BOND MARKET LIKE AIRPORT WITHOUT TRAFFIC

"Some of these fears are unfounded in the current environment because the system has enough checks and balances to support a wider bond market," said a veteran broker. The bond market is like a world-class airport with very little air traffic.

It was a world where money was scarce, smart brokers struck deals with MNC banks to make money, stock transactions were not disclosed, and government bond deals were reported with a lag in single entry records in RBI ledgers. Harshad wanted to play the game that was confined to a handful of smart brokers and banks. He used the government bond market to fund his stock purchase. As a broker for deals where one bank borrowed against security from another bank, Harshad credited the cheque to his account instead of the borrowing bank's, and used the money to buy stocks.

Simply put, he was going short on bonds and long on stocks. In a tight money market with bond prices falling, he bought back bonds at a lower rate to cover the short. With the country's largest lender, State Bank of India, acting as financier, he not only took on the older players in the bond street but simultaneously pushed up stocks to levels unheard of. Stocks surged, traders followed him, and legitimate transactions gave way to illegal ones. Banks that borrowed often issued bank receipts, or BRs, instead of bonds as printing of securities took time.

The intention - and there was nothing fraudulent about it - was to allow institutions sell bonds purchased in a primary issue against letter of allotment. Frauds happened when banks, under the spell of Harshad and his followers, started issuing BRs with no proper security to back up. SBI, according to bankers of that era, discovered a Rs 500-crore hole in its bond book when tax officials trying to cross-check whether brokers have paid tax approached the bank.

As Harshad bought stocks, there was a parallel set of players who misused the bond market in a reverse way. They were the lenders in badla trades (done to roll over positions). Like Harshad, they too used the bond market and banks for finance. But unlike Harshad, they did not buy stocks, but lent the money to those who wanted to roll over their positions. In a way they shorted bonds as well as stocks.

TIME TO CHANGE

It was only natural that after the scam, doors to the bond market were shut for brokers. What had shocked the world then was not the nature of the deals, but the magnitude of the scam and the number of players involved. Today there are some signs that the doors may be opened up in the near future.

Perhaps, banks as well as regulators are beginning to understand the importance of a corporate bond market (which will remain shallow as long as government bonds stay the way they are). When banks, with their new and stifling capital rules, find it difficult to give loans endlessly, large borrowers like infrastructure companies and blue-chip corporates as well as mid-sized firms will turn to the bond market for funds. At that point, they should not run out of resources.

Retail investors in stocks, who were the biggest losers in the '92 scam (as in all scams), had returned to the market after some years. Regulators, however, take a long time to change their minds. If they fail to quickly bury the past, the price of an illiquid bond market can turn out to be far more than any scam.

http://timesofindia.indiatimes.com/business/india-business/Time-to-bury-the-ghosts-of-Harshad-Mehta-scam-and-revive-the-bond-market/articleshow/12906433.cms

Bid to steal air cargo: Four arrested

THIRUVANANTHAPURAM: The Valiyathura police on Thursday arrested four persons in connection with the theft attempt of air cargo at the Thiruvananthapuram International Airport the other day.

�Sukhil, 23, Prasad, 23, Rajesh Zavier, 22, and Sibin, 22, were those arrested. While the first three are temporary employees with Air India SATS, the fourth is working at a studio in Valiyathura, police said.

�Three cartons containing electric fans and vacuum cleaners were found outside the airport wall on Sunday morning, which were abandoned by the thieves after the cargo complex employees raised an alert.

�Though the accused said that it was their first attempt, the police have not confirmed this. ‘’We are investigating whether they were carrying out this for quite sometime,’’ said Sajin Louis, Valiyathura sub-inspector.

�‘’A racket’s role cannot be overruled and the police are on a detailed probe,’’ he added.

�

Security Beefed Up

Meanwhile, security has been beefed up at the airport following the theft attempt. The security measures were a follow-up to the joint meeting of the officials of the Airports Authority of India (AAI), CISF and the Kerala State Industrial Enterprises (KSIE), which manages the air cargo complex.

�‘’Lighting has been improved in the area where the cargo is temporarily kept before transporting it to the cargo complex,’’ said Airport Director D Chandramouli.

�‘’It has also been decided not to allow labourers to come beyond 10-15 feet of the cargo complex wall,’’ he added.

�The AAI also cleared the waste equipment dumped in the area which helped the miscreants to hide stolen materials. The KSIE also set up additional lighting in the area which lies behind the cargo complex. �

�The CISF, on its part, has intensified patrolling in the area and the AAI has also asked the state police to conduct regular patrolling on the roads around the airport.��

http://ibnlive.in.com/news/bid-to-steal-air-cargo-four-arrested/252656-60-123.html

SpiceJet's direct flights takeoff from Kozhikode

Kozhikode, April 27:

SpiceJet Ltd has launched direct flight services from Kozhikode to Chennai, Bangalore, Thiruvananthapuram and Hyderabad.

Flights to Bangalore and Chennai commenced on Friday, while services on Hyderabad and Thiruvananthapuram routes would start from May 5, according to Mr Neil Mills, Chief Executive Officer of SpiceJet.

The airline will operate daily flights to Thiruvananthapuram, Hyderabad and Chennai destinations.

The Kozhikode-Bangalore service will be available five days a week (Monday, Wednesday, Thursday, Friday and Saturday). SpiceJet has strong presence in Kerala, connecting the State to all important cities in the country.

From Thiruvananthapuram, it connects with Ahmedabad, Aurangabad, Chennai, Kochi, Mangalore, Mumbai and Nanded. From Kochi, the airline has flights to 15 destinations including Colombo, Chennai, Hyderabad and Goa.

Mr Mills said that SpiceJet had newly acquired Bombardier Q400 aircraft for enhancing connectivity to Tier-II and Tier-III cities.

On this aircraft, the airline is now connected Hyderabad to 12 cities.

It was expanding its footprints on new destinations with a brand new fleet of Q400 NextGen turboprop aircraft and Boeing aircraft, Mr Mills said.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3361235.ece?homepage=true&ref=wl_home

Lufthansa to deploy latest Boeing aircraft on India flights

Bangalore, April 27:

Lufthansa will deploy the Boeing 747-800 on the Delhi and Bangalore routes in the current summer schedule.

India will be the first Asian country where Lufthansa will fly “the world's newest aircraft”, according to a press release.

It will deploy the aircraft on its direct Delhi - Frankfurt and Bangalore-Frankfurt routes.

Lufthansa is the launch customer for this aircraft, the first of which will connect Frankfurt and Washington from June 1 with six flights a week. New Delhi, Bangalore, Chicago and Los Angeles will be added successively during the summer schedule with the arrival of four additional aircraft scheduled to join the Lufthansa fleet in 2012, said the release.

