Thursday 7 March 2013

AirAsia nod only after close scrutiny


Even as concerns remained over whether AirAsia’s India plans has run into rough weather, Union Minister of Commerce, Industry and Textiles Anand Sharma clarified that the Foreign Investment Promotion Board (FIPB) had given its approval after “careful scrutiny”.
“You have to clearly read the press note. It is FDI in civil aviation in an existing airline or in the capital of a company. See, you have to look at the fine print. I am sure this decision has been made after very careful scrutiny of the policy and its understanding by the FIPB,” Sharma said on the sidelines of the ICC Asia Pacific CEO Forum on Thursday.
The FIPB granted an “in-principle” approval to the Malaysian budget carrier’s plans to start a new airline in India in partnership with Tata Sons and Arun Bhatia’s Telestra Tradeplace Pvt Ltd on Wednesday. This would be the first foreign investment proposal to be cleared by the finance ministry after the easing of Foreign Direct Investment (FDI) policy in aviation.
The Department of Industrial Policy and Promotion (DIPP) has been approached by the aviation ministry for a clarification over whether the amended FDI norms in aviation are applicable to new airline companies or only to existing ones. FIPB officials said that the three companies would now have to approach DGCA for the relevant licences and a scheduled air operator’s permit.
AirAsia had announced its plans to enter Indian skies last month and said that it intends to control 49 per cent in the new airline with Tata group company, Tata Sons and Telestra Tradeplace occupying 30 per cent and 21 per cent respectively. The initial investment in the JV would be around `80 crore. A finance ministry official said that the clearance had been given on the grounds that 49% FDI is now allowed by a foreign airline.


 

Vacate all airport space, Airports Authority of India tells Kingfisher Airlines


NEW DELHI: It's eviction time for Kingfisher Airlines (KFA). The Airports Authority of India (AAI) has written to the grounded airline, asking it to vacate all office space it occupies at its various airports across the country. The authority has also asked the airline's management to vacate the two hangars-one each at Kolkata and Chennai- immediately. In response to the AAI eviction letter, Kingfisher CEO Sanjay Agarwal is learnt to have sought time to meet AAI top brass next week.
"Kingfisher has dues of over Rs 300 crore and they have shown no sign whatsoever of even trying to clear a part of it. In such a situation, we cannot allow them to continue occupying precious commercial space at airports and we have asked them to vacate the same. The only place which we cannot evict is the apron area where their aircraft are parked," said a senior official.
At present, almost 30 aircraft leased to KFA are parked across the country which airports, tax authorities and banks are not allowing to be repossessed by the lessors. Till some months ago, lessors used to take a couple of planes back after paying airport authorities a lump sum. But now with tax authorities and banks trying to recover their dues and holding aircraft as security, lessors have realized that paying airports alone may no longer be enough to get their planes back. Since forcible holding back of leased aircraft is in violation of international conventions, aviation secretary K N Shrivastava has now asked all agencies to securitize their dues from airlines and leave the leased planes alone.
"The Kingfisher example of forcibly holding back leased aircraft will make it tough for other Indian carriers to get planes. The ministry is now going to help KFA lessors take their planes back but the problem is that many of them are not airworthy due to massive interchange of spare parts among them. KFA did this - take working parts from planes - to keep some planes flying in its last days," said an official.
http://timesofindia.indiatimes.com/business/india-business/Vacate-all-airport-space-Airports-Authority-of-India-tells-Kingfisher-Airlines/articleshow/18855362.cms

Cochin International Airport goes ‘solar’


Cochin International Airport Ltd’s initiative to utilise solar power will take off shortly.

 Installation of 400 solar panels have been completed and the project is in the final stages. CIAL has submitted the documents to the Kerala State Electrical Inspectorate for approval.
On getting approval, energy production will commence and CIAL will be able to use solar energy.
The Rs 98 lakh project is being executed by Vikram Solar P Ltd, Kolkata, who supplied the panels and are responsible for the installation. They are also responsible for its maintenance and upkeep for the next 10 years.
The project has a subsidy of 30 per cent under the Jawaharlal Nehru Solar Mission of MNRE and CIAL’s expenditure is only Rs 63 lakh , airport officials said. This is a pilot project of 100 KW capacity. There are 400 solar panels made of poly crystalline silicon, each of which has the capacity to produce 250 watts. The combined per day production would be nearly 450 units in the present climatic conditions of Kerala. Power from the solar panels will be connected to the gridand will predominantly be used for the air conditioning plant.
Based on the success of the pilot project, the officials said tendering process is on the way for the 1 MW solar power unit.
With the commissioning of the pilot unit, CIAL would be among India’s first international airport to use solar energy for its power requirements.


 

 
 

 

Offers $50 tickets to Singapore


Fly to Singapore from six cities, including Chennai, for just $50 or Rs 2,700, inclusive of all taxes.

