AI gears up to receive first Boeing 787 Dreamliner

With Air India's first Boeing 787 Dreamliner landing here on Wednesday, a definitive delivery schedule for the aircraft would be firmed up soon as two more are ready for delivery, official sources said.
The last hurdle in taking delivery of this plane has been cleared with the Law and Justice Ministry giving its nod to the compensation settlement agreement which Air India would sign with the US plane-maker for the almost four-year delay in its deliveries.

First Boeing 787 Dreamliner expected on Tuesday

New Delhi: After a delay of nearly five years, the firstBoeing 787 Dreamliner is likely to arrive here next week with Air India planning to take delivery of the aircraft on Tuesday.

"A total of three aircraft are ready for delivery at the Boeing's South Carolina factory. The first Dreamliner will take off from the US and is likely to arrive here on Tuesday," airline sources said.

The national carrier, which has ordered for 27 Dreamliners, will take the delivery of the rest two by early next month and get all the aircraft by the year 2016.

Air India was the second airline to place orders for 27 B-787s but is yet to receive the aircraft even as two Japanese carriers, All Nippon Airways and Japan Airlines, have started flying them.

The first Dreamliner was to have been delivered to Air India in the year 2008.

Air India had placed orders for 27 Dreamliners in 2005 and was supposed to take the delivery of the first of them in September 2008 and the rest by October 2011.

But their delivery was delayed due to various factors, including labour trouble at Boeing.

Apart from it, the delay was caused in finalisation of compensation package.

The Air India Board had on May 28 approved an agreement with Boeing on the compensation package and forwarded it to the government for approval.

On August 3, the Cabinet Committee on Economic Affairs permitted Air India to commence taking delivery of the Dreamliners after signing a compensation settlement agreement with Boeing.

Also, the delay was caused due to a probe by the US' National Transport Safety Board (NTSB) into the incident of failure of Dreamliner's engines during a pre-flight test on July 28 in which debris fell off the B-787's engine during a pre-flight test at the Charleston Airport in South Carolina.

Following this, civil aviation regulator, the Director General of Civil Aviation (DGCA), sought a report from its counterpart in the US the Federal Aviation Authority (FAA).

The DGCA has given safety clearance to Boeing 787 Dreamliner to fly to India.

The new carbon-composite aircraft can typically carry between 210 and 250 passengers on routes of 14,200 km to 15,200 km distance, while using 20 per cent less fuel than airplanes of a similar size.

The induction of the plane can enable Air India mount several new international flights.

Air India can be turned around, says CAPA

The national carrier, Air India, may be down in the dumps, but noted civil aviation consultancy Centre for Asia Pacific Aviation (CAPA) believes that it can make a turnaround based on the marked improvements in its domestic operations.

But the government must revamp the Maharaja’s board and management to achieve the desired objectives.

POSITIVE DIRECTION

“For the first time in several years, Air India’s domestic performance is headed in a positive direction which could become a trigger for an overall turnaround if the situation is capitalised. The national carrier needs to take advantage of the current domestic market conditions to focus on its restructuring by further reducing its cost base, improving productivity and solving its outstanding HR issues,” CAPA said in a report.

It said if Air India had a chance at achieving a successful turnaround, the time was now, but it needed a board and management that could seize the initiative.

“Air India’s domestic gross revenue per passenger increased by 46 per cent in the first quarter (April-June) resulting in top-line growth of $80 million, despite the impact of the pilots’ strike. Based on CAPA estimates, Air India’s average gross passenger revenue was the highest in the industry at Rs. 5,655.

As a result, domestic operations showed significant improvement and may have ended the quarter with a small surplus at the operating level, although CAPA estimates a net loss of Rs. 300-400 crore ($53.6-71.4 million),” CAPA said.

With no significant capacity induction expected in the overall domestic market, CAPA said that Air India should be in a position to maintain its improved yields and load factors.

The government-approved financial restructuring plan should help in significant reduction in interest costs, thereby reducing losses at the net level, the aviation think tank said.

However, Air India may not have the capacity to fully leverage the demand in the market, as it has less than 55 domestic aircraft, which is inadequate for a sustainable turnaround. Similarly, the carrier has only 20-25 aircraft available for international services, of which the B777s have not been appropriately deployed.

