Cheaper air travel could be illusory

According to sector experts, UDF charges are likely to go up in the absence of ADF

While Civil Aviation Minister Ajit Singh and some experts say abolition of the airport development fee (ADF) at the Delhi and Mumbai airports from January 2013 would lead to lower cost of travel, it might actually do the opposite.

Experts say the expected financing gap in the case of Mumbai International Airport Ltd (MIAL) will be Rs 4,200 crore and in the case of Delhi International Airport Ltd (DIAL) Rs 1,500 crore. Domestic passengers pay Rs 200 and Rs 100 as ADF at Delhi and Mumbai airports, respectively, and international passengers pay Rs 1,300 and Rs 600 a trip, respectively. Delhi also levies a user development fee (UDF) of between Rs 190 and Rs 450 on domestic passengers and Rs 400-1,000 on international travellers.

Sector experts say in the absence of ADF, the UDF charges are likely to go up. The amount will be fixed by the Airports Economic Regulatory Authority.

A GMR Group (it runs DIAL) spokesperson earlier told Business Standard that raising funds in the next two to three months to compensate for the loss of ADF (that is, raising debt and debt/equity to fill the gap) would be difficult. Adding, the government's move will pose challenges for private investors in the project, too.

Amber Dubey, partner and head-aviation at global consultancy KPMG, feels the low passenger traffic and profitability could make it difficult for airport operators to raise fresh debt or equity. Add an increased cost of funding in the present business environment, making debt and equity more expensive. In the project agreements, experts say an airport operator is allowed to recover the entire funding gap plus returns on the debt or equity brought in, plus the additional taxes, if any, from passengers. That's what will make airport rates higher for passengers in the long run.

Plus, UDF can always be revised if traffic falls, say experts. If the project cost increases, UDF will be used to provide more returns.

Another analyst feels even if we assume UDF will not be raised, with most airlines not seeing a good business environment, they can't afford to pass on the benefit of no ADF. And, passengers are only given a fixed figure they need to pay for travel, not a breakdown of costs.

Therefore, nothing stops airlines from not retaining the cost they charge today. Especially on the Delhi-Mumbai route, the competition will not let airlines/airports allow a lower charge structure.

ADF is charged to bridge the project funding gap. That is, it is a 'capital receipt', not taxable. Assume the airport company needs Rs 1,000 crore and manages to get Rs 800 crore. For the remaining Rs 200 crore, the government allows it to raise this by way of ADF. This Rs 200 crore can be put to use entirely for infrastructure costs like building terminals, runways and so on. For calculation of fare, only Rs 800 crore will be factored in and not the Rs 200 crore.

UDF makes up for a revenue shortfall if an airport is not able to get enough returns on its investment and is not economically viable. It is a 'revenue receipt'; that is, taxable. Taking the earlier example, the airport company is supposed to pay taxes to the Airports Authority of India and other taxes from the Rs 200 crore raised. Hence, it retains very little for its own usage. For calculation of fare, only Rs 1,000 crore will be factored.’

http://www.business-standard.com/india/news/cheaper-air-travel-could-be-illusory/490013/\

Kingfisher Airlines to lose flying permit if it doesn't respond to showcause notice by October 19: Aviation ministry

NEW DELHI: Once a premium carrier - Kingfisher Airlines grounded since October 1 stands to lose its flying permit if it fails to explain to aviation regulator DGCA abrupt cancellations of flights and non-adherence to schedule in the past.

"Tomorrow is the last day they have to respond to the show cause notice sent to them (Kingfisher Airlines) by the DGCA. If they don't do so, we wont give them any extra time and their license may be suspended," a senior official from the civil aviation ministry told ET.

The sector watchdog Directorate General of Civil Aviation (DGCA), did not approve the Vijay Mallya-owned carrier's winter schedule on Wednesday.

According to sector experts, this denied approval automatically means an adhoc license suspension, as the grounded carrier can't fly between October and March, which is the entire duration of the winter schedule, without the said approval.

The employees of the airline, who haven't been paid for the past seven months, have refused to join work unless their salary arrears are cleared. Numerous negotiations between the airline management and staff have failed over the past fortnight as employees stuck to their demand for wages.