 

This is nearly the price of a second class AC train fare to New Delhi from Chennai.
Promotional offer
This is a promotional offer from the Singapore-based low cost carrier, Tiger Airways, which is celebrating five years of its Indian operations.
The rider is that there will be only 10 seats to grab in each flight.
The airline will offer the promotional fares for sale from March 7 to 13 for travel between July 1 and November 13, said Kaneswaran Avili, Commercial Director, Tiger Airways.
The current fare to Singapore is around Rs 8,000, he told newspersons.
“This is only to celebrate our presence in India for the last few years,” he said.
Since the start of its operations to Chennai in October 2007, the airline has carried over 1.4 million travellers between Singapore and India.
With its A320 type aircraft, it connects Singapore with Chennai, Bangalore, Hyderabad, Kochi, Thiruvananthapuram and Tiruchi.
The airline is looking at other locations such as Kolkata and Madurai, he said.
Tiger Airways operates 11 flights a week out of Chennai, and totally 41 flights a week from all destinations.
The airline has recently undertaken several initiatives to strengthen its presence in India.
In December, it entered into an alliance with Via.com, a leading online travel network, to offer Indian customers Tiger Airways flights through the Web site’s offline distribution network of 20,000 travel agents in 2,400 cities.
corporate packages
The airline also launched corporate packages in collaboration with Via.com targeted at the business community.
The package includes deals such as free 25 kg check-in baggage, priority boarding and change-fee waivers for any flight changes up to four hours before departure, says a company press release

Tiger Airways looking for Indian partner


Tiger Airways, a low-cost carrier, has approached the governments of Singapore and India to open up more air traffic rights between Chennai and the island country – a route that is choking with air passenger traffic.

 

Currently, the slots are exhausted between the two designations.

 

If an airline wants to increase its frequency to Chennai from Singapore, it cannot do at this juncture.

 
It is in this context that Tiger Airways is looking at a ‘strategic partner’ in India having a similar kind of operations, Kaneswaran Avili, Commercial Director, Tiger Airways, told Business Lin
With over 80 per cent occupancy, the Singapore-based Tiger Airways increased its flight frequencyto 11 times a week from the initial four times.
“Chennai has been an enduring destination of choice for our customers,” he said.
There are about 10 weekly flights from Chennai to Singapore.
The carriers include Air India, Tiger Airways, Jet Airways, Air India Express, SilkAir (S) Pte, Singapore Airlines and IndiGo.
Since starting its first flight from Singapore to Chennai in October 2007, Tiger Airways today operates its flights to five other southern cities.
The airline has carried over 1.4 million travellers between India and Singapore.
When asked to comment about the recent media reports of a possible tie up with Indigo or SpiceJet, Avili said, “We are in touch with all the major airlines. We will have a tie up with those who have a similar line of our operations,” he said.
In earlier tie-ups with Mandala Airlines of Indonesia and SEAir of the Philippines, Tiger Airways picked up substantial stakes in both these airlines to extend the reach in these geographies.
Incidentally, Indigo has commenced a direct flight service between India and Singapore from March 1. According to a press release, over 28 million passengers have booked flights on Tiger Airways to date.
It carried 4.1 million passengers for the 12 months ending November 2012

No major hurdles for AirAsia's planned JV: Ajit Singh


AirAsia's planned joint venture in India does not see any major hurdle except for few procedural problems, civil aviation minister Ajit Singh said in New Delhi on Wednesday.
"I don't see any big hurdles, whether they (AirAsia with Tata and Arun Bhatia) form joint venture before or after. The aviation ministry will check procedures of taking no objection certificate, having two-third of India directors and others were followed," he said.
However, he said AirAsia's planned joint venture could face some procedural problems which have to be cleared by Foreign Investment Promotion Board.
AirAsia, Tata Sons and Arun Bhatia of Telstra Trade Place Pvt Ltd have proposed to set up a low-cost carrier in India.
Speaking on the sidelines of a seminar on General Aviation: the next step organised by Indo American Chambers of Commerce, the minister said the decision to allow foreign direct investment in Indian carriers "will be a game changer for the Indian civil aviation sector in the long run."
Singh said cooperation between India and the US had significantly strengthened over the years and the open sky policy has made India a fastest growing aviation market in the world, leading to growth in passenger traffic.
"This massive growth in air traffic would require huge investment for construction of new airports, expansion and modernisation of existing airports, improvement in connecting infrastructures like road, metro and sea link and also better flight management," he said.
The government has approved 15 more airports under the Greenfield Airports policy with majority of them being developed under the public private partnership mode.
"Current estimates indicate that Indian airports would require an investment of about Rs. 67,000 crore during the next five years alone of which 75 per cent is likely to be contributed by the private sector," Singh said.
The minister said India has the potential to become a Maintenance, Repair and Overhaul (MRO) hub due to growing aircraft fleet, location advantage and availability of talent.
"To facilitate the growth of MRO business and to make it competitive, the Government has recently decided to to give several concessions which include extension of time period allowed for utilisation of aircraft parts and others," he said.

AirAsia JV gets FIPB nod


The Foreign Investment Promotion Board (FIPB) on Wednesday gave an ‘in-principle’ approval to Malaysian airlines, AirAsia bid to start a new airline in a joint venture with the Tata group and Arun Bhatia of Telestra Tradeplace Pvt Ltd.
This would be the first foreign investment proposal to be cleared by the Finance Ministry after the easing of Foreign Direct Investment (FDI) policy in aviation.
AirAsia had announced its plans to enter Indian skies last month and said that it intends to control 49 per cent in the new airline with Tata group company, Tata Sons and Telestra Tradeplace occupying 30 per cent and 21 per cent respectively. The initial investment in the joint venture would be around `80 crore.
A Finance Ministry official said that the clearance had been given on the grounds that 49 per cent FDI is now allowed by a foreign airline.
The plans for a new airline, however, may run into rough weather over whether the amended FDI guidelines in aviation are applicable to new airline companies or only to existing ones. The Department of Industrial Policy and Promotion (DIPP) has been approached by the Aviation Ministry for a clarification, which is likely to be issued soon.
FIPB officials said that the three companies would now have to approach the Directorate General of Civil Aviation (DGCA) for the relevant licences and a scheduled air operator’s permit.
In the meantime, AirAsia CEO Tony Fernandes tweeted his reaction after hearing the ‘exciting’ news.
“The good always win. People and companies with good intentions to create jobs and make life of the average man better will always win,” Fernandes said on the micro-blogging site.
“I have selected the CEO for AirAsia India. A very smart boy from the South, (Chennai). An amazing CV. Will impress all...,” he said.
http://newindianexpress.com/business/article1491249.ece

Dreamliner Pilot Turns Rapper as Boeing 787s Remain Grounded


With the worldwide fleet of Boeing Co. (BA) 787s grounded due to battery fires, Air India Ltd. pilot Anjum Chabra turned to rap to lament his fate.