“The B747-800 features many innovations, such as the new Lufthansa Business Class product which includes a seat that turns into a horizontal lie-flat bed,” said Mr Axel Hilgers, Director — South Asia, Lufthansa German Airlines.

“The fact that we introduce the best products currently available on board of our long-haul fleet to India first shows the importance of this market for Lufthansa,” he said.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3360336.ece?ref=wl_info-tech

Mumbai-Delhi air fares will go up from May

Mumbai, April 27:

All fliers on the busy Mumbai-Delhi route will have to shell out more from May.

This follows the user development fee (USD) that will be levied by Delhi airport and airport development fee by Mumbai International Airport Ltd (MIAL).

This fee will be collected by the airlines or travel portals.

For those who have already booked tickets, MIAL will collect the development fee through a special counter at the airport.

Passengers had better get ready to shell out around Rs 1,000 to Rs 1,100 more on this route from May 15{+.}. Tickets on this route (for a mid-May passage) are currently around Rs 5,000 (one-way).

Outgoing travellers from Delhi airport flying more than 500 km will pay Rs 462.80 and an incoming passenger, including those from Mumbai, Rs 391.60.

This means the aggregate ticket cost for a flight to Delhi from Mumbai will cost around Rs 500, including the MIAL's Rs 100 development fee.

airport development fee

The airport development fee for Mumbai airport will come into effect from May 1.

Every domestic passenger flying out from Mumbai will have to pay Rs 100 while for the international passenger, it will be Rs 600.

As a result, airline companies have decided to increase air fares.

“The cost of fares will go up. There is no other choice. The return fare on Mumbai-Delhi route will be higher by around Rs 1,100. From an airline's perspective, there are additional charges like landing charges that will go up,” said Mr Mahalingam Shivkumar, Senior Vice-President (Finance), Jet Airways.

Travel agents and tour operators say that the move to levy the charges during the peak of domestic travel season will have an adverse impact on the tourism industry.

“This step doesn't promote tourism. April - June is peak domestic travel season. With air fares already so high, this move will further dampen the mood of the travellers,” said Mr Iqbal Mulla, President, Travel Agents' Associations of India (TAAI).

All airlines have jacked up their fares on many busy air routes like Mumbai-Delhi by 10-25 per cent over the past few weeks.

“India's aviation industry is already in a financial turmoil. This increase in airport charges will further push it into trouble,” Mr Mulla added.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3361204.ece?ref=wl_industry-and-economy

Immigration 'chaos' at Heathrow airport?

London: With less than two months to go for the London Olympics, tempers rose at the Heathrow airport last night after long queues and delays to clear immigration prompted frustrated passengers to brand the experience as 'omni-megashambles' and 'chaos'.

Angry passengers reported that there were only three immigration officials on duty last night to clear thousands of passengers from outside the UK and European Union.

There were four officials clearing passengers from within the European Union. Similar problems have been reported for several days, including by passengers from India.

Many flights from India land in London in the evening.

Alistair Campbell, communications director to former Prime Minister Tony Blair, was one of the thousands of passengers stuck in long queues last night. He said only three to four border staff were on duty for EU arrivals and just three for passengers coming from outside Europe.
He tweeted: "If this is what Heathrow T5 border queue is like on an average Thursday, Olympic athletes should think about coming soon".

Campbell had this to say to Olympics secretary Jeremy Hunt, who is currently under pressure to quit for alleged proximity to the Rupert Murdoch's company: "Jeremy Hunt should get down to Heathrow and do a bit of pre-Olympics border control recce work. Take his mind off things".

Keith Vaz, chairman of the Home Affairs Select Committee said the will demand improvements from Immigration minister Damian Green when he appears before it next month.

London Mayor Boris Johnson said: "We have to get this sorted. London's the business capital of the world and we can’t allow this position to be undermined, putting economic growth and jobs at risk".

The UK Border Agency, which is responsible for immigration controls at airports and has been subjected to funding cuts, is likely to draft in extra staff to deal with the larger number of passengers for the Olympics.

Besides passengers and officials related to the Olympics, concern over delay at immigration has also been expressed by MPs, who believe that "far less thought seems to have been given to the issue of how to deal with long queues at immigration".

In a letter to Hunt, the Culture, Media and Sport Select Committee said the issue of long immigration queues would have several impacts, including jeopardising future visits by people who arrive for the Olympics.

John Whittingdale, chairman of the committee, wrote: "While visiting tourists will understand that the Olympics is a busy time, if the wait is in excess of an hour then it may deter tourists from returning".

He added: "The second impact may be that planes cannot unload their passengers into the terminal due to capacity being exceeded. This would lead to circling in the air, planes being left on runways or planes blocking gates".

Noting that the proportion of passengers entering Heathrow from outside the European Union "may be significantly higher than usual" during the Olympics, Whittingdale said it would result in a longer process at immigration checks.

"We also understand that the flight schedule is not changing in any way and there was no suggestion that any contingency has been made for, perhaps, extra time being made to remove items from aeroplanes or for the unloading of passengers," he wrote.

http://zeenews.india.com/news/world/immigration-chaos-at-heathrow-airport_772116.html

Opposition slams hike in Delhi airport charges

New Delhi, April 27:

The Airports Economic Regulatory Authority's decision to allow the Delhi International Airport Ltd to increase user development charges by 346 per cent is becoming a political hot potato.

Opposition parties raised the issue in the Rajya Sabha and criticised the Government for allowing such a hike in airport user fee. During zero hour on Friday, CPI (M) MP, Mr K.N. Balagopal, said Delhi airport had become the most expensive airport in the world.

He said the matter was an issue of privilege as the Rajya Sabha was yet to discuss amendments to Airport Authority of India (Major Airport Development Fee) Rules, 2011. The rules, which allowed the private airport developers to levy user development fee, are yet to be adopted by Parliament, as Opposition members have moved amendments to it.

Mr Balagopal said even the International Air Travel Association has said the New Delhi airport was the most expensive. “How could the Government allow this to happen?” he said, and added that user development fee was charged even from incoming passengers in the name financial crisis being faced by the DIAL.

“When a related legislation is pending before the House for one year, how can the Airport increase the airport fee three to four times a year,” Mr Balagopal said.

CPI (M) leader, Mr Sitaram Yechury, and some members from the BJP demanded a ruling from the Chair on the issue. “Without any rule they have collected Rs 1,500 crore,” Mr Balagopal said.

He later told Business Line that he was likely to approach the Privileges Committee of Parliament against the AERA's decision. The AERA cleared a 346 per cent increase in airport charges recently. Domestic passengers will have to pay Rs 290 more and international travellers will pay about Rs 600 more as user development fee.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3361306.ece?ref=wl_industry-and-economy

Delhi airport tariff hike nod to help GMR

Tariff revision at Delhi Airport and softening interest rates are likely to help GMR Infrastructure return to profits in fiscal 2012-13 and give some relief to investors. 