“Without an appropriate fleet to support it, Air India’s business plan is almost irrelevant,’’ it says. Subject to a strong performance in 2012-13, CAPA believes that the carrier may need to consider augmenting its capacity..

It said that these recent positive developments should be used as an opportunity to re-motivate employees and the upcoming retirement of 13 Executive Directors should be used as an opportunity to induct experienced industry professionals.

Serious attention must be given to providing Air India with the necessary framework, including an effective board and senior management to maximise the prospects of achieving a successful turnaround.

Based on its April-June quarter performance and subject to sorting out issues with the pilots, a robust result in Q3 and Q4 could see Air India’s projected full-year loss for 2012-13 decline from $1.3 billion to just under $1 billion, CAPA said.

In this report, CAPA said that Kingfisher was heading for a temporary operational shut down as the airline continued to operate with minimal cash flows and its services were subject to occasional disruption due to labour issues.

“Without an investment of about $600 million in the next 30-60 days, and access to a further $400 million over the next 12-18 months to fully-fund its business plan, Kingfisher faces the prospect of an operational shutdown, possibly temporarily, to allow it to restructure and reorganise,” CAPA said.

It said that considering severe setbacks at Kingfisher and Air India, recently Jet Airways had failed to leverage on the weakness at the full service space.

Air India’s international operations post losses: Minister

The international operations of Air India are proving to be a losing proposition.

In a written reply to Parliament, Minister for Civil Aviation Ajit Singh said between April and June, the total revenue that the airline generated from its international operations stood at Rs 1,711.22 crore, while the total cost of operations was Rs 2,626 crore.

The total revenues from all its European operations stood at Rs 213.51 crore, while cost of operations was Rs 404.70 crore. From its North American operations, the airline raised revenue of Rs 447.25 crore, while the total costs stood at Rs 702.88 crore.

In the past, too, the airline’s international operations did not do well, the Minister’s reply shows. During fiscal 2011-12, its total revenue stood at Rs 7,763 crore against a total operation cost of Rs 13,793 crore. Similarly, during 2010-11, its total revenue from international operations stood at Rs 7,035.18 crore against Rs 12,659 crore on total cost of operating these services.

The Minister said the airline had taken several measures to improve its performance, including ensuring that all long-haul routes to North America, the UK, Europe and Far East are upgraded and are now operated with the new Boeing 777-200 Long Range and 300 Extended Range aircraft. Besides, the airline is also progressively increasing the utilisation of all aircraft.

In response to another question, the Minister said 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.

Thai Smile’s India service to take off from Hyderabad

Thai Smile Airways, the newly formed carrier of Thai Airways, will be launching its maiden flight from India connecting Hyderabad with Bangkok from September 16.

Thai Smile, a light-premium carrier positioned between a low-cost carrier and a full service carrier, was introduced by the airline in July, connecting three destinations so far — Macau, Surat Thani and Krabi — to Bangkok.

Hyderabad will be the carrier’s fourth destination. Thai Smile will actually be replacing the Hyderabad service being currently operated by Thai Airways and upgrade it to a daily service. It will be operated by an A320 aircraft.

New price point for passengers

Thai Airways currently connects seven cities in India. The new service was launched to offer a new price point for its passengers.

“We have priced Thai Smile at about 15 per cent cheaper than the regular Thai Airways flight, but with more or less the same facilities, such as onboard snacks and luggage capacity,” Woranate Laprabang, Managing Director, told Business Line.

The carrier is acquiring four A320s this year, as it scales up its operations. “We plan to have a fleet of 20 A320s by 2015. These narrow-body aircraft is best suited for our operations in terms of configuration and fuel efficiency,” he said.

Passenger traffic

Laprabang said the passenger traffic between India and Bangkok was now at 900,000 and with the introduction of Thai Smile services, it could go up to one million. Leisure travellers account for nearly 80 per cent of this traffic.

The carrier is looking at two new destinations to be added to its global network.

“On the radar are Ahmedabad, Amritsar and Thiruvananthapuram. We will take a call depending on the response of our maiden service in India (Hyderabad-Bangkok),” he said.

The carrier is also thinking of connecting new cities in Thailand to India such as Phuket and Krabi.

Air tickets get dearer

Air tickets have become costlier with the airlines effecting a fuel surcharge hike ranging between Rs.100 and Rs. 150, following a steep increase in aviation fuel prices by the oil companies this month.

