Mallya calls for a clear aviation policy

India needs a clear aviation policy that promotes healthy investment and addresses the factors retarding the growth of the air transport sector, Chairman of Kingfisher Airlines Vijay Mallya has said.

Delivering the presidential address at the 63{+r}{+d}annual general body meeting of the Aeronautical Society of India (AeSI) on Friday, Mr. Mallya, who is also the president of the society, said air operators in the country were facing adverse financial and operating conditions. Issues of taxation, user development fee and high input costs were affecting the aviation sector, one of the major drivers of economic growth.

“Despite the rapid growth of the past decade, the number of trips undertaken per capita in India still remains low at 0.04 compared to 0.25 in Brazil, 0.54 in Malaysia and 0.15 in China,” Mr. Mallya said, adding that a clear civil aviation policy would help address the industry's needs.

In his inaugural address, P.S. Veeraraghavan, director, VSSC, said India was emerging a strong contender in all fields of aerospace and aviation industry. A national conference on Advances in Thermophysics and Heat Transfer in Aerospace was organised in connection with the annual general body meeting of the society.

In his address, S. Ramakrishnan, director, Liquid Propulsion Systems Centre (LPSC), underlined the importance of bringing together experts in various fields for the indigenisation of propulsion systems.

Mr. Mallya also presented the National Aeronautical Prize instituted by the society to Mr. Veeraraghavan for his contribution to the development of satellite launch vehicle technologies.

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/article3482483.ece

Striking AI pilots reject Dharmadhikari report The report bases pilot pay on type of aircraft they fly, not on whether they belong to erstwhile Indian Airlines or Air India

Salaries of Air India pilots will depend on which type of aircraft they fly — narrow-bodied or wide-bodied — and not on whether they belong to erstwhile Air India or Indian Airlines, if the suggestions of the Justice Dharmadikari Committee report, made public by minister of civil aviation Ajit Singh on Friday, are accepted.
The report also links payment of pilots to the number of hours they fly and to a fixed allowance.

The union of the 450 striking pilots, the Indian Pilots Guild, or IPG, rejected the suggestions and called the Dharmadhikari report biased and prejudiced. “The report is tailor made to suit the interests of employees of erstwhile Indian Airlines. It reinforces the bias and prejudice that the management harbours against the employees of erstwhile Air India vis- a-vis erstwhile Indian Airlines,” an IPG spokesperson said. The pilots of erstwhile Air India are on strike, and have opposed the training of Indian Airlines pilots on Dreamliner aircraft, which are wide-bodied.

The report was given in January this year. The civil aviation ministry has decided to have a four-member Implementation-cum-Anomaly Committee on the Dharmadhikari recommendations. It is to be chaired by a director from the ministry, Syed Nasir Ali. The panel is to seek the views of all sections of employees on how to go about the job. It will have one member each from the erstwhile IA and the erstwhile AI.

“The committee has recommended that pilots, engineers and technicians below them servicing narrow-body aircraft should be paid differently from those on wide-body aircraft,” said minister Ajit Singh. The erstwhile IA had operated on all domestic and short-haul international routes, primarily with narrow-body aircraft. And, the pre-merger AI plied on long-haul international routes, with wide-body aircraft.

It may be noted that a primary demand of the AI pilots on international routes, on strike for more than three weeks, has been to stop the training of pilots from the erstwhile IA to ply the new Dreamliner aircraft. These planes are built for long-haul plying.

The minister said the Dharmadhikari report had projected a saving of Rs 250 crore from AI’s annual wage bill of Rs 3,000 crore during the first year itself. The savings would mainly be from changing of rules, such as a flying allowance based on actual hours flown, not a pre-fixed amount. And, curtailing the list of staff dependents who could avail of free travel tickets.

The report has also recognised the need for certain allowances given to a certain class of employees like pilots, cabin crew and engineers, in line with industry standards. This will probably have to be approved by the Cabinet.