GMR Infra has got approval from Airports Economic Regulatory Authority to increase tariff at Delhi Airport by 353% from May 15. The airports segment posted loss of Rs 115 crore in the quarter ended December. The airports segment is the company's largest segment, which contributed 42% to revenues for the third quarter. 

Also, the company would save about Rs 25 crore per quarter in interest costs due to a 50-basis-points drop in interest rates, according to ETIG analysis. GMR Infra has been posting losses since the past five quarters. In the December quarter, it posted a loss of Rs 191 crore. Besides the airport business, the company has also made huge investments in the power sector. 

It has almost 42,000-MW thermal capacity under development, out of which 2,000 MW will be ready for operations in the first half of the current fiscal and the remaining will be ready to commission in the next fiscal. 

For its 2,000 MW, which will become operational this year, the company has coal linkage with Coal India and is expecting timely supply of required coal. Once operational, these plants will help improve the firm's cash flows. The company also has coal mines in Indonesia, which it can use manage lack of coal availability from Coal India for its upcoming capacity. If the company is able to receive coal from Coal India, it will sell its Indonesian Coal in the open market, further helping it improve cash flows. 

In addition, the company's only gas-fired power plant is running at low capacity due to limited gas availability from Reliance's KG basin. Also, it is yet to receive coal linkage for one of its plants. 

http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/delhi-airport-tariff-hike-nod-to-help-gmr/articleshow/12888137.cms

TN-based URC may bag contract for metro station at Chennai airport

New Delhi, April 26: 

The Tamil Nadu-based URC Ltd is likely to bag the contract for construction of the metro station at Chennai airport. The value of the project is estimated at Rs 51 crore. 

Official sources told Business Line that URC's bid is likely to emerge as the lowest from among the seven bids that have been received. The award of the contract is likely to be announced in the next few days. The project is to be completed in 14 months from the award of the contract. 

The project involves construction of an elevated metro station and will include construction of a basement for scooter parking, doing the entire mechanisation at the station and construction of concourse for ticket sales among other activity. 

The completion of the project will make Chennai the second city after Delhi which will have a metro train connection to the airport. Officials indicated that unlike in Delhi the metro connection will not go right into the airport. 

The Airports Authority of India is also in discussions with Chennai Metro Rail Ltd to designate metro stations where passengers can check in their bags. This would require adequate screening equipment to be installed at those stations and security procedures to be put in place, sources said. 

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3357904.ece

Change in Air India flight timing

The timings of Air India services operating in Thiruvananthapuram- Kochi- Kozhikode sector have been changed with effect from May 1. 

Flight AI-9505 on the Kozhikode- Thiruvananthapuram route will operate on Mondays, Wednesdays, and Fridays. The flight will leave Calicut international airport at 7.45 a.m. and will arrive in Thiruvananthapuram at 8.50 a.m. 

Flight AI-9503 from Thiruvananthapuram to Kozhikode will operate on Tuesdays, Thursdays, and Saturdays leaving Thiruvananthapuram at 7.55 a.m. to arrive at Calicut international airport at 9 a.m. 

Flight AI-9503 from Calicut airport to Kochi will operate on Tuesdays, Thursdays, and Saturdays. It will leave Calicut airport at 9.30 a.m. and arrive in Kochi at 10.15 a.m. 

Flight AI-9505 from Kochi to Calicut airport will operate on Mondays, Wednesdays, and Fridays as per the following timing: departure from Kochi 6.30 a.m.; arrival at Calicut airport 7.15 a.m. 

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/article3359128.ece 

Delhi airport will be ?world's most expensive?

If you are planning to board a flight to or from Delhi's Indira Gandhi International Airport any time after May 15, be prepared to shell out more as airport charges have been raised by a whopping 346 per cent by the Airports Regulatory Economic Authority. 

The hike incorporates landing and parking charges, uplifting of fuel and using the common user terminals. Additionally, a user development fee (UDF) will be levied for the first time on incoming passengers, which is expected to go up further after 2013. 

The hike is, however, less than half the 774 per cent increase sought by the GMR-led joint venture Delhi International Airport Limited (DIAL) which runs the airport. ?The revision of charges is much below our expectations. It is less than half of the requested increase and therefore inadequate,? it said on Wednesday. 

?The approximate increase in ticket pricing works out to Rs.290 on an average for a domestic and Rs.580 for an international flight,? it added. 

However, this amount will be more if the airlines decide to pass on the hike along with the user development fee to the passengers. 

?The entire cost increase will be passed on to the passenger,? said Jet Airways' senior vice-president (finance) Mahalingam Shivkumar. 

The fee hike would be effective for two years. So far, outgoing passengers have been paying an Airport Development Fee (ADF) of Rs.200 for domestic and Rs.1,300 for international travel, which is a temporary arrangement to help DIAL face its immediate cash crunch for construction and development of the airport. 

The UDF will now be in addition to this ADF, with the UDF for international travel set at Rs.845.50 for outgoing passengers travelling between 2,000-5,000 km and Rs.699.17 for incoming passengers. Travel beyond 5,000 km would work out to Rs.1,068 for outgoing passengers and Rs.881.10 for incoming passengers. 

On the other hand, a domestic passenger flying out of Delhi for up to 500 km will pay Rs.231.40 and Rs.195.80 while landing in Delhi. Travellers flying more than 500 km will pay Rs.462.80 for flying out and Rs.391.60 for flying in. 

The UDF for international travel is set to go up further to Rs.895.26 for incoming passengers and Rs.741.16 for outgoing passengers for 2,000-5,000 km. For those flying over 5,000 km, it would be Rs.1,130.85 for outgoing passengers and Rs.932.95 for incoming passengers. 

The Geneva-based International Air Transport Association termed the hike extremely disappointing. The increase would in effect make Delhi ?the world's most expensive airport,? it said. 

http://www.thehindu.com/news/national/article3353811.ece

Wage cut, no PLIs likely under new Air India pay structure

NEW DELHI: Air India's new pay structure will take at least a year to get implemented, as the airline will require additional government approvals for harmonising wages of the licensed category-employees, which is likely to cause deviation from Department of Public Enterprises (DPE) norms, a senior civil aviation ministry official said. 

The government is in the process of harmonising AI's wage structure on the principles laid down in a report submitted by a committee headed by a retired Supreme Court judge, Justice D Dharmadhikari. 