The airlines have issued a circular to their travel agents informing them about the Rs. 100 hike in the fuel surcharge till 1,000 km and Rs. 150 for flights going beyond that distance, a travel agent has said.

Oil marketing companies have hiked the jet fuel or Aviation Turbine Fuel price by over 3.2 per cent on August 16, the third straight increase since July. This has added to the cost burden of cash-strapped airlines.

Passengers will now have to pay Rs. 1,600 instead of Rs. 1,500 as surcharge till 1,000 km and for the distance more than 1,000 flyers will have to shell out Rs. 2,550 instead of Rs. 2,400.

Leasing aircraft on loss-making routes cost AI Rs. 4,234 crore

An investigation by Air India’s internal vigilance department found the airline lost a staggering Rs. 4,234.28 crore between 2005 and 2010 because it leased 16 aircraft to enhance capacity on routes that were already making losses, documents obtained by The Hindu show.

The investigation, whose findings were submitted for review by Air India’s Board on November 29, 2011, shows the leasing losses accounted for a third of the airline’s total losses of Rs. 13,835 crore.

Earlier, a report by the Comptroller and Auditor-General said the airline had also lost Rs. 68,000 crore because it committed itself to purchasing aircraft far beyond the recommendations of its own feasibility studies.

Air India officials declined to comment on the report. However, in a leaked communication to the Cabinet Secretary that became public earlier this month, the former Air India chief, Sunil Arora, alleged that key decisions had been coloured by “unprecedented” interference by the former Civil Aviation Minister, Praful Patel.

In his May 28, 2005 letter, Mr. Arora said Air India’s Board had been steamrollered into purchasing more jets than required. In some cases, Mr. Arora alleged, even seat configuration requirements had been changed to suit particular manufacturers. Indian Airlines, similarly, had been pulled out of profitable routes to make way for private operators.

Air India’s Board, a briefing note on the investigation prepared for it states, was told a variety of reasons were assigned for leasing aircraft despite the negative returns on the routes, such as protecting slots at airports and maintaining schedule integrity. However, “no viability study was carried out of these futuristic issues vis-?-vis the loss that was going to be caused, which would justify taking the aircraft on dry lease at an estimated loss.”

“From the actual operating results, it is seen that revenue earned by operating leased aircraft was about 50 per cent lesser than the revenues estimated in the Economic Viability Report,” the report states.

“In a particular case,” the note states, “[an] aircraft was taken on fresh dry lease five months before the lease period of the then operating dry leased aircraft came to a close, and that too when this route was making loss. Subsequently, operations on the same route were terminated.”

The note also records that key documents on the decision-making process are missing.

GoAir spreads wings in North and South

MUMBAI, AUG. 22: 

GoAir has introduced a new flight on the Lucknow-Delhi and Lucknow-Mumbai routes as of August 21.

The Lucknow flight schedule offers a daily return service on the Delhi and Mumbai sectors.

Currently, In the North, GoAir operates from Delhi, Chandigarh, Jammu, Srinagar, Leh, Patna and Jaipur. With this new service, the airline will operate 42 flights a week to and from Lucknow, connecting onwards to Bangalore, Kolkata, Goa, Ahmedabad, Pune, Srinagar and Nanded.

GoAir recently entered into a contract with the Germany-based Lufthansa Technik for maintenance and spare parts for its A320 fleet.

Giorgio De Roni, CEO, GoAir, said, “Within this financial year GoAir will receive an additional brand new aircraft. We have also planned more flights to and from Bangalore.”

As part of its growth, the airline will be adding 72 next generation A320 NEO aircraft to its fleet.

SpiceJet to fly to Jabalpur from Delhi, Mumbai from Sept

Expanding its network to more tier II cities, no frill carrier SpiceJet today announced launch of two daily flights to Jabalpur from Delhi and Mumbai from September 7.

"SpiceJet would be operating two daily direct flights from Jabalpur. The airline is launching direct services on Jabalpur-Delhi and Jabalpur-Mumbai routes. The opening of ticket sale is effective from today and commercial flights would start from September 7," a SpiceJet spokesperson said.

Jabalpur would be the third destination of the low-cost airline in Madhya Pradesh after Bhopal and Indore.

SpiceJet would be deploying its newly acquired Bombardier Q400 NextGen Turboprop aircraft, which can accommodate 78 passengers on these two routes.