On the pilots’ strike, the minister made it clear there would be “cross-utilisation” of all resources, including personnel, to allow a fair opportunity to everyone as a matter of policy in the merged entity at all levels, including cross-training at various levels. He reiterated that the pilots’ concerns would be taken up only after they called off the strike unconditionally. The 25-day strike has cost AI about Rs 330 crore in revenue till now.

Debt rejig cuts losses
Meanwhile, AI says it has been able to reduce its losses to Rs 5 crore a day from Rs 15 crore earlier, due to the earlier restructuring of its debt. “Our monthly interest outlay has come down to Rs 25 crore from Rs 250 crore earlier and the rest of the losses have been covered through improved performance, bringing our losses down to Rs 5 crore a day,” said chairman & managing director Rohit Nandan.

He said the banks had restructured debt of Rs 22,000 crore. Of this, around Rs 12,000 crore was converted to long-term debt, at a lower interest rate of 11 per cent, with a payment moratorium till October. Another Rs 3,000 crore was converted into cash credit and the rest is to be returned to the banks through a bond issue.

“We are working on our bond issue, which will be launched soon,” Nandan said.

The carrier had accumulated losses of Rs 20,000 crore and has to show an operational profit by the end of this financila year, and net profit by 2018, according to the turnaround plan.

http://business-standard.com/india/news/striking-ai-pilots-rejectdharmadhikari-report/476093/

AI strike continues, losses mount to Rs 330 cr

New Delhi: The strike by pilots of national carrier Air India continued for the 24th day Thursday, pushing up the airline's losses to more than Rs.330 crore.

"We have lost nearly Rs.330 crore on account of ticket cancellation, unused labour and bulk of Boeing 777 fleet being grounded," an Air India official told a news agency.

"We expect to stabilise our operations and cut the losses to less than Rs.5 crore a day from June 2," he added.

"We have finished work on our interim plan which will be implemented from June 1. Under the new plan, several destinations where the load factors are quite low might be dropped for the time being."

The airline is expected to fully shift to the truncated interim schedule from June 1, dropping seven international destinations including Hong Kong, Osaka, Seoul and Toronto.

The airline will operate only 38 services instead of the regular 45.

According to the airline official, bookings for international destinations will also be tweaked.

Currently, the carrier is operating through a contingency plan under which a bare minimum number of flights are maintained by clubbing operations to various destinations in Europe and the US.

Air India has maintained that it has enough executive pilots to operate services to long-haul destinations in the US and Europe on some of the Boeing 777 and Airbus A330 aircraft.

The airline is said to be examining several proposals to restore the international operations which includes wet leasing aircraft from other airlines.

The proposal, according to officials, will include renting of aircraft with pilots and cabin crew.

"There is a proposal to wet lease at least five aircraft with pilots and crew. We require pilots and crews to maintain operations to key destinations in Europe, the US and Southeast Asia," said an official.

Trouble started for the airline May 8 when pilot-members of the Indian Pilots Guild took mass sick leave, protesting the move to provide Boeing-787 Dreamliner training to pilots from the erstwhile Indian Airlines.

http://zeenews.india.com/business/news/companies/ai-strike-continues-losses-mount-to-rs-330-cr_48687.html

Spicejet to get first ATF shipment early July: CEO

Country's third largest carrier by market share, Spicejet on Thursday said it hopes to take delivery of the first shipment of directly imported aviation fuel by early July.

"We will be the first carrier to import ATF directly, as we hope to take the delivery of the first shipment early July," Spicejet chief executive Neil Mills told agencies in a post-earnings conference call on Thursday.

On April 18, the director general of foreign trade, apex government authority on exports and imports, had allowed Spicejet to import aviation fuel directly, making it the first airline to get such an approval.

Early February, the government had allowed airlines to import fuel directly as part of its steps to help the bleeding airlines, which are set to close FY12 with nearly USD 2 billion in losses.