 

 

 

 

 

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A cameraman films an Air India Ltd. Boeing Co. 787 Dreamliner at the India Aviation 2012 conference at Begumpet Airport in Hyderabad. Photographer: Dhiraj Singh/Bloomberg

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“Ain’t no flight for me here so ain’t no Singapore, ain’t no casino for me so there’s no money no more,” he sang in a video he posted on YouTube. “What kind of pilot am I, who sits at home most of the time never gets to fly.”

 

Watch: The Air India Rap video on YouTube. Warning: Contains strong language.

 

His plight is shared by Dreamliner pilots across the industry since the planes were grounded on Jan. 16. Pilots, who spend weeks training for new aircraft, usually don’t fly more than one type of plane at the same time to reduce the risk of mistakes in different cockpits. With no end in sight for the planes to resume service, they are passing their time practicing in flight simulators and speaking to students.

 

“When you don’t know when the aircraft will be ready to fly again, you don’t want to cross that bridge of putting them on to another aircraft,” said Peter Harbison, executive chairman at the Sydney-based CAPA Centre for Aviation. “There will be an array of issues in putting them on other planes.”

 

Experts are still investigating the cause of a lithium-ion battery fire on a Japan Airlines Co.-operated Dreamliner in Boston in January, and an emergency landing by a 787 plane flown by All Nippon Airways Co. later that month. The incidents led to their global grounding, the first time in 34 years that an entire airplane model has been pulled from service.

 

Permanent Solution

 

Boeing last month submitted a permanent solution for the battery problem to the U.S. Federal Aviation Administration to get the plane back in service. The proposal will require extensive testing even if approved before regulators end the plane’s grounding, the U.S.’s top aviation official said.

 

Dreamliner pilots at All Nippon Airways Co. (9202), the biggest operator of 787s, have been visiting school children to talk about their jobs since their planes have been grounded.

 

They went to Den-En Chofu University near Tokyo last month where they talked to 120 children, mostly six, seven and eight- year-olds. Pilots have also been taking training lessons and using the flight simulators in their free time, said Megumi Tezuka, an airline spokeswoman.

 

ANA, whose 17 787s make up about 7 percent of its fleet, has canceled 3,601 flights through the end of May, affecting 167,820 passengers. It has about 200 pilots qualified to fly the Dreamliner, said Tezuka. The Tokyo-based carrier said in January the grounding of the fleet cut sales by 1.4 billion yen ($15 million) that month.

 

Huge Problem

 

All Nippon shares rose 1.1 percent to 193 yen in Tokyo trading today, extending the gains this year to 6.6 percent. Boeing climbed less than 0.1 percent to $78.71 at 10:33 a.m. in New York.

 

JAL has 130 certified pilots who are observing flights on other planes and doing drills to maintain their skills, said Jian Yang, a spokesman with the carrier. The company, which has seven 787s in its fleet, isn’t training any new pilots, he said. Last month, the airline said the flight cancellations would cut sales by 1.1 billion yen in revenue through the end of March.

 

Air India pilot Chabra also complained about money in the song. An Air India spokesman confirmed Chabra was a pilot with the state-run company. He couldn’t be reached for comments.

 

United Continental Holdings Inc. (UAL) has about 125 pilots that have completed training for the planes, Christen David, a spokeswoman for the Chicago-based carrier, said in an e-mail. Some of the carrier’s 787 pilots are able to return to the planes they were flying earlier if they were still “current” on those airplanes, said Jay Pierce, chairman of the Continental chapter of the Air Line Pilots Association.

 

No Spare Planes

 

It’s a “huge problem for the airlines that have already taken delivery of those aircraft,” said International Air Transport Association’s Chief Executive Officer Tony Tyler. “Until the problem has been resolved we won’t see those aircraft operated.”

 

The airlines most likely don’t have enough spare planes for the 787 pilots to fly even if they were retrained for other models, said CAPA’s Harbison.

 

“The pilots are surplus to needs at the moment,” he said. “The gaps have been filled so they aren’t needed.”

 

Pilots spend two to three months learning to fly 787s, depending on what planes they flew beforehand, ANA’s Tezuka said. The airline isn’t considering having the pilots fly other aircraft as it expects the grounding won’t be long-term, she said.

 

Pay Cut

 

ANA pilots’ salaries are being cut by about 20 percent, compared with when they were flying, as they lose night time and long distance travel allowances, said Toshikazu Nagasawa, a director at the Air Line Pilots’ Association of Japan, which has about 4,500 pilots as members. JAL pilots are losing about 30 percent, as they have a different payment structure, he said.

 

Last week, Japan’s transport ministry said that pilots who are required to take yearly flight tests on their airplanes will not lose their 787 licenses if they can’t be checked due to the grounding of the Dreamliner.

 

“We are doing all we can to help determine the cause of the problem,” Japanese Transport Minister Akihiro Ohta told reporters in Tokyo last week.

 

Even after the 787s resume service, Chabra’s return to the cockpit is not guaranteed.

 

India’s Civil Aviation Minister Ajit Singh said in an interview he asked the airline’s chairman to take action against the pilot.