"The Dharmadhikari report recommends strict adherence to DPE guidelines but in case of licensed categories (pilots and engineers), it will have to deviate from the norms for state-owned companies as the market-rates for pilots will have to be doled out," a senior civil aviation ministry official said. 

Meanwhile, the Dharmadhikari Committee has also recommended setting up a committee of airline-related professionals to ensure implementation of wage parity and level-mapping of employees in a time-bound manner. 

"If the mere implementation takes five years, it will be a waste. It will not be able to solve employee issues," the official said. The government is also likely to appoint consultants to see that the wages are rationalised in a proper manner. 

When asked if there will be any salary cuts, the official said, "rationalisation is a two-way process where some people will have to come down and some others will be brought up." 

The Dharmadhikari Committee report has also recommended monetisation of Air India's assets, which not only includes renting out space at prime locations like the airline's head office at Nariman Point, Mumbai and the booking office near Jor Bagh, New Delhi, but also airport lounges. 

"The rent can be used to cover maintenance and employee costs and idle resources can be utilized," the official said. 

Meanwhile, the report suggested to do away with the performance-linked incentives (PLIs) component of employee salaries as according to DPE guidelines, only a profitable enterprise can dole out this incentive. 

The Comptroller and Auditor General (CAG) of India had also found Air India Board guilty of approving an increase in various allowances, including PLIs, by up to 50% with effect from January 2005, even though the financial position of the company was not sound and depended on loans for working capital. 

The cut-off date for wage harmonisation will be taken as April 2007, when the merger had taken place and would apply to 26,000 Air India employees, who are on the company's payrolls. The exercise will not cover about 8,000-10,000 contractual employees. 

Almost 80% of Air India's annual wage bill of around Rs 3,000 crore is distributed among 15-16% employees whereas the remaining accounts for the salaries of the rest of the large workforce. 

Recently, the government has restructured 21,000 crore of Air India's total loans amounting to Rs 43,000 crore and has also given the loss-making carrier equity infusion of Rs 30,000 crore over the next eight years. 

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/wage-cut-no-plis-likely-under-new-air-india-pay-structure/articleshow/12859748.cms

Cochin International Airport posts 10% growth in passenger traffic in FY 12

Kochi, April 24: 

Cochin International Airport Ltd has registered a 10 per cent growth in international passenger traffic and eight per cent in domestic travel during 2011-12. 

As many as 47.23 lakh passengers (43.45 lakh) including international and domestic passengers travelled through CIAL. 

The cargo movement through the Air Cargo Complex had also registered a growth in last fiscal touching 42,262 tonnes. 

Of this, export cargo comprised 26,182 tonnes and imports 9,358 tonnes. CIAL had also handled 6,922 tonnes of domestic cargo. 

The growth in passenger traffic and cargo movement at CIAL assumes significance at a time when the aviation sector in the country is currently passing through difficult times, senior officials said. 

The establishment of Plant Quarantine Department by the Central Government at CIAL had also enabled the arrival of sufficient number of cargo to the airport from the neighbouring states. 

Besides, the arrival of several chartered and non-scheduled flights at CIAL had also resulted in the growth of passenger traffic. 

The airport had handled 53 international flights from this category and 152 tourist charter flights from domestic sector in 2011-12. 

The decision of prominent business groups in Kerala to purchase business jets had also boosted the prospects of the CIAL. 

Most of these flights are now parked and operated from the airport. 

The officials said that the passenger traffic is likely to increase during this financial year with the commencement of Tiger Airways to Singapore from Kochi on April 28. 

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3350578.ece

Airports authority to file suit to recover Rs 240 cr from Kingfisher

New Delhi, April 24: 

The Airports Authority of India will file a recovery suit against Kingfisher Airlines to get back Rs 240 crore that the cash-strapped airline owes the state-run airport operator. 

Official sources told Business Line that the decision to seek court intervention to recover the funds has been approved at the highest level. 

The decision to file a recovery suit was taken after AAI officials realised that seeking a corporate guarantee from the airline will not help them recover the pending monies. 

The recovery suit is likely to be filed in a Delhi court soon, sources indicated. The process involves the court selling assets of Kingfisher Airlines to recover the monies due to AAI. Although sources confirmed that most of the aircraft, which the airline is operating, are on lease, so recovering money by seizing the aircraft would not be easy. 

The recovery suit will also include directors on the board. 

As the present situation amounts to ?falsification of financial statement' and directors are signatories to such a statement, the source added. 

Earlier, there was an incidence, when the state-run airport operator blocked an aircraft of a private domestic airline. 

But the lesser of the aircraft managed to get it unblocked by saying the payment issue is not between it and the airport operator but between the airline and the airport operator. 

Somehow, the airline managed to repay the amount. The airline is no more operational. Despite repeated attempts, Kingfisher Airlines officials were unavailable for comments. The airline, which has a debt of $1.3 billion, is under pressure from its lenders to inject fresh equity. 

The debt-laden carrier terminated operations to 28 of its 56 destinations, including Hyderabad and Kolkata, over the past few days and asked about 40-50 per cent of its staff to stay at home till further orders. With this truncated operation, Kingfisher has become the smallest one among scheduled commercial airlines. According to the latest traffic data, released by DGCA, its market share came down to 6.4 per cent in March. 

The AAI move comes against the back drop of sundry outstanding against various organisations crossing the Rs 2,000-crore mark. Official sources said that AAI has also written to the Government seeking its intervention to recover the money owed by Air India. 

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3350535.ece

Aviation professionals must oversee Air India, Indian merger: Panel

New Delhi, April 24: 

A committee of airline professionals or persons connected with the airline industry should be set up to ensure that the merger between Air India and Indian is completed smoothly. 

This is one of the recommendations proposed by the Dharamadhikari Committee which was set to bring about integration of employees after the merger of two State-owned carriers. The committee submitted its report to the Minister of Civil Aviation in February. 

Sense of urgency 

Official sources told Business Line that the recommendations were made so that those with knowledge of the industry can suggest a ?hassle free? manner to ensure that the merger take place at the earliest. Sources pointed out that there was a sense of urgency to ensure that the merger process is completed at the earliest as more than five years have already passed since the two airlines were merged. 

The idea of having industry professional as members of the committee did not find favour with the Committee as technical details of the airline industry functioning would have to be explained to the members, sources said. 

Meanwhile, the Government is considering appointing consultants to see that the wages are rationalised in a proper manner. The Ministry may have to seek the approval of the Cabinet if there is a major variation in wages from the norms laid down by the Department of Public Enterprises. 

The report has also called for monetisation of the airlines assets so as to meet its expenses. 

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3350534.ece

Private airlines owe Rs 14,573 crore to PSU banks

New Delhi, Apr 24: 

Private airlines owe a total of Rs 14,573 crore to state run banks, with loss making air carriers Kingfisher Airlines and Jet Airways together accounting for almost 80 per cent of the outstanding as on the second quarter of 2011?12. 