Mills further said the airline hopes to save considerably in fuel costs with this direct import. While Spicejet saw its fuel bills shooting up 55 per cent in the last quarter of the past fiscal, for the full fiscal of 2012, it was still higher at 64 per cent for the Chennai-based carrier.

On with whom the company has tied up for ATF transport, logistics and storage facilities, Mills refused to reveal the name, citing confidentiality with the partner but said they have tied up with a private company.

While refusing to give guidance for the first quarter of the current fiscal, Mills said he was 'hopeful of a strong recovery this quarter' as there has been a steep fall in crude prices, from USD 116 barrel in the Q1 of 2012 Brent crude is trading at USD 106-107 to a barrel now.

"Coupled with fall in crude prices and direct import of ATF will help us save big time in fuel cost," he added.

On Wednesday, Spicejet reported a four-fold jump in Q4 losses at Rs 249 crore, despite a 46 percent increase in sales to over Rs 1,100 crore.

The Kalanithi Maran-run carrier had reported a loss of Rs 59 crore a year-ago. On the possible impact of the steep 346 per cent hike in airport charges in Delhi from May 1 on its bottomlines, Mills said, last fiscal the airline paid Rs 20 crore in fees to the Delhi airport operator and added that there will be an impact on the airline's expenses with this development.

On whether the airline will completely pass on the fees hike to the passengers, Mills said, already the tickets are sold much below cost and he is forced to pass on the hike to passengers. But, he did not quantify the increase.

For the full year, the company's net loss stood at Rs 605 crore against a net profit of Rs 101 crore in the prior year, while income rose to Rs 3,998 crore from Rs 2,938 crore.

While net sales of Spicejet soared 46 percent to over Rs 1,100 crore in Q4 of last fiscal against Rs 760 crore year ago, average passenger yields too rose 18 per cent.

The losses are glaring as the airline saw its passenger traffic growing a healthy 24 per cent, outperforming the industry growth of around 16 per cent.

Load factor also rose to 81 per cent from was 74.4 per cent during the same period, which helped it ramp up its market share to 17.1 in the year, from 13.6 per cent in March 2011.

http://www.deccanchronicle.com/channels/business/companies/spicejet-get-first-atf-shipment-early-july-ceo-322

Vijay Mallya seeks clarity in aviation policy

Kingfisher Airlines chairman Vijay Mallya has stressed the need for a clear aviation policy that will help promote healthy investment which has been the “long-felt need” of the industry.

He was presiding over the 63rd annual general body meeting as well as the national conference on advances in thermophysics and heat transfer, organised by the Aeronautical Society of India here. It was Mallya’s last programme as president of AeSI before handing over the post to G.R. Rao.

Mallya emphasized the importance of air transport as one of the major drivers of economic growth and underlined the link between civil aviation and economic activity. Since the last decade, civil aviation had been making rapid strides, he said.

The International Civil Aviation Organisation estimates that every $100 spent on aircraft produced benefits worth $325 for the economy and every 100 additional jobs in air transport produced 610 new jobs.

However, the number of trips per capita in India remained low, at 0.04 compared to 0.25 in Brazil, 0.54 in Malaysia and 0.15 in China.

“Even though the potential is immense, India is facing adverse opposition in financial and operative environments.

In order to realise its true potential, the issues of taxation, user development fee and other inputs need to be addressed,” he said.

The seminar was inaugurated by P.S. Veeraraghavan, director of VSSC.

http://www.deccanchronicle.com/channels/business/news/vijay-mallya-seeks-clarity-aviation-policy-680

Foreign airlines see growth opportunities in India, says CAPA

Chennai, June 1:

Foreign airlines remain interested in India despite challenges.

A number of carriers have either suspended services to India ( such as AirAsiaX, American Airlines and Qantas) or have reduced frequencies on certain routes (Air France, Austrian and Lufthansa).