Need strong new airlines with strategic partners


The Centre for Asia Pacific Aviation (CAPA) has strongly advocated for last 10 years that foreign airlines should be allowed to invest up to 49 per cent in Indian domestic carriers. Our regulations with respect to FDI have been unique in the world - we have excluded one class of investor that has the greatest strategic interest to develop the sector. This regulatory anomaly existed for more than 16 years.

 

CAPA welcomed the decision to allow foreign airlines to invest up to 49 per cent in Indian carriers in September 2012 and expects it to be a game-changer that will positively impact the entire value chain. Foreign airlines will bring in strategic capital and expertise. Other forms of institutional funding will follow, further strengthening the sector.

 

Deep structural issues

 Allowing in foreign airlines, though, will not solve the deep structural problems of the Indian aviation sector. We need a comprehensive policy and regulatory framework which is transparent and aligned to the needs of the sector. Moreover, this framework should not be at the discretion of a few people, which, unfortunately, has been the case since the early 90s. We need to quickly remove the negative fiscal regime which makes the Indian airlines largely uncompetitive and also have a robust long-term infrastructure development plan . Overall, a focus on core and fundamental issues is most critical, which has not been addressed for almost two decades.

 

The decision of AirAsia to start a low-cost carrier (LCC) in India is on expected lines. The combination of AirAsia with partners such as Tatas make it a very formidable entity. I was surprised with Tatas playing the role of a junior partner in this JV and having a limited role. The FIPB approval is a significant step, as I was expecting some hurdles, especially with respect to the structuring of this JV but welcome the quick decision from FIPB. CAPA also welcomes the clarification by DIPP that FDI by foreign airlines is not limited to existing carriers but is applicable for new start-ups; this is a strategic decision. Limiting FDI by foreign airlines only to existing airlines is fundamentally flawed, as India needs strong new airlines which are well capitalised and have strategic partners.

 

FIPB approval just the beginning

 For the AirAsia-TATA JV, the approval from FIPB is just the beginning of the regulatory process. Getting past the ministry of civil aviation might not be easy and challenges are likely. The ministry is not in favour of issuing new national licences and usually recommends a regional licence as the first step. It will be interesting to see how the ministry deals with the AirAsia application for a national licence. There will many other challenges, especially the board representation, management control and use of the AirAsia brand name.

 

The civil aviation ministry needs to come up with a transparent framework with respect to granting new licences for national operations and not be driven by ad hoc and a case-by-case approach. There may be other similar applications with strategic partners and how the ministry deals with AirAsia will set a precedent.

 

AirAsia is creating a pan-Asean LCC with multiple cross-border JVs and is aggressively pursuing this strategy. The group has very successful and profitable airlines in Malaysia and Thailand with 23 per cent and 11 per cent operating margins but is struggling in Indonesia. JVs in Philippines and Japan are still in the red and are likely to face losses in the near term. AirAsia group has 120 aircraft and will touch 150 by end of 2013. It has 460 A320s on outstanding order. It brings to India proven expertise and credentials.

 

What AirAsia will bring

 Expect AirAsia to bring an ultra low-cost airline model to India, with 14-15 hours of aircraft utilisation, high-labour productivity and low-distribution costs. The JV will be big on ancillaries and will make strategic use of IT. Expect AirAsia to have already chosen its route network and initially focus on less competitive routes, with potential to stimulate the market with aggressive low fares. The challenges to achieve high aircraft utilisation, low distribution costs and scale in ancillaries remain though. I expect a ruthless focus on costs to achieve a higher level of productivity than existing industry levels. We might see many innovations and a different approach to marketing. I also see existing carriers increasing services out of Chennai before AirAsia starts. Overall, I don't see any near-term impact on Indian carriers till AirAsia reaches a significant scale.

 
CAPA welcomes AirAsia's entry to India and sincerely hopes the ministry of civil aviation plays a progressive role in clearing all impediments to entry of foreign airlines in existing airlines, as well as new start-ups like AirAsia. All such decisions should be driven by the national interest and the desire to make Indian aviation more competitive, sustainable and profitable. Ajit Singh has been instrumental in changing the FDI regime and allowing foreign airlines to invest in India. He must now take the crucial steps to ensure the benefits of this decision become visible to the sector and the Indian economy. http://www.business-standard.com/article/companies/need-strong-new-airlines-with-strategic-partners-113030700030_1.html

No issues with proposal: Ajit Singh


What were the issues raised by the ministry with the Foreign Investment Promotion Board before clearance of the Tata-Air Asia proposal?

 In principle, we have no issues. Only concern is that the joint venture (JV) comply with the requirements of the foreign direct investment (FDI) policy.

 

What areas need clarity?

 The commerce ministry should change the note to bring more clarity on FDI. I don't see big hurdles, whether they (AirAsia, Tata and Arun Bhatia) form the JV before or after. The aviation ministry will check the procedures of taking a no-objection certificate, having two-thirds of Indian directors and others.

 

The main purpose of FDI was to help domestic airlines. If this JV happens, don’t you think the purpose would be compromised somewhere?

 The idea created by the press was that we were doing it for Kingfisher Airlines. As Kingfisher was in financial straits, the impression was created that FDI was for financial reasons. I said it’s an enabling provision. We are doing it as we expect airlines to get technical and management expertise and the reach of the companies which invest.

 

The policy framework is clear — 49 per cent FDI in carriers, including the investments by the foreign carriers, and that is through the government approval route.

 

Second, we have regulatory requirements and guidelines. Anybody who wants to come—Indian, foreign or JV—has to go through these.

 

We have no problem with anybody forming a JV or investing in existing airlines, as long as they meet the policy guidelines and regulatory requirements.

 

How long will it take for the aviation ministry to give clearance to this JV, once the proposal comes?