"We are pleased to expand out presence further in Madhya Pradesh, which is vast state," said Neil Mills, SpiceJet Chief Executive Office.

United Spirits to face heat if Kingfisher Airlines left to flounder

If billionaire Vijay Mallya does not infuse cash into the cash-strapped Kingfisher Airlines Ltd or find other ways to mitigate the trouble at the airline, the crisis will have a spillover effect on his other group companies, say analysts.

Take the case of United Spirits Ltd (USL), the flagship alcohol beverages company of the Mallya-led UB Group. The company, say analysts, will come under severe stress if Kingfisher is allowed to flounder.

Though USL has not directly lent to Kingfisher, it has a current outstanding debt of close to Rs 400 crore towards United Breweries (Holdings) Ltd, the group’s holding company, which in turn has supported Kingfisher in a big way.

UB Holdings has around Rs 13,000 crore exposure in Kingfisher — Rs 4,000 crore through debt and equity and Rs 9,000 crore through corporate guarantees to banks and aircraft lessors.

“If Kingfisher Airlines is left to flounder and were to close down, the financial institutions do have recourse. As much as Rs 835 crore of corporate guarantees have already been revoked by certain banks and aircraft lessors and UB Holdings is in active discussions in this regard with the beneficiaries,” a senior member of a corporate advisory firm which has worked with Kingfisher told Business Standard.

UB Holdings, along with a clutch of a promoter-led companies, holds close to 28 per cent in USL of which as much as 98 per cent has been pledged. USL itself is in an uneasy situation of leverage of little over two times under a debt of Rs 8,600 crore and is working on a few options to deleverage to ease the interest outflow. There has been repeated buzz in the market that global spirits firm Diageo Plc is in active discussions with Mallya to pick up stake in USL.

A senior management official of USL said that by 2010-11-end, the company had a total exposure of close to Rs 370 crore towards UB Holdings, which it was yet get back. “It has been extended. During 2011-12, there have been no fresh advances towards UB Holdings, but USL has a current account exposure of around Rs 25 crore as UB Global (another group firm) does lot of exports on behalf of USL,” the official, who did not want to be identified, said.

According to a senior investment banker who closely tracks the UB Group, it is imperative that Mallya infuses at least Rs 1,200-1,500 crore equity into Kingfisher Airlines at the earliest, lest the crisis will have a cascading effect on his other group companies. “As I understand, a strategic partner has to take an exposure in Kingfisher and leverage it as a feeder in India for its global operations,” the banker, who also requested anonymity, said. .

Kingfisher has been saddled with a debt of close to Rs 9,000 crore and since November 2011, it was forced to curtail operation by a fifth. It currently operates 12 aircraft from the earlier 66, and has reduced daily flights to close to 90 from the earlier 360.

The company has been maintaining it is continuing its operations through a holding plan until recapitalisation happens. It is also looking forward to government for allowing foreign direct investment in the civil aviation sector. A spokesperson for Kingfisher Airlines said the airline was doing all things possible to keep its operations afloat amid all odds.

Pain ahead for Jet Airways

The hike in fuel prices on August 16 saw the Jet Airways (India) stock shed five per cent last week. While the stock has recouped some of the losses on hopes that the improved June quarter performance will continue and its pricing power will hold, analysts and wealth managers aren’t convinced.
“It is doubtful whether the profits reported in the June quarter will be sustained given that there is no visibility for the business. Unless there is further consolidation and a handle on fuel prices (up 10 per cent over the past month) which is the key input, companies will come under pressure. We have advised our clients to stay away from this space,” says Manish Sonthalia, vice-president and fund manager, Motilal Oswal Asset Management Co Ltd.

While airline companies have shown improvement by rationalising costs, Jet’s fortunes hinge on how competition reacts to the falling demand and higher fuel costs. Edelweiss Securities analysts Sachin Gupta and Ashish Gupta who have a mixed outlook on the sector say: “Past experience leads us to be pessimistic on continuation of industry discipline. Economic slowdown has started to reflect in traffic growth, which poses a question mark on continuous yield improvement assumption.”