Even the response to the show cause that the airline needs to submit to the DGCA by tomorrow needs to include its plan on clearance of employees'salaries.

Today the airline's scrip slipped 5% to touch Rs 12 after the civil aviation minister Ajit Singh hinted to media persons that the regulator may suspend or cancel the company's flying licence.

The government, which has been giving a long rope to the airline for the past one year, issued a show cause notice a day after a tragic incident took place where Kingfisher Airlines' technician Manas Chakraborty's 45-year old wife Sushmita Chakraborty committed suicide blaming financial stress.

Launched in May 2005, Kingfisher Airlines has never made profit, and is sitting on a debt pile of about Rs 8,000 crore. The company reported a net loss of Rs 650.78 crore ($117 million) for the quarter ended June 30.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/kingfisher-airlines-to-lose-flying-permit-if-it-doesnt-respond-to-showcause-notice-by-october-19-aviation-ministry/articleshow/16864952.cms

Domestic air travel in free fall on high fares

NEW DELHI: High airfares and prohibitive airport user charges at places like Delhi amid a slowing economy have finally taken their toll on domestic air travel. After negative month-on-month growth for a while now, this year is staring at the possibility of witnessing lesser people take to skies than 2011.

The January-September, 2012 period saw 438.4 lakh people flying within the country - 0.9% less than last year's figure of 442.2 lakh in the same period. The single digit negative growth recorded for past many months has also accelerated. Last month saw a 12.4% fall in domestic flyers with the figure at 40.2 lakh as against 45.9 lakh in the same month last year.

Airline officials say they expect the free fall in traffic to be checked with the onset of the festive season. The festive rush is likely to push up aircraft occupancies, which saw 30%-35% seats remaining unoccupied.

"We may see a fall in domestic passengers this year over 2011. The winter schedule will kick in shortly and domestic flights are getting reduced by 19% along with Kingfisherremaining grounded. So there's not much capacity to make up for the lost ground even if demand suddenly picks up in a big way," a senior official said. While passengers do not come flocking to airports now, airlines are hoping for better times financially. "Kingfisher going out of the system has meant that the demand-supply mismatch has been corrected," said an airline official.

On the market share front, LCC IndiGoremained top of the charts, followed closely by the Jet Group. Air India(domestic) regained the third spot by displacing LCC SpiceJet, thanks to an aggressive marketing by the maharaja's team. Kingfisher, which flew till September 30 before a lockout was declared, was the smallest schedule airline with a mere 3.5% share.

http://timesofindia.indiatimes.com/business/india-business/Domestic-air-travel-in-free-fall-on-high-fares/articleshow/16873056.cms

Muscat flight makes emergency landing

Over 150 passengers were stranded at the Rajiv Gandhi International Airport (RGIA) in Shamshabad here on Thursday after a Hyderabad-Muscat flight made an emergency landing due to operational lapses.

Officials said the flight made an emergency landing minutes after taking off from the airport around 6.30 a.m. After a 15-hour long delay, the flight took off around 9 p.m.

Airline authorities shifted the passengers to a hotel during the waiting period.

http://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/muscat-flight-makes-emergency-landing/article4011797.ece

Nod to acquire land for Kannur airport project

656 acres will be acquired under second phase

The State-level Empowered Committee has given approval for the acquisition of 656 acres of land for the proposed Kannur International Airport, Ports and Excise Minister K. Babu has said.

The said expanse would be part of the second phase of land acquisition for the project, Mr. Babu said here on Thursday. Negotiations were on from mid-September with around 1,000 landowners for fixing the value of land.

The negotiations were held in different sessions, grouping landowners in various categories based on the nature of the land, with the value of land starting from Rs.45,000 for an acre.

The negotiations were initiated after protests from the landowners against the prices fixed by a district-level purchase committee (DLPC), which ranged between Rs.25,000 and Rs.80,000 an acre. Because of the protests the Empowered Committee returned the DLPC’s proposal, and asked it to revise the prices.

Of the total 783 acres to be acquired under the second phase, the issue of 656 acres had been solved with the committee’s approval.