Jet Airways recently announced plans to suspend its Mumbai-Johannesburg service from June.

Reasons for these reductions include insufficient traffic, poor yields and high airport charges, according to the Centre for Asia Pacific Aviation, a research agency on aviation.

Apart from AirAsiaX, these are largely carriers that face competition from Gulf and Asian carriers on routes to/from India.

AirAsiaX's withdrawal was in part due to the weakness of its direct distribution strategy in the Indian market, which could not support the capacity generated by 11 weekly wide-body services into Kuala Lumpur, the agency said.

However, CAPA says there are several incumbent carriers that see growth opportunities.

These are mainly from emerging regions such as Asia, Africa and the West Asia with examples including:

Dragonair has announced plans to launch services to Kolkata from Nov-2012.

Etihad will launch Abu Dhabi-Ahmedabad services, effective Nov-2012.

Virgin Atlantic will be resuming London-Mumbai services from Oct-2012.

Kenya Airways commenced non-stop Nairobi-Delhi service in May-2012.

Air China launched Chengdu-Mumbai service in May-2012.

Iraqi Airways launched routes from Baghdad to Delhi and Mumbai in first quarter. BMI commenced London-Amritsar service in Oct-2011.

SilkAir launched a new Singapore-Kolkata route in Aug-2011.

Singapore Airlines has launched five additional frequencies to Mumbai last year.

Virgin Atlantic will benefit from the suspension of Kingfisher's Mumbai-London operation.

It plans to schedule the service to facilitate convenient onward connections to at least four US destinations. It is expected to emerge as an important player on Mumbai-UK and Mumbai-US routes, says CAPA.

Africa - interest

Meanwhile, Africa is a region of growing interest.

Kenya Airways, which launched its second Indian destination in May-2012, has identified Ahmedabad, Bangalore, Chennai and Hyderabad as cities that it plans to expand to over the next few years.

Ethiopian Airlines has similar expansion plans and has suggested that its Addis Ababa hub could play an important role in carrying traffic between India and South America.

Several airlines that do not currently operate to India are understood to be evaluating the possibility of entering the market in the next 12-24 months.

These include Alitalia and Czech Airlines (in Europe); Garuda Indonesia, Jetstar Asia, Lion Air, Myanmar Airways and Vietnam Airlines (in Asia) and Air Austral (Africa).

Expansion

But it is carriers such as Emirates, Qatar Airways and Turkish Airlines that have the most aggressive expansion plans and are pushing for additional ‘bilaterals' as their current entitlements are exhausted.

Emirates, the largest foreign carrier in India, already operates 184 weekly services to 10 cities across India, not including its low-cost subsidiary, Flydubai, but has exhausted its ‘bilaterals'.

Turkish Airlines, which has a daily service to Mumbai and Delhi, is seeking to increase this to double daily and wishes to operate to an additional six destinations.

Singapore Airlines and Cathay Pacific are also expected to seek increased rights, CAPA said in its analysis on Indian aviation.

raja@thehindu.co.in

---

Several incumbent carriers that see growth opportunities are mainly from emerging regions such as Asia, Africa and West Asia.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3481042.ece

Pay will be protected, Ajit Singh assures staff

Airline moves to implement workforce integration

New Delhi, June 1:

Air India employees are likely to receive their salary in August as per the recommendations of the Dharamadhikari committee report. The Committee had been set up to bring about integration of unified Air India, including pilots, cabin crew and engineers.

Addressing a press conference in the Capital on Friday, the Civil Aviation Minister, Mr Ajit Singh, said that pay of employees will be protected.

The Minister and officials, however, declined to comment on whether there will be a decline in the monthly pay package that some employees will receive after the implementation of the report.

Annual savings

The Minister said the implementation of the report would lead to an annual saving of about Rs 250 crore.

The saving would be on account of implementation of Voluntary Retirement Scheme and a cutback in passage rules.