 Let’s see. I don’t know now. I have not done it before. But that is not the concern. They are themselves saying they will be ready to fly by the end of this year.
http://www.business-standard.com/article/economy-policy/no-issues-with-proposal-ajit-singh-113030600200_1.html

AirAsia-Tata JV gets FIPB green signal


The Foreign Investment Promotion Board (FIPB) today cleared Malaysian low-cost carrier (LCC) AirAsia’s proposal to launch a domestic airline in India, in alliance with Tata Sons.

 

The approval has come close to six months after the government last year liberalised the country’s foreign direct investment (FDI) policy, after a long debate, allowing foreign airline companies to hold up to 49 per cent stake in Indian ones.

 

Some news reports had yesterday suggested the proposal could face hurdles from the civil aviation ministry after minister Ajit Singh had said: “The commerce ministry should change the FDI guidelines to bring more clarity on whether a new airline JV comes under its rules.” The doubt was on whether these norms  applied only on foreign airlines investing in existing Indian ones or also on those setting up JVs for greenfield operations. However, Singh said he supported the proposal in principle.

 

A senior government official who attended the meeting today said: “The proposal has been cleared. It’s in line with the policy, which allows up to 49 per cent FDI.”

 

AirAsia promoter Tony Fernandes tweeted: “Exciting. Thank you all... The good always wins. People and companies with good intentions to create jobs and make life of an average man better will always win.”

 

AirAsia is to hold 49 per cent stake in the proposed JV, while Tata Sons will hold 30 per cent and Delhi-based Telestra Tradeplace’s Arun Bhatia 21 per cent. However, operational control of the airline would be with AirAsia; Tata has made it clear it will only be an investor.

 

The next big challenge for the JV would be getting a no-objection certificate from the civil aviation ministry and an air operator’s permit from the Directorate General of Civil Aviation (DGCA). These could take up to six months.

 

A senior ministry official today said: “AirAsia has not applied for a permit. However, we have concerns on issuing a national permit to a new airline. We would prefer it taking a regional permit. If such airlines start flying on trunk routes, there will be overcapacity on those routes.”

 

The application of G R Gopinath for a national permit is still pending with the ministry. Singh’s contention is that Gopinath’s airline should first fly regional (for which it has a licence) before it could be given permission to operate across the country and its licence could then be upgraded.

 

Fernandes has already made clear his intention of treading slow — starting operations in South and West India, rather than nationally from day one. He plans to begin with four-five aircraft, with Chennai as base and concentrate on Tier-II and III cities, instead of the metros where airport costs are too high.

 

Unlike in Malaysia, where it had the first-mover advantage, AirAsia will face a tough challenge from domestic LCCs, such as IndiGo, which controls nearly half the LCC market and is growing rapidly with new capacity. Also, it will not have the advantage of low ATF rates and airport charges, which account for 50 per cent of costs.

 

Besides, the foreign carrier has not been able to make a mark through its international operations in India. Experts, however, say its entry could lead to a fare war in the Indian market, as Fernandes has publicly said the fares of domestic LCCs are too high.

Airlines industry may outspend others in targeting mobile consumers


The airlines industry is likely to overtake other industries in targeting mobile consumers with expenditure expected to go up to $37 million per company in 2015 from $27.2 million, according to a study on global mobile consumer trends.

The New Age Mobile Consumer trend study, commissioned by TCS, stated that airlines, energy and telecommunications firms were increasing spend to engage consumers through their mobile devices.

“During 2012, energy companies spent an average of $30.8 million per company in targeting mobile consumers, encompassing factors such as app development, customer service delivery through mobile devices, and mobile-friendly marketing campaigns,” according to a release based on the report.

telecom

The telecommunications industry came second with expenditure at $28.6 million and airlines at $27.2 million. These three sectors have the highest proportion of total sales transactions, marketing campaigns and post sales interactions conducted with consumers specifically through mobile devices, said the report.

During 2012, the average expenditure of the companies surveyed for the report was between $27 million to $31 million per company. By 2015, however these numbers are likely to change.

The airlines industry is expected to become the highest spender at $37 million per company, followed by the telecommunications industry at $35 million and the computer hardware and software industry at $34 million. The energy industry is expected to fall to the fourth place with expenditure at $31.8 million.

“The level of expenditure, the high commitment to developing mobile delivery channels, and the increasing volume of mobile consumer transactions reflect a high level of transformational change some industries are undergoing due to the influence of consumer mobile devices,” said Satya Ramaswamy, Vice-President and Global Head of Mobility in TCS.


 

Questions ahead of FIPB meet on Tata-AirAsia airline


Even as Tony Fernandes, promoter of Malaysian low-cost airline AirAsia, tweeted on Tuesday that he had selected a “very smart boy from south Madras (Chennai)” as AirAsia’s Chief Executive Officer for its airline, a question mark hangs over his proposal to set up a new domestic airline with the Tata group. It comes up before the Foreign Investment Promotion Board (FIPB) for clearance tomorrow.

A cross-section of Ministries represented on the FIPB feels that the Tatas and Telestra Tradeplace Ltd., partners in the proposed airline, should have first formed a company, in which AirAsia had invested, before seeking approval. They believe that such a proposal would find greater acceptance with the Government.

Secretaries of the Ministries of Finance, External Affairs and Commerce are among the permanent representatives on the FIPB.

Secretaries of Ministries related to the issue being considered (in this case, the Civil Aviation Ministry), are also invited to the meeting.

Some in the Government believe that the decision to allow foreign airlines to acquire a stake in domestic carriers was made to provide the latter access to funds, which were difficult to come by from banks.

