy passenger movement from Kerala’s airports, Air India introduced special flights under the brand name Air India Express. Instead of solving our problems, this has created more problems than we can think of.”

He added that flights from Kerala sector were being withdrawn under the guise of providing connectivity to the Haj passengers. Demanding that Air India Express operations be resumed to and from Kerala, the Association has asked for use of Boeing 777 aircrafts (which were on offer for wet-lease operations to others and now kept unutilised).

Association general secretary Sibi Sebastian added: “We also have demanded that the department concerned study the fare structures and bring rationality and parity on all flights connecting Kerala.

http://www.thehindu.com/todays-paper/tp-national/tp-newdelhi/malayalee-association-protests-against-air-india-gulf-flight-cancellations-fares/article3940720.eceerala.”

Chandy conveys protest to AI team

Chief Minister Oommen Chandy on Wednesday summoned Air India officials located in the State capital to his official residence and registered the State government’s strong protest against the national carrier’s action cancelling flights to the Gulf without notice and the steep hike in air fare.

The meeting took place soon after the morning session of an extended Cabinet session and the entire Cabinet team was present at the meeting.

The Chief Minister made some candid references to the manner in which Air India treated the Gulf passengers. Mr. Chandy also handed over a letter to the Air India (AI) Station Manager, conveying to the AI’s Chairman the State’s strong protest.

The Air India team headed by Station Manager S.G.S. Jacob explained the carrier’s stand. He said that it was only in the case of the Sharjah flight that the airlines could not convey information about its cancellation on time. The reason was that Air India Express passengers did not have SMS facility for providing information about flights. Moreover, several passengers had not given their phone numbers or that of their travel agent. This made it difficult to convey the message on time, they said.

The Cabinet members felt that there was no justification for cancelling the flights on the Gulf sector, which was a revenue earner for the airlines, to transport Haj pilgrims. The Haj pilgrimage was planned much ahead and the airlines should have made alternative arrangements, Ministers Aryadan Mohammed and K.C. Joseph said.

Mr. Chandy said that cancellation on account of unforeseen circumstances was understandable; the manner in which the cancellation was made and the brusque behaviour of the airline staff were unjustifiable. He also sought to know the rationale in hiking passenger fares.

At one point of time, the officials pointed out that only 40 per cent of the passengers could not be catered to. Chief Secretary K. Jayakumar, however, said that the percentage quoted was only intended to minimise the damage, even while forgetting the psychological damage that had caused. He said that the airline staff could have at least been courteous.

This is for the first time that Air India officials were being summoned by the entire Cabinet team to express the sense of consternation that the people felt about Air India’s actions.

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/chandy-conveys-protest-to-ai-team/article3940942.ece

Mobile self check-in to be implemented at Bangalore airport

Bangalore, Sept. 26:  

Bangalore airport plans to implement mobile self check-in and RFID solutions.

Bangalore International Airport Limited (BIAL) has entered into a partnership with IBM, by which passengers can use their mobile phones to check-in instead of waiting in the line.

Through this tech modernising initiative, IBM will build a technology infrastructure that will support BIAL’s future plans of providing new passenger experiences such as using a mobile phone coupled with RFID technologies, thereby freeing up its workers to concentrate on services such flight scheduling and better baggage handling, according to BIAL officials.

This solution would connect disparate systems and processes across the airport and create a scalable platform which could encourage more passengers to fly, say IBM officials. The airport’s annual air traffic volume increased by 7 per cent during 2011, and the number of passengers increased to 12.53 million from 11.24 million in 2010.

Daniel Bircher, Director Operations, BIAL, told Business Line that while the airport is equipped with monitoring systems, the increased complexity arising out of systems running on different software, is putting a lot of stress on its personnel such as Air Traffic Controllers (ATCs) and other ground crew. With this solution, BIAL can reduce costs, he added.

However, BIAL did not put a number on the cost savings accrued. India is poised to move from the ninth largest civil aviation market to the top five in the world within the next decade, said Rahul Sharma, Partner, IBM Global Business Services, India/South Asia Region.

Interestingly, BIAL has undertaken this initiative at a time when air travel, especially premium travel, could be affected due to the global economic slowdown, according to International Air Transport Association (IATA).

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3939747.ece

Banks want Mallya to pledge other Kingfisher brands

Kingfisher Airlines’ turnaround plan to be presented today

New Delhi, Sept. 26:  

The 17-bank consortium that funded Kingfisher Airlines (KFA) will on Thursday urge the ailing airline’s promoter Vijay Mallya to pledge other Kingfisher brands as collateral, such as beer, mineral water and music CDs.

This will be done when Mallya meets the consortium bankers’ at Bangalore for a presentation on how he plans to turnaround the airline, sources in the banking industry said.

Currently, the Kingfisher Airlines is the only brand that has been charged with the banks.