While country?s second largest airline Jet Airways owes Rs 5,899 crore to public banks, the outstanding amount of struggling air carrier Kingfisher Airlines is Rs 5,748 crore, Minister of State for Finance, Mr Namo Narain Meena, said in a written reply to the Rajya Sabha on Tuesday. 

He was giving details of total loans given to private airlines as on the second quarter of last fiscal. 

One being asked if State Bank of India, leader of consortium of lenders to debt strapped Kingfisher Airlines, plans to lend more to the company, Mr Meena said the lender ?has not extended any further relief to Kingfisher Airlines?. 

Kingfisher Airlines has a debt of Rs 7,057.08 crore and the financial crunch has hit its operations with dozens of flights being either cancelled or clubbed 

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3349024.ece?ref=wl_banking

Kingfisher leads aviation plunge in bourses on talk of FDI being deferred

Mumbai/Bangalore, April 24: 

Shares of Kingfisher Airlines plunged to a record low of Rs 14 on the Bombay Stock Exchange on Tuesday. 

All aviation stocks fell on reports of the Government deferring its decision on allowing foreign airlines to invest in domestic carriers. But the fall was steepest for Kingfisher Airlines. While Kingfisher shares closed at Rs 16.05, down 5.03 per cent, SpiceJet lost 2.85 per cent to Rs 29 and Jet Airways was down 1 per cent to close at Rs 341.65. 

On April 2, Kingfisher had climbed from a previous low of Rs 14.95 on hopes of the FDI proposal getting clearance. However, reports now indicate that the Government could even defer the decision to May-end. 

Aviation analysts say that allowing FDI may not benefit the aviation industry greatly. Debt-laden airlines like KFA will find it difficult to take advantage of it, they say. 

?Kingfisher Airlines is unlikely to capitalise on FDI in aviation considering it has less than 7 per cent market share. SpiceJet may stand to gain the most and, perhaps, IndiGo over a period of time,? said Mr Nikhil Vora of IDFC. With the domestic aviation sector witnessing high passenger yields, the key to reviving the ailing airline sector lies in revising the cost structure, he added. 

Kingfisher Airlines had reported a net loss of Rs 444.26 crore for Q3 2011-12. The banking consortium, with exposure of over Rs 7,000 crore in the cash-strapped airline, has refused to extend further loans till the company brings in fresh equity. 

With the account turning sub-standard for all banks, ?it becomes all the more difficult for us to consider the airline's request for additional funding?, said a State Bank of India official. ?The airline has to come up with a feasible business plan and show seriousness in turning its fortunes,? he added. 

Another banker was hopeful that with the airline being allowed to import fuel directly and the FDI coming into place soon, the airline would be able to perform better. Kingfisher's continued operations, despite on a skeletal level, would ensure some revenues for the company, he said. ?The airline can't be shut down, and there is some hope in the next two quarters,? he added. 

http://www.thehindubusinessline.com/markets/stock-markets/article3349983.ece?ref=wl_markets 

RBI's lifeline: Aviation sector can borrow abroad for working capital

Mumbai, April 24: 

The country's struggling aviation sector has been thrown another lifeline. 

The RBI has allowed companies in the sector to resort to External Commercial Borrowing (ECB) for working capital purposes. 

The ECB will be allowed to the airline companies based on the cash flow, foreign exchange earnings and their capability to service the debt, according to a RBI notification. 

The RBI has given aviation companies time up to May 2014 to raise funds through the ECB route. 

The ECB can be raised with a minimum average maturity period of three years. 

The overall ECB ceiling for the entire civil aviation sector would be $1 billion and the maximum permissible ECB that can be utilised by an individual airline company will be $300 million. 

http://www.thehindubusinessline.com/industry-and-economy/banking/article3349975.ece?homepage=true

GoAir in talks with European firms for maintenance, spares

Wadia Group-owned GoAir has said that it is in talks with two European companies to take care of the company?s aircraft maintenance and supply of spare parts. Besides, the airline said it is contemplating to start international operations and focus will be neighbouring countries. 

After launching its service to Chennai, which will be the 22nd destination for the airline in the country, Giorgio De Roni, chief executive officer, Go Airlines (India) Ltd said, currently the aircraft maintenance is done in-house. With the airline?s fleet increasing it is better to have a maintenance agreement with another carrier which will help bring down the cost. 

While minor maintenance activities will be carried out in the country, major overhaul will be taken up outside India, added Kamal Kikani, vice president - customer service and airports, Go Airlines (India) Ltd. 

The airline expects to take delivery of 72 new fuel-efficient A320 NEO aircraft from Airbus starting 2016. In June 2011, GoAir announced it has placed an order worth $7.2 billion, which according to the then currency strength was estimated to be around Rs 32,400 crore. 

The additional aircraft will be in addition to the 11 and its proposed target of 20 aircraft by mid-2014. 

?We expect deliveries starting from the first quarter of 2016,? said Roni. 

Meanwhile, the airline is also studying the possibility of commencing international operations. ?We will not look at long haul international routes, focus will be neigbouring countries,? said Roni. 

At present, there is a threshold set by the Director General of Civil Aviation (DGCA) that to operate internationally, the Indian airlines should have at least 20 aircraft. However, the foreign airlines who have operations in India do not have such mandates. 

?We are studying the possibilities of approaching the government for permission for the Indian airlines with fewer than 20 aircraft to fly internationally,? he said. 

Last fiscal, the airline operated around 30,000 flights with around 50,000 flight hours, serving around 4 million passengers to and from 21 destinations. This year, the company expects to operate around 35,000 flights, with 60,000 flight hours, serving 5 million passengers to reach various destinations. 

Meanwhile, even as airline companies are lining up for government?s approval for directly importing aviation turbine fuel (ATF) which would lower the fuel bill, there are issues like handling and transportation of the fuel without contamination to be addressed, said Giorgio De Roni, chief executive officer, Go Airlines (India) Ltd. 

?There are some issues to be addressed before directly importing ATF directly. The fuel has to be brought unloaded in the port and then transported up to the aircraft. Contamination would be an issue in the sector where safety is key priority,? he said. 

?It should be a joint effort of the industry and we have to discuss it in the federation of airline companies,? he added. 

Commenting on the talks on allowing for foreign direct investment in the Indian carriers, he said that the foreign companies could support the Indian airlines to grow better. However, he added that it is the Indian companies which should strengthen their presence in the country. 

http://www.business-standard.com/india/news/goair-in-talkseuropean-firms-for-maintenance-spares/472099/

Aviation sector allowed to raise up to $1 bn in ECB

After clearing the implementation of relaxed external commercial borrowing (ECB) norms to meet capital requirements in the power and road sectors yesterday, the finance ministry today paved the way for implementing the measures announced in the Budget for the airline sector. 