Acquisition of the remaining land would begin with the issuance of fresh notifications under Section 4 (1) of the Land Acquisition Act. Notifications issued earlier had lapsed. The first phase saw 1,300 acres of land being acquired.

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/nod-to-acquire-land-for-kannur-airport-project/article4011859.ece

48 services a week by Air India Express

Air India Express will operate 48 services a week from Calicut International Airport, Karipur, to various West Asian destinations from October 28, said a press note issued here on Thursday.

There would be one flight to Al-Ain; seven each to Abu Dhabi, Dubai, Bahrain/ Doha, Muscat, Sharjah, and Dammam; two flights to Salalah; and three to Kuwait. In addition to these flights, Air India Express will operate three flights per week to Mumbai; seven flights to Kochi; and one flight a week to Thriuvananthapuram, taking the total number of Air India flights from Kozhikode to 59 a week.

Following this arrangement, Calicut International Airport will connect the cities of Dubai, Abu Dhabi, Sharjah, Doha, Baharain, Muscat, and Dammam on a daily basis.

All arrivals into the Karipur airport will be before 5 a.m. or after 11 a.m. This is to ensure that no flights are diverted from the airport owing to bad weather. “Daily flights to Dammam have been a long-standing demand,” the press note said.

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/48-services-a-week-by-air-india-express/article4011830.ece

Airport employee found dead

G.G. Balaji (44), a Group D employee in the Chennai airport was found hanging in one of the retiring rooms on Thursday. Police said the incident could have occurred around 10.05 a.m.; they were informed about it around 10.30 a.m. The room in which the body was in was found locked from inside.

A suicide note was recovered in which he undertook sole responsibility for his death. Retiring rooms are located in the second floor in the link building at the airport.

The body was taken to Chromepet General Hospital and after post-mortem examination, handed over to his family members, police said.

A case has been registered under Section 174 (Death under suspicious circumstances) of the Criminal Procedure Code.

http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/airport-employee-found-dead/article4011602.ece

Air Kerala: tour operators ready to buy 50% seats

They say the airline will be a boost to tourism

The Confederation of Accredited Tour Operators (CATO) has expressed their readiness to support the ambitious Air Kerala project by guaranteeing seats from different cities within the country to Kerala and purchasing 50 per cent of the seats in the proposed airline.

CATO is an umbrella organisation of 30-odd government-approved tour operators.

“The filling of seats from different destinations will be a boost to the State’s tourism industry, and will check the exorbitant air fare increase by different domestic carriers, especially to Kerala,” CATO president Abraham George and secretary P.K. Anish Kumar said.

High airfares

CATO pointed out that the status of domestic tourist flow to the State over the past few months was not encouraging owing to high airfares in domestic sector. Even though October is the beginning of tourist season in the State, they said tour operators were upset over the very low rate of booking.

“Kerala is not an affordable destination to families of four or more members as the air fare itself is more than Rs.50,000 (for four persons) for travelling from Mumbai or Delhi to Kochi or Thiruvananthapuram,” the office-bearers said.

Mr. Anish Kumar said the CATO had decided to support the Air Kerala venture to maintain a steady and sustainable growth of tourism. “Air Kerala will play a vital role for the next boom for tourism in God’s Own Country and CATO will provide all support for the airline’s smooth takeoff,” he said.

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·  Domestic tourism hit by high air fares: CATO

·  ‘Booking rate dismal though season has begun’

http://www.thehindu.com/todays-paper/tp-national/air-kerala-tour-operators-ready-to-buy-50-seats/article4011813.ece

Turkey looks to India for more trade, flights

Turkey is keen to not only boost bilateral trade with India, its national carrier also wants permission to operate more flights to various destinations here, a senior Turkish Government official said here late on Wednesday.

Speaking to newspersons, Turkish Ambassador Burak Akcapar said although the two countries had initiated a joint study to promote trade in February 2011, it needs to be signed and negotiations started to give a further boost to trade.

“We believe that with the current set-up, trade will not be able to flourish more than what it is. This year, there is already a little bit of slowdown. Therefore, we need to step up in formulating a new framework that promotes two-way trade exchanges.

