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