Keeping in mind the immediate financing concerns of the civil aviation sector, Finance Minister Pranab Mukherjee, in his Budget speech, had announced companies in the aviation sector would be allowed to avail of ECBs for one year for working capital and refinancing of working capital rupee loans. 

ECBs under this provision would have a ceiling of $1 billion for the entire civil aviation sector. The cap for individual airline companies has been fixed at $300 million. This may be availed either in a lump sum or in tranches, depending upon the utilisation of the limit during a particular financial year. 

Saying the Reserve Bank of India (RBI) would come out with the relevant circulars and notification for implementing these measures within a week, Joint Secretary, (capital markets), Thomas Mathew, said the proposals of individual companies would be considered by RBI under the approval route, based on parameters such as cash flows and the capacity of individual companies to repay these loans from their foreign exchange earnings. 

To increase access to ECBs, RBI would consider relaxation in the average maturity period for ECBs above $20 million from five to three years, he said, adding the central bank would also keep a tab on the utilisation of the funds. 

?Working capital loans are short-term and attract higher interest rates. Raising these through ECBs would reduce costs by 200 basis points,? said an Air India official, on condition of anonymity. 

On the possibility of raising the $1-billion limit, Mathew said, ?We will answer this issue when we reach such a situation.? The civil aviation ministry has already demanded this limit be raised to $2 billion. 

http://www.business-standard.com/india/news/aviation-sector-allowed-to-raiseto-1-bn-in-ecb/472021/

Eligibility for carriers flying abroad may be relaxed

In a reversal of its policy, the civil aviation ministry is open to relaxing eligibility norms for Indian carriers planning to fly abroad. 

?We are open to relaxing eligibility norms required for Indian carriers to fly international. No one has approached us with a proposal to relax norms, but it can be looked at,? said civil aviation minister Ajit Singh. He said relaxation in the eligibility norms would also depend on the merit of the case. 

According to the norms, an Indian airline should have domestic flying experience of at least five years and a fleet of 20 aircraft to be eligible to fly abroad. However, there are no such norms for international carriers flying into India. These only require permission under bilateral rights. 

GoAir is the only Indian carrier that does not have the approval to fly abroad because it does not fulfill the minimum 20-aircraft fleet criteria. Due to financial constraints, Kingfisher Airlines has also stopped flying to foreign locations. 

GoAir chief executive officer Giorgio De Roni recently said the carrier was studying possibilities to approach the government for allowing it to fly abroad with less than 20 aircraft. The airline operates with a fleet of 12 Airbus 320 aircraft, which it plans to increase to 20 by mid-2014. In June 2011, the airline had placed orders worth $ 7.2 billion for 72 new, fuel-efficient A320 NEO aircraft and the deliveries are expected to start in 2016. 

The civil aviation ministry, under Ajit Singh, has allowed increasing the utilisation of foreign bilateral rights for Indian carriers to 40 per cent from the summer schedule, roughly equal to the utilisation by foreign carriers. Before this, Indian carriers were utilising only 22.7 per cent of the total foreign bilateral rights and foreign carriers were utilising about 40 per cent of their allocated rights. 

India has signed bilateral rights agreements with about 100 countries and there are 834,000 weekly seats on international air routes. Of the 22.7 per cent utilisation by Indian carriers, Air India utilises 11.9 per cent, while the remaining four private carriers that fly abroad utilise a combined average of 10.8 per cent. International carriers utilise 37.9 per cent of the total ceiling. 

http://www.business-standard.com/india/news/eligibility-for-carriers-flying-abroad-may-be-relaxed/472142/ 

ode-share alliance with JetBlue to expand Emirates' US network

Emirates passengers travelling to the US from India will soon enjoy seamless connections to a dozen US cities, with the airline starting a one-way code-share with JetBlue. 

The two airlines have been interline partners since 2010, facilitating passengers the convenience of a single ticket for Emirates- and JetBlue-operated flights. 

Mr Orhan Abbas, Vice-President (India & Nepal), Emirates Airline, said, ?US attracts huge traffic from India for work, education and leisure. The association with JetBlue will benefit Indians travelling to US on Emirates by offering smooth connectivity from New York's JFK Airport to some of the most popular destinations in the US.? 

Emirates' network within the US will soon extend to almost 20 cities through JetBlue. Emirates currently offers two daily non-stop flights to JFK. 

As a one-way code-share, an Emirates' flight number will be placed on JetBlue services to 12 cities, including Boston, Buffalo, Chicago, Fort Lauderdale, Tampa and Washington Dulles. 

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3335992.ece

Air India to sort out pricing issue with online travel agencies

Air India will be meeting major online travel agencies to sort out issues concerning ticket pricing and revenue sharing. 

Airline companies are at loggerheads with travel portals on ?opaque fares'. Airlines like Indigo and Jet Airways had pulled out inventory (removed their tickets) from the Nasdaq-listed Web site makemytrip.com in protest against the ?opaque fares' scheme the portal deployed on its Web site. 

?Opaque fares' is a practice where a portal sells heavily discounted tickets. It is a form of blind booking as the identity of the airline is kept a secret till the buyer pays for the non-refundable ticket. 

Late last month, aviation regulator DGCA had directed all airlines to stop participating in any ?opaque fare' scheme being offered by the online travel portals 

Several airlines complained that through this scheme, some portals were issuing low-priced tickets of cash-strapped Kingfisher Airlines, a charge denied by Vijay Mallya's carrier. 

However, makemytrip.com maintained ?that the fares and inventory of various airlines on its Web site was controlled by the airlines. All fares are displayed as per the guidelines received and approved by airlines including the special fares that were approved by the participating airlines.? 

Industry sources pointed out that some portals were not charging any cancellation fee on some air tickets. 

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3336459.ece?homepage=true&ref=wl_home

Air India's upgrade scheme

Mumbai, April 20: 

Economy class travellers of Air India can now get themselves upgraded to executive class on AI's domestic network from 45 cities. The airline has added 28 more cities to the scheme. 

?Under Air India's on-going airport upgrade scheme named ?Get Up Front', passengers flying in economy class can avail upgrade subject to availability of seats in executive class at the airport, on payment of a fixed amount of Rs 4,000 for travel distance up to 750 km and Rs 6,000 for distance more than 750 km,? an AI spokesperson said. 

The offer is open to all passengers holding tickets in Economy class, including APEX fares. Passengers holding frequent flyer award tickets would also be able to avail themselves of the upgrade facility by paying the requisite upgrade amount. The scheme is valid till June 30, he added. 