What is also spoiling the show for Jet is the weak rupee and its continuing high debt, which remains a key overhang on the stock. The scrip, currently at Rs 395, is trading at seven to eight times its FY13 estimated value to estimated Ebitda (earnings before interest, taxes, depreciation and amortisation). In this backdrop and given the stock’s outperformance (more than doubled in 2012; it is up 11 per cent in August against Sensex’s 3.8 per cent rise), could lag broader markets, going forward.
Falling demand
Passenger demand for the first four months of the financial year is down two per cent year-on-year largely due to the fall in June (four per cent) and July (eight per cent). Given the high ticket prices and a slowing economy, analysts are revising their FY13 estimates. “Higher ticket prices and a decelerating economy could snowball into a steep fall in passenger travel,” says an analyst. Thus, passenger volume growth, which was between 15-20 per cent in FY10-FY12 and averaged 17 per cent over the last 10 years, is likely to be flattish or record a fall in the current fiscal.
While the issues facing Kingfisher Airlines and Air India do give Jet a breather, falling demand would force it to either drop prices or lose market share, going forward.

CHALLENGES AHEAD
In Rs crore	Q1' FY13	% chg y-o-y	FY13E	% chg y-o-y
Net sales	4,711	31.5	20,922	25.3
Fuel expenses	1,967	25.8	-	-
Ebitda	463	282	1,636	LTP
Ebitda margin (%)	9.8	645 bps	7.8	-
Net profit	25	LTP	-90	-
E: Estimates: LTP: Loss to profit, Source: Company, Analyst reports

Losing share
Among the recent developments, Indigo (unlisted) went ahead of Jet to become the largest domestic carrier in July with a market share of 27 per cent, compared to Jet’s 26.6 per cent. Given Indigo’s expansion plans and Jet’s focus on profitability and improving its yield, the younger carrier (Indigo) is likely to maintain its lead over the next couple of months. However, analysts believe Jet is likely to regain its pole position in the December quarter as rising passenger traffic in a seasonally strong quarter feed into its domestic network.
Higher profitability: Can it last?
Aided by a scaling down of Kingfisher operations which helped boost load factors (for Jet and others), higher yields and tight control on costs helped the company post a net profit after five successive quarters of losses. SpiceJet, too, has witnessed a similar trend.
Thus, while Jet’s revenues increased 31 per cent, expenditure grew 20 per cent, improving margins from 9.8 per cent in the year-ago quarter to 16 per cent in latest quarter. While the performance is much above expectations, Mahantesh Sabarad and Vijay Nara of Fortune Research say cost reductions achieved may not last, making it difficult to sustain margins as other increases like airport charges set in. The company, too, believes margin pressures are likely to stay. In a recent investor conference call, the company’s chief commercial officer, Sudheer Raghavan, had said high crude prices, rupee depreciation and a slowdown in the economy will impact its operating margins in the short-term. On the debt front, the company plans to reduce its borrowings, which currently stands at Rs 13,500 crore, by Rs 2,200 crore. However, Fortune Research analysts feel the company may just cross half that mark and advocate caution on that count.

Jet Airways to operate more flights to Gulf from winter

MUMBAI: Jet Airways today said that effective October 18, it will launch a new Mumbai-Sharjah service, its sixth daily flight to the UAE from the city, apart from resuming services to Kuwait and Bahrain from Kochi, as part of its winter schedule. 

"Our new daily return service Mumbai to Sharjah will be the sixth daily service between Mumbai and the UAE, in addition to the existing four daily services to Dubai and one daily flight to Abu Dhabi," the airline said in a statement. 

The return services on the Kochi-Kuwait sector will operate four times a week-- Mondays, Thursdays, Saturdays and Sundays respectively, the airline said, adding the Kochi-Bahrain return services will operate on Tuesdays, Wednesdays and Fridays. 

The introduction of these flights will further strengthen Jet's presence in the Gulf where it has emerged as one of the leading carriers to and from the country of late. The airline will deploy the next-generation Boeing 737-800s on these routes, offering premiere and economytickets. 

Announcing these services, chief commercial officer Sudheer Raghavan said, "in keeping with the growing demand for connectivity between the Gulf and our country, as well as onwards via our international hub in Mumbai, Jet is delighted to enhance its services on the India-Gulf sector in the winter schedule. We are confident that the new services will prove popular with our guests." 

Jet currently operates a fleet of 99 aircraft, which include 10 Boeing 777-300 ER aircraft, 11 Airbus A330-200s, 58 next generation Boeing 737-700/800/900 aircraft and 20 modern ATR 72-500 turboprop aircraft. 