Passage relates to the number of free and subsidised air tickets that are provided to each airline staff and their extended family at present.

The committee is likely to recommend a severe curtailment of family members entitled to such passages after implementation of the report. Mr Singh said that April 1, 2007 has been set as cut off date for new pay scales and promised that senior employees will not be paid less than junior employees. There will be uniform pay scales for all employees of erstwhile Air India and Indian Airlines, the Minister said.

For the executive cadre, pay scales are according to the Department of Public Enterprise (DPE) norms and for non-executive cadres, pay scales are as per the industry norms.

Panel formed

A four-member Committee headed by Mr Nasir Ali, Director in Ministry of Civil Aviation, has been entrusted with the task of doing level mapping of the airline employees for implementing the report.

The committee has been asked to submit its report within the next 45 days.

The Minister also announced that Productivity Linked Incentive (PLI) in its present form shall be abolished.

However, it will be subsumed in determination of basic pay to the extent DPE guidelines.

Officials indicated that with the implementation of the Committee report the various agreements signed with Air India will be null and void.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3481009.ece

Air India may hire more pilots

New Delhi, June 1:

With the pilot agitation continuing for close to a month, Air India may look at hiring some pilots, the Minister for Civil Aviation, Mr Ajit Singh, said on Friday.

The agitation has seen a severe curtailing of the long haul international flights operated by the airline. Addressing a press conference, the Minister said that a new Government panel was now looking at which international routes operated by the airline were able to meet their costs and which were not.

On the Boeing 787 Dreamliner aircraft joining the airline fleet, the Minister announced that the Cabinet Committee on Economic Affairs will take a view on what compensation the aircraft manufacturer should pay Air India. The compensation is being sought in view of the close to five-year delay in delivery of the first aircraft.

Declining to reveal the amount being sought in compensation, Air India officials said that the aircraft had been cleared by a team of the Directorate General of Civil Aviation.

“At the moment we have 32 pilots who fly the wide body aircraft in the fleet that have been trained to fly the Boeing 787. In addition we also have 16 pilots who operate the narrow body fleet who have also been trained to fly the new aircraft,” a senior AI official said.

The airline fleet consists of wide body aircraft like the Boeing 777 and narrow body like Airbus A-320 family of aircraft.

New international airports: Meanwhile a proposal to declare five airports including Tiruchy and Lucknow as international airports will soon be taken up by the Union Cabinet.

The Cabinet nod for the proposal will allow foreign airlines to fly to these airports and enhance air connectivity.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3481008.ece

Jet fuel price cut may not bring down air fares, say analysts

Mumbai, June 1:

The two per cent cut in jet fuel prices on Thursday will have little impact on airline companies, analysts say. Fuel accounts for 40 per cent of airline companies' expenditure.

Passenger fares are not headed down for now. “The aviation sector is reeling under losses. And in such a scenario, it will be difficult to bring down the fares. Airlines would use any dip in fuel price to consolidate their profits,” an official of an airline company said.

Aviation analysts feel that the difference would be minimal. “Since international oil prices seem to be stabilising on the higher side, a two per cent reduction on the jet fuel prices will hardly make any difference,” said Mr Amrit Pandurangi of Deloitte.

The extremely competitive nature of the aviation industry will make it difficult to bring down air fares, he added.

“It is the industry behaviour that determines the profit or loss of an airline company. If one airline reduces air fares, others have to follow suit. The benefit from the jet fuel cost reduction is minimal,” Mr Pandurangi said.

Even after the reduction, Aviation Turbine Fuel (ATF) prices are still considerably higher than a few months earlier.

In Mumbai, jet fuel will now cost Rs 66,587.90 per kilo litre (kl), against Rs 68,022.08 per kl. The three fuel retailers, Indian Oil, Hindustan Petroleum and Bharat Petroleum, revise jet fuel prices twice every month, based on the average international price in the preceding fortnight.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3481006.ece