ADVANTAGE OF AN AIRLINE TO DO SELF HANDLING

ADVANTAGE OF AN AIRLINE TO DO SELF HANDLING

1.       The policy and notification dated 17-01-2000 permit to do self handling with bonafide staffs.

2.     The cost of self handling by their own staffs can show different on their service to their customers who pay to them.

3.   The cost is only 25% compared to the cost the ground handling charge to the customer airline in India.

4.    The airline can pay more to their staffs who work directly under them which will boost the motivation of the staff will help them to improve the customer service.

5.       Due to this the airline can increase their sales and increase their frequency 1 to 2, 2 to 3. 3 to 4 etc..

6.    In March 2007 the Government foreign airline who operate 14 flights per week in a particular destination can do self handling. Because even the frequency is increased they can do with the same staffs and handle which cost less.

DISADVANTAGE OF GROUND HANDLING

1.       Ground handler will not pay as per the standard of the airline. Due to make profit which will reduce the quality of service level to their customs.

2.      They will be giving the same type of service which they will be giving other airline.

3.     There will not be any motivation for them to give different service to the customers which will affect the customer service and destination of sales.

4.       Quality of staff will not available like the airline standard.

5.   Most of the foreign airline ground staffs standards are monitored by the respective civil aviation authority in respect of safety and security.

6.       Ground handlers cannot provide security staffs. If airline is doing self handling the security staffs are also will do customer service. Since it is one team.

It is justified by your Government to show step mother treatment to foreign airline to force them to use cheap ground handlers who do not have any experience also do not gone through any safety training as per ICAO directive.

AI unions want to meet Ajit Singh, warn of stir

Air India staff unions have sought a meeting with Civil Aviation Minister Ajit Singh on their objections to the separation of engineering and ground handling departments into separate companies. 

Last week, the Cabinet cleared this decision, which aims to reduce the ailing government carrier?s wage bill and also create two new profit centres. However, eight employee unions are resisting the move and are against taking transfer to the new entities ? AI Air Transport Services Ltd and AI Engineering Services Ltd. 

Representatives of the eight unions met here on Monday to discuss the implications. ?We may resort to industrial action. It is a question of 19,000 employees and we will not take things lying down,?' said a member of one union. They are to meet again on Thursday. He added the minister was yet to meet all the unions, three months after he took charge. 

AI expects the engineering company to service its fleet and get other business, generating profit of Rs 2,000 crore after five years. 

The management expects the engineering company?s wage costs to reduce over the next four years, following the retirement of existing staff. 

The unions, however, say the hiving-off decision is not a viable idea and are prepared to explain why they think so. 

Source

Fresh squeeze on air travel agents' margins

After the International Air Transport Association (IATA) burdened travel agents by shrinking their payment schedule from fortnightly to weekly, Indian carriers are adding to their woes. Two of the largest airlines, Jet Airways and Air India, have decided to stop absorbing the surcharge on payments by agents made through credit cards. 

Both, by not absorbing the surcharge, aim to save Rs 30 crore each annually. Ironically, Kingfisher Airlines, in a huge financial crisis, has not issued any such order. 

?We decided to absorb that charge earlier because that ensured immediate money to us. Now, we have decided not to absorb it and have asked the agents to make that payment, as they also get a 50-day period to make their credit card payments,? said a senior AI official, who did not want to be identified. Likewise, Jet has decided not to absorb the two per cent surcharge from May 1. 

Agents make payments to airlines by cheque or credit card. In the latter transaction, money reaches the airline immediately but the clearance of cheques normally takes three to four days. 

Recently, IATA told travel agents they?d have to remit ticket sale proceeds to airlines every week, in place of the current fortnightly span. It has slated the change to take effect from June 1, even as agents are demanding a deferment in implementation. The proposed change would substantially change the way airline ticketing business is done in India. 

IATA?s billing settlement plan (BSP) is a payment gateway for travel agents. Twice a month, agents are required to remit to airlines the proceeds from ticket sales. For instance, if a ticket is sold by an agent between the 1st and 15th of a month, the agent deposits the amount to the airline on the 25th or the 30th of that month. According to the new plan, for all sales between the 1st and 7th, an agent will have to make payment to the airline on the 15th and so on. Low-cost airlines such as IndiGo, GoAir and SpiceJet are not members of the BSP. 

Agents say they will find a way out by talking to the banks. ?Our payments to airlines are huge and any bank would like to waive the charge for us. We are talking to the airlines and also asking them to talk to banks or allow us to talk to them. We expect a solution on this soon,? said Ajay Prakash, president, Travel Agents Federation of India, which represents half the country?s agents. 

He said airlines were ready to absorb the surcharge for tickets booked on their websites ?but not for us?. ?The credit payment is only 10 per cent of their total revenue. 

Source

Air India to induct Dreamliner next month

Mumbai, April 16: 

Air India will induct the first of the 27 Boeing 787 Dreamliners next month. 

The Dreamliner will be inducted in the second or the third week, sources in Air India said. Around 30 pilots will be trained for flying the new plane in Singapore. 

The national carrier is expected to get, at least, three of these planes this year. The Dreamliner will have Delhi and Mumbai as its operational bases. Its flying schedule has been proposed on the assumption that it would fly 4,500 hours per annum implying daily utilisation of 12-13 hours. 

The aircraft, meant for long-haul flights, is light-weight and made of composite materials such as carbon fibre and is reported to be fuel-efficient, which would help Air India cut its operational costs significantly. 

Raising funds 

Meanwhile, the national carrier has invited merchant bankers to raise working capital loans up to up to $1 billion from overseas markets. 

The move follows the Government allowing the aviation industry borrow up to $1 billion annually through the external commercial borrowing (ECB) route. 

The Government approved the much-awaited financial restructuring plan (FRP) that involves Rs 30,000-crore equity infusion over the next eight-year period and a debt recast (CDR) of Rs 21,200 crore. 

Source

Outstandings: Kingfisher in talks with GMR on payment schedule

Hyderabad, April 16: 

The ailing Kingfisher is in talks with GMR Group on payment schedule for outstanding dues. The airline had agreed upon a schedule earlier but could not follow it. 

?They have been facing a bad patch. They were not able to meet that schedule. But they did clear part of their dues in EMIs. It has reduced the number of flights and operating on cash-and-carry these days. They are paying about Rs 25 lakh a day,? Mr P.S. Nair, Chief Executive Officer (Corporate) of Airport Sector in GMR Group, told Business Line. 

The outstanding dues from airlines (mainly from Kingfisher and Air India) are put at Rs 300 crore. Of this, Kingfisher's share is about Rs 50-60 crore. 

?It is not current payables but outstanding dues which is a cause of worry,? he said. Airlines, generally, get a month's time to pay from the date of bill generation. ?That is a general norm,? he said. 