It operates to 74 destinations both domestic and international with its three services under Jet Airways, JetKonnect and JeLite.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/jet-airways-to-operate-more-flights-to-gulf-from-winter/articleshow/15586804.cms

AAI seeks land for new terminal

The prospect of a new domestic terminal, adjacent to the world-class international terminal complex here, has brightened with the Airports Authority of India (AAI) approaching the State government again for 32.8 hectares of land to set up the terminal and ancillary facilities.

The proposed domestic terminal, adjacent to the terminal complex that had come up on the Chakka side, was part of the third and final phase of the ambitious master plan conceived by the AAI in the 1990s.

The delay on part of the State government to acquire and handover the land required (for the domestic terminal) had forced the AAI to go ahead with the construction of the international terminal and commission it.

At present, international operations were being carried out from the New International Terminal Building (NITB) and domestic operations from the old international terminal which was refurbished.

Airport Director V.N. Chandran had recently met Chief Minister Oommen Chandy and discussed land allocation and other issues concerning the airport.

As the domestic terminal and the cargo complex was on the Sanghumughom side, AAI sources told The Hindu that it had been creating problems for airlines and passengers. The construction of a new domestic terminal adjacent to the NITB would have benefited the passengers as it was close to the National Highway 47 bypass and the city. It would facilitate easier operations for the airlines, sources said. Of the 32.8 hectares sought, 39 cents would be from the coconut farm near Valiyathura.

The AAI had also demanded shifting of the Kaniyankara temple and the Chakka Oldage Home. The authority had also sought one hectare of land near the Arat gate, near Vallakadavu.

The State had also been asked to provide 2.4 hectares of land for the construction of a parallel taxiing track. AAI sources said the State had also been asked effect the essential changes in the Revenue records.

The State had spent Rs.41 crore for the approach road and a bridge across Parvathy Puthanar to the Rs.300-crore NITB. As much as Rs.100 crore had been spent to acquire land for the first and second phases. The functioning of the Thiruvananthapuram International Airport Development Society, set up to spearhead development works of the airport, had stopped a year ago.

Russia hopes India will refloat MMRCA tender

A top Russian arms trade official suggested that India may cancel the results of its tender for the purchase of 126 medium multi-role combat aircraft (MMRCA).

“I wouldn’t say that the MMRCA tender is a closed issue. We have information that the tender is still up in the air,” said Vyacheskav Dzirkaln, Deputy Director of Russia’s Federal Service for Military Technical Cooperation.

The French Rafale aircraft won the MMRCA tender, whereas Russia’s MiG-35 did not even make it to the shortlist, which also included the European Eurofighter.

Mr. Dzirkaln told the Interfax-AVN news wire on Tuesday that neither the Indian nor the French side were happy with the financial terms of the deal and the extent of technology transfer.

“The sides have so far failed to reach agreement on these issues,” the Russian official claimed.

He did not rule out that India may refloat the tender.

“In the tender is floated again, we would be prepared to take part, taking into account the lessons we have learnt,” Interfax quoted Mr. Dzirkaln as saying.

The Russian official said the Indo-Russian defence cooperation had “enormous” potential.

“India is Russia’s Number One defence partner. It accounts for more than a third of the total volume of our military-technical cooperation with foreign countries,” he said.

Russia’s defence sales topped $13 billion last year.

“The potential [of Indo-Russian defence cooperation] is enormous and prospects for growth are very impressive,” Mr. Dzirkaln said.

He spoke hours after the news came that the U.S. Apache Longbow had beaten Russia’s Mi-28 in the $1.4-billion Indian tender for the purchase of 22 heavy-duty attack helicopters.

Mr. Dzirkaln said Russia was prioritising technology transfer and license production of high-tech defence systems in its defence cooperation with India. He revealed that a contract for the supply to India of additional 42 long-range multirole Su-30MKI fighters to India will be signed in the next few months.

“The contract is ready and practically finalised with the Indian side. It is currently undergoing procedures within the Indian Defence Ministry. We hope that it will be signed before the end of the year,” Mr. Dzirkaln said.

Airport charges at Delhi prohibitive: GoAir chief

 “Delhi is definitely one of the most expensive airports in the world,” said Giorgio De Roni, CEO, GoAir, on Tuesday.