Meanwhile, the Directorate-General of Civil Aviation (DGCA) has formally notified the rules under which a foreign airline can acquire a stake in a domestic airline.

The notification states a “foreign airline” is one that has been issued an Air Operator Certificate by a state other than India to carry out specified commercial air transport operations. The notification makes it clear that only such scheduled and non-scheduled airlines “which are companies registered under the Companies Act, 1956” can receive FDI from foreign airlines.

Kingfisher Airlines' lenders complicate Diageo deal; may sell pledged United Spirits' shares


MUMBAI: Lenders to Kingfisher AirlinesBSE 2.60 % have indicated they may sell United SpiritsBSE 0.31 % (USL) shares pledged with them as collateral either in the market or at a higher price to outsiders, dealing a serious, but not fatal, blow to the proposed takeover of USL by British liquor giant Diageo.

 

Top lenders from PSU banks told ET that they have lost faith in Vijay Mallya, and don't believe he is going to revive the airline. "We are open to selling the shares to anyone who gives us the best price," a senior official with one of the PSU banks said. "It should be a transparent deal," he added. Two per cent of United Spirits shares were given as collateral to the State Bank of India-led consortium a few years ago when Kingfisher Airlines borrowed money to continue operations. The lenders want their money back, but Mallya has been unable to come up with a satisfactory revival plan for the airline. It is common for lenders to take shares of group companies as collateral. When the loan becomes bad, they have the option of selling the shares in the market to recover their money.

 

"'Legally, the lenders can sell the shares if there is a default by the borrower," says Rohit Berry, an investment banker at BMR Advisors, an audit and consulting firm. "If there is no other way, that will be the last resort."

 

The lenders' stance now poses an unexpected complication for Diageo and Mallya, who have received most of the clearances for the transaction and are on the verge of launching the open offer. If the lenders don't release the 2% stake for sale to Diageo, Mallya and the UB Group will be forced to find extra shares in order to complete the deal. In normal circumstances that shouldn't be difficult, but in this case nearly 98% of the promoter stake of 27.5% in USL is pledged.

 

Diageo may also not find it easy to buy the extra shares in the market without pushing up its cost of acquisition. The Indian market regulator's takeover rules allow an acquirer to buy shares of the target company after announcement of the open offer on the condition that it offers the same price to all shareholders. Diageo can buy the remaining 2% in the market, but will have to pay a higher price and revise the open offer price. The preferential allotment at Rs 1,440 per share, which has already been approved by the board and the shareholders, will also have to be revised.

 

The SBI-led consortium holds 2% of USL shares as collateral for loans given to the bankrupt Kingfisher Airlines. The shares are a part of the promoter holding of USL, which Mallya agreed to transfer to Diageo last November. Diageo and the UB Group struck a deal under which the British drinks giant will buy 19.3% from the promoter group companies of USL and treasury stock and make a preferential offer for another 10%.

 

People close to the situation say there is little danger of the deal collapsing as the UB Group will find a way to persuade the banks to release the collateral. The banks want assurance that their money will be repaid. The official declined to talk about how they will proceed with the sale if the situation worsens. Technically, it is difficult for a third party or a hostile bid to emerge in this situation. Few investors would want to take on both Diageo and Mallya and a 2% stake is too insignificant to make a difference. Also, the deal can be consummated if Mallya and the UB Group replace the shares with the lenders with shares released through revocation of other pledges. http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/kfa-lenders-may-sell-usls-pledged-shares-which-may-complicate-diageo-deal/articleshow/18822410.cms

 

Godrej Properties inks JV with Jet Airways


Godrej Properties Ltd. (GPL), the real estate arm of the Godrej group, launched its new commercial project ‘Godrej BKC’ here on Tuesday. It will come up in Bandra-Kurla Complex (BKC) here.

 

Godrej BKC, expected to come up by end-2015, is a 50-50 joint venture between GPL and the country’s leading private air carrier, Jet Airways (India). The airline is the anchor tenant in the project, and will move its headquarters there, using 161,460 square feet carpet area of the total saleable area of 1.3 million square feet. GPL and Jet will share the profits from the development equally.

 

Larsen & Toubro will be the construction partner, and the structure will offer a floor plate of 70,000 square feet, with 19 floors and 2 basement levels for car parking.

 

The units are being offered at Rs. 27,000-28,000 per square foot initially, said Pirojsha Godrej, Managing Director, Godrej Properties. Addressing a press conference , he said that it was a pure-play corporate office development with no plans for retail or other asset classes in the development.

 

“The office space market has been weak over the last few years with capital values being subdued and nowhere near their 2007-08 highs,” said Mr. Godrej. “Also, we felt the Indian economy has troughed out and the pick-up will happen over the life of the development of this project,” he added.

 

GPL expects revenue of Rs. 3,500-4,000 crore from the project. “We will consider rentals at a later stage, maybe two years from now. We are already in talks with some potential buyers,” he said, adding that the project cost of Rs. 2,000-2,500 crore would be funded by a combination of debt and proceeds arising from sales.

DGCA clears the air on foreigners taking key positions in airline joint ventures


A day before the Foreign Investment Promotion Board (FIPB) will take up the Tata-AirAsia joint venture (JV) proposal, Tony Fernandes, the promoter of the Malaysian low-cost carrier, today announced on Twitter he had chosen the chief executive officer (CEO) for the Indian venture.

 

It is believed neither the ministries concerned nor the Department of Industrial Policy & Promotion had given their written comments on the AirAsia proposal for tomorrow’s FIPB meeting. However, some news agency reports suggested the civil aviation ministry could create hurdles for the proposed company, saying the new foreign direct investment (FDI) rules were meant only for existing airlines.