At present, the Turkish market is more liberalised than India. This creates a situation in which out of the $7-billion Turkey-India trade, only $756 million is Turkey’s exports to India, the Envoy said.

The Ambassador said a number of issues were holding back trade volumes from growing. “There is a limit on how many marbles and precious stones can be exported to India. We could also export more fresh fruits that would help bring down prices in India. There is also an issue with Turkey’s exports of hazelnuts. The list is very long,” he said.

More flights

The Envoy felt that allowing Turkish Airlines to operate more flights to India would also help the country receive more foreign tourists.

At the moment, Turkish Airlines operates daily flights from Mumbai and Delhi and is keen to operate to six cities, including Hyderabad, Bangalore, Chennai, Amritsar and Kolkata.

http://www.thehindubusinessline.com/todays-paper/tp-economy/turkey-looks-to-india-for-more-trade-flights/article4010497.ece

Kingfisher may push re-launch to Nov 5

New Delhi, Oct. 18:  

Has Kingfisher Airlines put off its re-launch till November 5?

While airline officials declined to say anything on the issue, sources confirmed that a message had gone out to employees informing them that all flights had been cancelled till November 5. The airline had declared a lock-out on October 1, and grounded all flights.

Sources claimed that the latest missive was a pre-emptive measure being taken by the management with all eyes on the meeting scheduled for Monday in Mumbai.

They said that at the meeting, the Management was likely to offer back wages for at least two months to the employees in the hope of winning back some of the striking staff.

“If some employees come back, sale of tickets will open soon after and flights will restart. But if the employees insist that all seven months of salaries are paid before they resume work, then the lock-out is expected to be extended till November 5,” sources said.

Interestingly, till late this evening, the airline’s official Web site was showing that tickets were available for sale from October 24. Sources claimed that the Web site bookings were likely to be blocked by late tonight.

http://www.thehindubusinessline.com/todays-paper/tp-economy/kingfisher-may-push-relaunch-to-nov-5/article4010493.ece

Domestic airlines report 12% drop in passenger traffic in Sept

New Delhi, Oct. 18:  

Domestic airlines registered a decline of over 12 per cent in the number of passengers during September this year, as compared to the same period last year.

Latest data released by the Directorate General of Civil Aviation show that domestic airlines flew 40.18 lakh passengers in September, as compared with 45.87 lakh passengers flown previously.

Analysts say the decline in passenger demand was largely due to the fare hike by airlines . To spur demand, the full service airlines, including Jet Airways and Air India, have dropped fares by 40 per cent if passengers book in advance.

The data indicate that for the fourth successive month, demand was lower than the available capacity.

IndiGo leads

In September, airlines dropped capacity by 1.3 per cent, while passenger demand dropped by 7.7 per cent on a year-on-year basis.

Almost the same trend has continued since June.

During September, Delhi-based low-cost airline IndiGo was the market leader with a market share of 27.2 per cent, followed by Air India (19.3 per cent) and SpiceJet (18.5 per cent).

Jet Airways, along with its low-cost subsidiary, JetLite, enjoyed a market share of 23.8 per cent, although on a stand-alone basis Jet Airways enjoyed a market share of 18.1 per cent, while JetLite had a market share of 5.7 per cent.

http://www.thehindubusinessline.com/todays-paper/tp-economy/domestic-airlines-report-12-drop-in-passenger-traffic-in-sept/article4010492.ece

Mallya warrants case closed

Hyderabad, Oct. 18:  

The case against Kingfisher Airlines, its Chairman Vijay Mallya and four others pertaining to bounce of cheques to the tune of Rs 10.56 crore has been closed by the 13th Metropolitan Court in Hyderabad. This follows an out of court settlement between GMR Hyderabad International Airport Ltd (GHAIL) and Kingfisher Airlines. Consequently the GMR, which operates the GHAIL withdrew its complaint from the designated special court on Wednesday. The Hyderabad Court had issued non-bailable warrants against Mallya and other top executives of Kingfisher Airlines last week, when they failed to appear in person.

http://www.thehindubusinessline.com/todays-paper/tp-economy/mallya-warrants-case-closed/article4010488.ece