Speaking to The Hindu on the sidelines of a media conference, organised to announce the airlines’ launch of a flight connecting Bangalore and Goa, Mr. Roni said, “There is no logic in the airport operator increasing airport charges for domestic carriers by 334 per cent in one year.” “The operator’s request was marginally higher — 700 per cent,” he observed sarcastically.

“High airport charges are a serious problem,” said Mr. Roni. Airports such as Pune had increased charges by as much as 35 per cent with barely a day’s notice to the airlines, he said.

“Delhi (airport) is a problem. It is brand new and extremely nice, but the cost is extremely high.” “I understand that some foreign airlines are postponing increasing their capacity in India because they find the airport charges at Delhi too high,” Mr. Roni said.

Although many airports were likely to increase royalties, fees and other charges in the near future, the increase at Delhi airport had been “the most critical,” Mr. Roni said. Drawing on his experience of 25 years with the international aviation industry, Mr. Roni, said airports in Ireland and the Netherlands, which increased fees, experienced declining revenues as a result. Several airlines, he pointed out, decided not to operate out of airports that hiked airport fees sharply, he said.

“I am not so sure that an increase in fees charged by airport operators results in higher revenues,” Mr. Roni said. Observing that domestic air travel had fallen significantly during June and July, he wondered whether the increase in airport charges would have compensated for the decline in volumes. “The increase in airport charges would cost us Rs.50-60 crore more,” Mr. Roni said.

Mr. Roni said the Federation of Indian Airlines had raised the issue of high airport charges with the Ministry of Civil Aviation, and the Airports Economic Regulatory Authority of India (AERA). The Delhi International Airport Ltd., which is controlled by the GMR Group, was last week indicted on several counts by the Comptroller and Auditor General for causing losses to the public exchequer.

“The funny thing is that in Delhi we not only pay for departing flights but also for arrivals,” Mr. Roni said. “I do not know another airport in the world that does this,” he said.

Govt may ask CBI to probe ‘more damaging’ power, airport deals

 As the Opposition turns the heat on the Prime Minister over the CAG report on coal block allocation, the Government is silently working on handing over to the CBI the other two reports — on Mega Power Projects and Delhi International Airport.

Both Houses of Parliament were adjourned today after the Opposition demanded the Prime Minister’s resignation. However, both the Government and the Congress are confident of facing the Opposition’s onslaught.

A senior Government functionary, who did not wish to be named, said that for the Government, more damaging were Comptroller and Auditor General’s reports on Ultra Mega Power Projects (UMPP) and implementation of public-private-partnership for Delhi International Airport Limited (DIAL).

NOT PRESUMPTIVE

“We are ready for a CBI probe into the matter,” the person said. The CBI is already investigating irregularities in the allocation and utilisation of coal mines.

The DIAL report, which is said to be more damaging, is likely to be discussed at the highest level of the United Progressive Alliance as Nationalist Congress Party leader Praful Patel was the Civil Aviation Minister during the audit period. The Government and the Congress are finding it difficult to put up a defence as the loss estimates by the CAG are not presumptive in the case of DIAL and UMPP.

The Opposition, except the CPI(M), is yet to make a statement on these two reports. The Leader of the Opposition in the Rajya Sabha, Arun Jaitley, had said the BJP would soon prepare its views on the two reports.

The Deputy Leader of the Opposition in the Rajya Sabha, Ravi Shankar Prasad, told reporters here on Tuesday that the CAG report on DIAL was as serious as the one on coal. CPI(M) MP K. N. Balagopal has already sought a probe into the issue by a “federal” agency.

In its report, CAG had said that of the total capital expenditure of Rs 12,857 crore claimed by DIAL, the Airports Economic Regulatory Authority of India had admitted Rs 12,502.86 crore as the total project cost. In the UMPP report, the CAG said that permission for use of excess coal by Reliance Power from the three coal blocks allocated to Sasan UMPP not only vitiated the bidding process but also resulted in undue benefit to the company.

UNDUE BENEFIT

A Congress leader said the CAG report says the Madhya Pradesh Chief Minister and BJP leader, Shivraj Singh Chouhan, had written to the Centre requesting that Reliance Power be allowed to use excess coal. “Such things will be revealed only in a thorough probe,” he said.

Kingfisher allowed to fly with truncated fleet, schedule

Kingfisher Airlines will be allowed to continue for now with a truncated flight schedule and a depleted fleet.