 

Earlier in the day, the Directorate General of Civil Aviation (DGCA) had notified the new rules for foreign direct investment into the aviation sector that permitted the positions of CEO, chief financial officer (CFO) and chief operating officer (COO) could be held by foreigners, subject to security clearance from the home ministry. Fernandes’ announcement of going for a CEO with a South India link had come within hours of this.

 

“I have selected our CEO for AirAsia India. Very smart boy from the South, Madras. An amazing CV. Will impress all,” he tweeted.

 

In another tweet, indicating the hiring  for the proposed venture was on in full swing, Fernandes wrote: “Fantastic candidates put in front of me by Tata Sons. I can’t believe the talent in India is amazing.”

 

After FIPB has approved the proposal, the commercial launch of the venture would hinge on the civil aviation ministry giving it an air operator’s permit. Before the announcement of the Tata-AirAsia alliance, Civil Aviation Minister Ajit Singh had told Business Standard no fresh licences would be issued because there was a demand-supply mismatch in the Indian skies.
http://www.business-standard.com/article/companies/dgca-clears-the-air-on-foreigners-taking-key-positions-in-airline-joint-ventures-113030500406_1.html

UN aviation agency raises alarm over Indian charter flights


New Delhi: The United Nations aviation watchdog has raised a safety alarm over charter aircraft operations in India.

The Montreal-based International Civil Aviation Organization (ICAO) has issued significant safety concerns over aircraft charter operations in India.

The directorate general of civil aviation (DGCA) has now formed five teams of three officers each which will review the licensing of each of the 147 nonschedule operators here.These teams will also examine the safety practices of these companies.

Fears over charter or nonschedule operators licensing and their planes airworthiness arose after ICAO did an audit of the DGCA last December.The audit report sent to Indian aviation authorities raised concerns in areas of operations and airworthiness.It questioned the licensing process and the process for approving modifications carried out in aircraft by the operator.We have sent an immediate corrective plan to address ICAOs significant safety concerns that has been accepted by them.We are aiming to complete the verification programme of non-schedule operators before June-end, said an official.

The DGAC teams will now examine the airworthiness of charter companies aircraft and examine their flight safety standard.These teams will check the preparedness of the companies crew to handle emergencies.

ICAO has expressed concern at the fact that charter operators have got their aircraft modified from manufacturers but those changes have not been checked and approved by the DGCA.Now all such modifications are going to be checked and certified.


 

 

Jet-Etihad deal: India working to assuage UAE's investments concerns; PM to visit Abu Dhabi

MUMBAI: The Indian government is moving fast to assuage the UAE government's concerns regarding investments from that country in India, an assurance that is seen as a crucial perquisite to successful completion of the Jet-Etihad deal.

 

 Prime Minister Manmohan Singh will be visiting Abu Dhabi later this month to discuss, among other things, an investment protection treaty between the two countries. The bilateral treaty will assure the UAE that investments made by its companies in India will be protected from unilateral, arbitrary action. The timing of the visit is crucial as it comes at a time talks between Etihad and Jet Airways have been deadlocked due to concerns expressed by the foreign airline over the safety of its investment in India's second largest airline. Etihad and the UAE government are seeking assurances that their investment will not go the way of Etisalat, a UAE telecom company whose licences were cancelled by the Supreme Court last year as part of investigations into the issue of 2G telecom licences in 2008. The two airlines have focused on the purchase of a 24% stake in Jet by Etihad. The transaction, if successful, will help Jet pay down a part of its debt and secure an alliance with an ambitious Middle-Eastern airline. It is not known whether the bilateral investment protection treaty will be signed during the prime minister's visit, though it will be an important topic of discussion.

 

 Government and industry officials said Etihad and the UAE government had sought written guarantees from the government about its investments, but the government was wary of providing something so explicit to a single industry. Minister for Commerce, Trade and Textile Anand Sharma told ET that no written assurances would be provided to UAE companies.

 

 Sharma was on an official visit to Abu Dhabi last month and is believed to have held substantial discussions with the UAE about the investment treaty. "As a cabinet minister, I have an India-specific discourse and not sector specific. We've dispelled their doubts in an India-specific manner by telling them that India as a whole is a safe investment destination. We want investment in all sectors and, therefore, India and the UAE have in principle agreed to ink a bilateral investment promotion and protection agreement to boost two-way trade. This particular issue never came up like this (with specific request for written assurance for Jet investment)," he told ET. The Etihad transaction with Jet is part of a bigger push by the UAE government to expand economic cooperation with India. UAE companies are believed to be willing to invest up to $2 billion in Indian infrastructure and energy projects.

 

 India, on the other hand, wants higher foreign investment to increase growth opportunities for its companies and jobs for millions of unemployed youth. Last year, the government changed its decades-old policy to allow up to 40% foreign investment in Indian airlines. If the deal with Jet is signed, Etihad will become the second major foreign airline to enter India after AirAsia. "Etihad wanted some guarantees and assurances from the Indian government," said a senior Jet official not wanting to be identified, adding Jet was in the process of getting these assurances.

 

 Jet's top management team, including its promoter, and his legal advisors are currently in Abu Dhabi thrashing out the final deal contours. "The deal is at a very crucial stage," a senior Jet official said. It is believed that both the airlines have been able to iron out differences regarding board representation and the right of first refusal. Etihad might end up with four representatives on the Jet board and will have some measure of operational control. Mails sent to both Jet and Etihad did not elicit a response. Last week, Jet sold three pairs of its Heathrow (London) airport slots to Etihad Airways for $70 million. The airline recently launched an offer for two million discounted tickets to shore up cash and get incremental revenues. Jet has a debt burden of over Rs 13,000 crore and is in urgent need of cash infusion to keep the business viable.