GMR was upbeat about the reported Rs 30,000 crore plan to revive the fortunes of Air India. Mr Nair was hopeful that Air India would payback its dues to GMR when huge funds were infused. 

Delhi airport bleeding 

Mr Nair said that the Delhi airport is bleeding with its efforts to increase airport fee not getting through. 

?Since 2001, there was only one hike in 2009. That too was a pittance. It should at least cover increase in inflation. What we have been asking for is not something out of the box. We have prepared proposals according to the Concession Agreement we signed,? he said. 

The airport operator has asked for a fee of Rs 770. ?The process is on,? he added. 

Male Airport 

Mr Nair said the company was confident of completing the first terminal in 2014 at Male according to schedule. 

The political situation had not impacted the project timeline there. ?There is no decline in passenger traffic (after political events),? he said. 

Source

BEML begins work on aerospace unit at SEZ

The BEML Limited, a defence public sector undertaking, is moving forward in the aerospace vertical as part of the expansion of its defence business. In this regard, BEML has begun work on an aerospace manufacturing division at SEZ near the Bangalore International Airport, Devanahalli.

The ground breaking for commencing the civil works was performed by BEML Chairman & Managing Director V RS Natarajan in the presence of functional directors and other senior executives. BEML Limited is the first company to set up Aerospace Facility at a SEZ. The construction work has begun and this infrastructure facility shall be ready by September this year. This will pave the way for BEML to enter into Aircraft component manufacturing field. This is the second new aerospace manufacturing facility.

This aerospace facility will be capable of manufacturing aerospace components and parts, assembling aircraft and helicopters up to 21 metres tall. The facility is spread over 3,00,000 sq ft and the company has invested Rs 455 crores into this project. BEML has already set up an aerospace manufacturing division at Mysore and got certified qualifying them to design aircraft, helicopter and engine parts. Presently, this division is manufacturing ground support equipmentôground handling equipment like aircraft towing tractor, crash fire tender, weapon loader, jigs & fixtures, sub-assemblyomponents for SU-30 aircraft.

With the opening of a new facility at Bangalore, Mysore Aerospace Division will be dedicated towards manufacturing of ground support and handling equipment only whereas the manufacturing of aerospace and related parts will be moved to Bangalore factory.

The upcoming aerospace SEZ facility will have assembly hangar to produce sub/major assembly with 21-metre height for civil / military aircraft and also could be used for assembly of 90-100 seater aircraft and for the MRO of a fixed or rotary wing aircraft, sheet metal shop along with chemical milling centre, machine shop with heat treatment and surface treatment shops and composite facility.

With all these, BEML is able to take up jobs in aerospace segment right from design, virtual testing, precision/heavy manufacturing of sub-sub assembly, sub-assembly, aggregates and parts. BEML will be able to harness all offset opportunities.

Source

Kingfisher Airlines staff not to go on strike

Kingfisher Airlines' employees have cancelled their plan to go on strike, following airline chairman Vijay Mallya's assurance that they would be paid on Wednesday. The employees, led by pilots and engineers, had threatened to stop work from Tuesday night if two months salary was not paid. However, they backed off after a late night negotiations with Mallya at his Mumbai residence.

Nine representatives met Mallya on Monday night and the meeting continued till 4 am on Tuesday. "We knew it was not possible for him to pay us two months salary today, but we made it clear that we can't wait long,'' a pilot said.

The pilots and engineers also assured him that they had no plans of forming an union. The sudden climbdown by pilots and engineers will give a breather to the Kingfisher management, which is struggling to keep its schedules intact, following a freeze of bank accounts. The airline is operating 120 flights with 20 planes in its summer schedule.

Mallya also cautioned that a strike would disrupt airline's operations and Directorate General of Civil Aviation could cancel its operating permit. He had earlier said junior staff will be paid on Wednesday and pilots and engineers would be paid on the following Monday and Tuesday.

However, the airline's spokesperson refused to comment.

Sources said the pilots and engineers may agitate in case they do not receive the salaries on the said date, but for now, have put off the agitation. "We are confident that the chairman will pay us on Wednesday and we are supporting him,'' a commander said.

Mallya is also reported to have assured the employee representatives that he will "try his best'' to pay second salary in April but did not give any date. The airline's employees have not been paid for the past four months. The pilots and engineers had indicated that they are under stress and cannot work until their salaries are paid.

In an emotional appeal to his employees, Mallya on Sunday wrote, "We need to re-build confidence and earn the trust from our guests back again...This will not be possible without your continued efforts, commitment and goodwill towards your company.''

SOURCE

Air India plans fare system that syncs with fuel price

To make its fare structure more transparent, Air India is launching a dynamic fuel surcharge system, where the amount a consumer pays for travel would change (even decrease) in tandem with the regular alterations in the price of the aviation turbine fuel (ATF). The new charge may be called "fuel pass through", according to a source in the airline.

According to the formula being worked out, the company would raise the fuel charge by Rs 50 for every Rs 1,000-per-kilolitre increase in the rates of jet fuel. Inversely, there would be a slide in the fares by the same amount in case of a Rs 1,000-per-kl decrease.

"We are working on this," said a senior Air India official. "It will be implemented in a month."

He said this would make the system "much more transparent" than the existing fuel surcharge, which is not directly proportional to the price of ATF. "We plan to call it 'fuel pass through'," he revealed. It will both increase and decrease in accordance with the change in ATF price."

The carrier, he said, was not currently discussing the idea with any other airline. "Usually, the industry follows whatever we do. We hope that happens in this case as well," he added.

In the existing system, a fare has two components - base fare plus surcharge and then fees on passenger services and development. The surcharge and fee component in an airline ticket is around 40 per cent of the total fare in an economy-class ticket and around 15 per cent when it comes to business class.

Consumers have for long been complaining that the current fuel surcharge component is not dynamic, as it tends to stonewall the routine variations in the price of ATF.

The Travel Agents Federation of India, too, notes that fuel surcharge has seldom decreased in the last five years even when there has been a slide in the prices of ATF.

"In any case, why do we need a fuel surcharge component in the fare," asks Ajay Prakash, president of the association that represents half of the country's travel agents. "One can tinker with the fare to adjust the increase or decrease in the input cost."

Further, in case of cancellations or no show, the airlines do not refund the fuel surcharge. Thus, Air India's proposed move, Prakash noted, would be "a step ahead in making things more transparent".

Not all are convinced that this upcoming system would make a difference to air travellers. These are all internal matters, notes Makemytrip.com. "A consumer is not bothered about any of these technicalities," shrugs Keyur Joshi, co-founder and chief operating officer of the online travel portal.

SOURCE