Now, the banks are looking to bring other Kingfisher brands as charge under their fold, including the market leading Kingfisher beer brand. The other brands sought to be brought under charge could be those relating to mineral water and music CDs.

The proposal to extend charge to other brands in the group comes in the wake of erosion in the security value on banks’ existing exposure to KFA.

“The issue of extending charge to other Kingfisher brands is part of the agenda of Thursday’s meeting,” said a banker, who requested anonymity.

Mallya is expected to spell out in his presentation how further equity funds will be pumped into the private carrier.

He is also likely to present a roadmap for time-bound reduction in liabilities to the banking system.

The issue of alternate source of funds in case foreign equity (including from foreign airline) does not materialise will also be discussed, it is learnt.

Against a net exposure of about Rs 6,339 crore, the total value of pooled security available with the banks was Rs 5,213 crore, it is learnt. This translates into security coverage of about 82 per cent.

Kingfisher Airlines brand was the only intangible and all other assets were physical assets on which charge was created.

An international consulting firm had in April 2010 valued the Kingfisher Airlines brand at Rs 4,111 crore.

The continuing losses incurred by the private airline has eroded the security value, especially in the recent years, compelling the consortium to seek extension of charge to other Kingfisher brands, it is learnt.

At Thursday’s meeting, Mallya is expected to spell out the progress on sale of non-core assets — Kingfisher House at Mumbai and promoter’s Villa in Goa.

Bankers have already opposed its proposal to substitute the charge of promoters’ villa in Goa with another asset.

The future course of action by banks in the KFA case would largely depend on how soon the promoter is able to bring capital into the airline

http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3939703.ece

SpiceJet not in urgent need of funds now: CEO

Chennai, Sept. 26:  

The no-frills carrier SpiceJet Ltd said it is in no hurry to mobilise funds. There is no cash flow crisis as of now, and hence, “we are not desperate” to raise funds, said Neil Mills, Chief Executive Officer. However, he said private equity is one of the options the company will explore.

On foreign direct investment, he said though the company has not had formal talks with any airline as yet, it will evaluate all individual deals, and will strike one “that would make economic sense to our shareholders and the company”.

Speaking to a group of media persons on the sidelines of the company's annual general meeting held here today, he said lower occupancy, hike in airport charges, volatile currency and an all-time high in fuel prices are the major challenges the aviation industry is facing.

Fuel alone accounts for over 45 per cent of the carrier’s operating cost. Direct fuel import will lower operational costs. In the case of SpiceJet, direct import of ATF should happen anytime soon. There are some bureaucratic delays and “should be cleared in a few months”, he said.

Refusing to give out the exact discount the carrier is offering on its fares, he said that “our rates are competitive enough”. 

After five straight quarterly losses, SpiceJet posted a Rs 56-crore profit for the April-June quarter of the current financial year, against a Rs 72-crore loss in the comparable previous year quarter. A press release from the company attributed the improved performance to higher passenger load factors.

http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3939702.ece

Kingfisher in talks with foreign airlines: Mallya

Bangalore, Sept. 26:  

Kingfisher Airlines is in talks with a few foreign carriers as also domestic investors for a possible stake sale, confirmed Chairman Vijay Mallya on Wednesday.

This gave the airline stock a near-9 per cent boost. On the BSE, the stock gained about 10 per cent intra-day before settling at Rs 15.70, up 8.65 per cent.

“We are in talks. But the FDI announcement has just come in. So, it is early days,” Mallya told newspersons on the sidelines of the Airline’s AGM.

Mallya is to meet the consortium of bankers on Thursday to make a presentation. “I can confirm that there is a meeting with the consortium tomorrow. We will make a presentation to them as requested,” he said. Mallya said the airline had a meeting with the consortium last month as well. “We obviously have to keep meeting (our) bankers,” he said.

At the AGM, Mallya told shareholders that the promoters had infused Rs 1,154 crore since April, 2012. Hitting out at the media, he said that “reports on Kingfisher trouble are utterly baseless.” He said the airline’s share prices are taking a beating because of “sustained negative media reports.” He also claimed that airlines making profits are doing so either because of international operations or through the sale-and-lease-back model.

He denied that Kingfisher had only seven aircraft operational. About 40 aircraft are operational and the remaining 25 would be back on air after recapitalisation. “Every airline is struggling and so it was prudent to cut back capacity to contain losses,” he said.

Mallya said low-cost model was not the only option to make profits and hence the airline was in the process of reconfiguring seats to become a full service carrier.

Shareholders angry

But shareholders were unimpressed with Mallya’s explanation and blamed the current management for the poor state of the company. Some said even FDI would not rescue the airline because the management was inefficient. A vendor for the airline said the company should consider converting the amounts due to him and others into equity shares at a discounted price.

http://www.thehindubusinessline.com/todays-paper/article3939724.ece