 

Air India hopes to restart Dreamliner operations by mid-April


New Delhi, Mar 4:  

 

Air India is hopeful of getting its six Boeing 787 (Dreamliner) aircraft back in the air by the middle of April this year, aviation industry sources indicated.

 

The State-owned airline had grounded the six newest aircraft in its fleet on January 17, following a directive from the US regulator, the Federal Aviation Administration (FAA).

 

This follows a recent meeting in the US attended by regulators of the countries that were operating the aircraft, airline officials and FAA officials.

 

The meeting was informed that a ‘permanent fix’ to the problem with the lithium-ion batteries was likely to be in place by March-end.

 

When in operation, the aircraft was earning daily revenue of around Rs 2 crore for the airline.

 

The re-induction of the aircraft will be good news for the airline, which has maintained that Boeing 787 will help its turn around its financial fortunes.

 

The airline has been reporting losses since the past few years.

 

Ajit Singh, Civil Aviation Minister, told Parliament that the provisional loss incurred by Air India during 2011-12 was about Rs 7,853.94 crore.

 

The cumulative loss suffered by it since April 1, 2007 till March 31, 2012 was about Rs 28,000 crore, he added.


 

IndiGo benefits from slots vacated by Kingfisher

New Delhi, March 4:  

 

Delhi-based low cost airline IndiGo is the major beneficiary of the Government taking away slots from the now non-functional Kingfisher Airlines and distributing them to domestic airlines at airports run by the state-owned Airports Authority of India (AAI).

 

IndiGo has been given four slots – three in Chennai and one in Pune – of the 11 slots which were earlier used by Kingfisher Airlines to operate flights from AAI-owned airports.

 

A slot is defined as the scheduled time of arrival or departure made available at an airport to an airline for operating regular flights.

 

Air India has been provided two slots and Jet Airways and SpiceJet one each from those held by Kingfisher Airlines at Chennai airport. At Pune airport, all the four airlines have been given one slot each that were earlier used by Kingfisher.

 

Kingfisher was allocated 580 slots of which 331 slots were in Delhi, Mumbai and Bangalore airports in winter schedule 2013 which ends on March 28. Globally airlines follow a winter and a summer schedule.

 

Domestic airlines have also asked for slots in Mumbai and Bangalore airports.

 

These two airports are run by a consortium headed by GVK. A source at Bangalore International Airport Ltd said the slots taken from Kingfisher Airlines were distributed across various airlines. The source however said the slot determination takes place on a quarter-to-quarter basis and it is difficult to give exact slot details across airlines.


 

In a first,airline lets autistic kid fly with help dog


Mumbai: When eight-year-old Jiyon Ganguly walked into Kolkata airport with his Labrador Simbaa one January morning,the terminal paused in its steps.Passengers gawped and as Jiyons mother Parama Bhattacharya and Simbaa stepped into a curtained enclosure for the pre-flight security check,the stunned woman security officer accidentally dropped her hand-held metal detector.

She almost fainted.There was such a commotion.But Simbaa being the gentleman he is,stood calm through it all, Parama said.

After all,it was probably the first time in India that an autistic passenger was allowed to board a flight with his therapy dog.Most airline websites say only passengers with physical disabilities those with a visual or hearing impairment can board a flight with dogs trained to assist them.Theres no mention of mental health assistance dogs.

In India,as in many countries abroad,only humans are permitted to fly in passenger cabins.Animals have to go cargo,except in cases where the animal in question is trained to assist a passenger with a disability.The general rule is clear: service dogs are allowed onboard flights.But most airlines interpret it to mean only persons with physical disabilities.

This is the grey zone that Jiyon,afflicted with Autism Spectrum Behavioural Disorder,and his therapy dog Simbaa,a ninemonth-old Labrador,navigated on January 12,when,after two weeks of negotiations,Jet Airways let them fly together.

It started with a traumatic train journey from Mumbai to Kolkata on December 23.Since dogs are allowed only in first class cabins on Indian Railways,the family booked themselves into one on Duronto Express.On board,Simbaa ate the pesticide meant for rats.Since the train did not have a halt,the Labrador spent night and day vomiting.The dog settled after a visit to a veterinarian in Kolkata,but the family was jolted.

I had checked airline websites and passengers with mental disabilities are not allowed to carry their therapy dogs on board.The only option was to send the dog into the cargo hold, Parama said.That was when she decided to speak to Jet Airways.

She got a negative response from the airlines reservation team in Kolkata.They asked me what is autism,whether it is an abnormality,whether it is retardation.I explained and they said I should speak to their medical team in Mumbai.The Jet doctor said they had never done this before,but he asked me to get a medical certificate from Jiyons doctor on his condition and the need for him to travel with the dog, Parama said,adding that his tone suggested there was little chance the dog would be allowed.

Parama said she persisted with the doctor and reasoned that if they could pay heed to passengers with physical needs,why not those with mental issues.The airline finally agreed to let the boy travel with his therapy dog.Jet took care of everything right from the time we entered the terminal building.It was the best flight Jiyon and I had ever taken, said Parama.

A Jet Airways spokesperson said that as a policy,they permit service dogs for disabled guests or those with special needs and there is no charge applicable.

Dr Harish Shetty,the psychiatrist treating Jiyon,said: Its fantastic that an airline has recognized this disability and is compassionate.Therapy dogs have a calming influence on the patient.When flying,the child is in an environment that he is not used to,so having his dog on board helps greatly. The doctor said he had not come across any cases in the past when a patient with a mental disability was allowed to fly with his/her therapy dog