One of the reasons for no action being taken against the airline, which could have included cancelling its licence for not flying the sanctioned number of flights and not paying staff and vendors, is that the Directorate General of Civil Aviation (DGCA) is currently conducting a safety audit of Kingfisher.

Sources indicated that till such time that the audit is over and the report examined, no action is likely against the airline.

Meanwhile, the airline has informed the DGCA that currently it has a fleet of 11 aircraft – six Airbus A-320 and five turbo-prop ATR aircraft – and has been operating 85 flights since August 17.

This was conveyed at a courtesy call that the airline’s Chief Executive Officer Sanjay Agarwal paid to the newly appointed DGCA Arun Mishra. At the meeting, Agarwal is believed to have said that the current reduction in flights was due to “industrial action.”

Pilots have not been reporting for duty since August 17, protesting non-payment of seven months of back wages.

The airline had approached the DGCA to operate 118 flights during the ongoing summer schedule with 17 aircraft. At the moment, six aircraft are grounded due to engine trouble.

At the meeting, Agarwal is said to have assured that pilots will be paid on Tuesday and added that later in the day there was a meeting with two investors for recapitalising the debt-ridden airline.

Emerging from the meeting, he categorically denied to Business Line that there was any plan to shut down the airline.

Jet Airways to launch Mumbai-Sharjah service from Oct 18

Jet Airways will launch its new daily service from Mumbai-Sharjah from October 18. This will be the airline’s sixth daily flight to the UAE from Mumbai in addition to the resumption of its services to Kuwait and Bahrain from Kochi. 

The airline’s return services on the Kochi-Kuwait sector will operate four times a week (Mondays, Thursdays, Saturdays and Sundays).

Its Kochi-Bahrain return services will operate three days a week (Tuesdays, Wednesdays and Fridays).

The airline will deploy Boeing 737-800 aircraft in the routes and offer premiere and economy configurations.

Jet Airways currently operates a fleet of 99 aircraft and connects to 74 destinations in India and other countries.

IndiGo flights to Dubai from Chennai, Kochi

IndiGo has announced introduction of new flights connecting Dubai to various destinations in South India.

Aditya Ghosh, president, IndiGo, who unveiled airline’s growth plans, said the airline would launch its new daily and non-stop flights between Kochi and Dubai and Chennai and Dubai on August 25.

The airline will be offering introductory return fare of 734 dirham (or Rs 11,200) on all new flights.

Recently IndiGo launched its second daily and direct flight between Dubai and Delhi and between Delhi and Bangkok. Hyderabad has also been connected with Dubai recently.

The new services will consolidate IndiGo’s position as the fastest growing airline in India, with 58 brand new Airbus A320s - 6E operates 361 daily flights, connecting 32 destinations, he said.

“Kochi holds a lot of promise for us and indeed is a key market. Expanding operations in Kochi is in line with our growth strategy outlined for South India,” he said.

With rising business and tourism stemming from the southern hubs, Ghosh said IndiGo is also determined to provide the best travel experience to all those who wish to fly to Dubai from these destinations.

GoAir launches flights on Bangalore-Goa route

GoAir has added its 13th aircraft and launched a Bangalore-Goa route designed for businessmen. The company said that this flight will leave Bangalore early in the morning and return the same night.

Announcing the launch of the new flight, Giorgio De Roni, chief executive officer of GoAir, said the unlisted company posted impressive profits for the June quarter. “Q2 (the September quarter) is the weakest, but we feel that we can deliver a profit,” he said.

Talking on foreign direct investment (FDI) in the airline industry, De Roni said, “I hope that the government will approve FDI in airlines. India is in the middle of the strongest growth rate and FDI may help the industry to grow.”

The government has mandated that Indian airline companies who want to operate on international routes should have operated for a minimum of five years and have at least 20 aircraft. “The government, however, allows international operators to fly to India even if they have just one aircraft,” he said.

While GoAir has requested the government to relax these requirements, De Roni said, the company will be able to acquire 20 aircraft from July 2014 and meet the government requirement if it remains in force.

Tier II and III cities are showing more dynamic growth than metros and GoAir is looking at the possibility of using different aircraft for these cities, said De Roni.

Thanks to a 22 per cent capacity increase, GoAir, which flew around three million passengers last year, would be flying about five million this year.

De Roni was critical of Delhi Airport and said that, to the best of his knowledge, it was the only one in the world which charged a fee on arriving passengers.