Is Air India management serious about running the show?

A worried Air India management is now looking for ways and means to have its grounded fleet on air as soon as possible to offset the losses (over `400 crore in 40 days) as it feels the government just might disapprove of the `30,000 crore bailout it has promised to the financially beleaguered state-run carrier.

The Cabinet has recently released an equity of `1,900 crore to Air India as part of the `30,000 crore bailout package. However, with over 400 pilots into a 40-day strike now, the international operations of Air India have taken a major hit .

“Milestones as laid out by the government have to be achieved, or else it will be difficult even for the government to justify the bailout package,” a senior AI official said requesting anonymity.

While losses of the airline run into `10 crore everyday as per management estimates, `400 crore is already lost. The non-alacrity of the management in reaching a consensus on the pilots strike is obvious. That the management is unenthusiastic about bringing the airline back on track is all the more obvious. May be the management like everyone else have accepted the fact that Air India is a dead elephant. However, it is not just the pilots’ strike that is an issue here. There are several layers to the problem that explains why even the pilots threatenedwith termination are still unwilling to come back to work.

Aviation Minister Ajit Singh has claimed that 75% of the operations are normal. It beats the logic as to how, with only six Boeing-777 flying out of the 20 in their fleet, this can be achieved.

Even AI Express that has come up with a backup plan by which it has cancelled its domestic operations is under severe pressure now.

The AI management clearly knows that its advertisement on the website for new pilots is such that very few except the existing bunch on strike become eligible to apply. Freshly recruited pilots will have to undergo type-rating training that will take two years and `50 lakhs to train each of the newly recruited pilots. “If all the instructors who are busy operating flights, and if 100 pilots are to be trained with the infrastructure we have today it will take 5-6 years. To train a commander from an experienced co-pilot takes 2 years normally. With no experienced co-pilots it will not be possible to have commander even in 10 years,” an Air India official highlighted.

AI and IA are two separate organisations with very different work cultures and work ethics. AI has a legacy of being the national carrier and the “Maharaja” of the international routes, with Mumbai as its operating hub. In fact, Air India, helped train, Singapore Airlines, which is the current market leader on international routes. However, with the changed scenario today, the national carrier is one of the worst examples of how to run an airline.

“Therefore, it is time that both —(unions and management) appreciate that they are in a joint venture and they have mutual benefits by working together,” said R Pushpavanam, an ex-director ofPersonnel at Indian Airlines.

http://newindianexpress.com/business/news/article543168.ece

Government’s indecisiveness on striking pilots hits Air India operations

Civil Aviation Minister Ajit Singh’s threat to sack the rest of the 300 pilots on strike seems to be coming hollow. Till now 101 pilots have been terminated and their compensatory pay cheques have also been given. But, a decision on the rest of the pilots still hangs in balance as the Air India management and the Ministry of Civil Aviation are yet to take a final call on their future.

Meanwhile, the near 100 executives pilots, who have been filling in for the pilots on strike, have now started showing signs of stress and fatigue. In a letter to Ajit Singh and Air India CMD Rohit Nandan, they have expressed their inability to carry on with the contingency plan as they were getting worked out. As these executive pilots are keeping the airline’s fleet afloat, administration and training work at the airline has come to a grinding halt.

“The pilots have not come to work for over 30 days now. How long do they expect us to wait for them to resume duty? If the situation doesn’t change the rest of the 300 pilots may also be terminated. But that decision will be taken by the AI management,” Ajit Singh had said, despite the fact the pilots have refused to relent.

However, Nandan has been asked by the ministry not to come out with conciliatory statements like, “We appeal to the pilots to come back.”

Sources feel that the pending decision to terminate the other 300 pilots suits every one primarily because the airline needs the pilots, for the management to train new pilots would not only be expensive but will also take a long time to produce commanders from co-pilots.

The decision has been kept in abeyance as Nandan was in Beijing for the annual IATA meeting. “But the reality remains, all pilots can’t just be terminated just as the airline does not have the wherewithal to produce commanders overnight,” said a senior official with the airline requesting anonymity.

Despite the Delhi High Court order to the management to pay the overdue salaries of the pilots, the ministry officials and the management are not worried.

Air India’s advertisement for new pilots expires in July and is for Indian nationals only. Even if the company wants to take expats, there are a few who want to join the airline given the reputation of poor pay masters that the airline has gained. In fact, many expats left the airline because many remained unpaid.

http://newindianexpress.com/business/news/article543759.ece

How many agreements will Air India dishonour?

The current crisis that Air India is faced with is to be blamed on the Air India management to a large extent. Unsure of the road forward, the management from the beginning has been taking its instructions from the aviation minister and not in the best interest of the airline and its employees. There are several layers to the problems of Air India.

CMD Rohit Nandan has no answers to the allegations of why the Indian Airlines pilots were promised an allowance of $1,500 and fixed hours of pay last November even while the Dharmadikari Committee was making its report.

While all concerned officials agree that the erstwhile Air India pilots have been snobbish, none have denied their allegations against the management. The management has signed so many wage contracts with different section of the employees, that it is impossible to honour all of them under the turnaround plan. “If the claims of these pilots on strike getting `8 lakh for salary is true, the management is to be blamed for agreeing to such high pay scales at a time when it could ill-afford it.

These are wages that the management agreed to even before the merger and even when there was no union. So isn’t the management to be blamed for this anomaly?” ex-Air India employee Jitendra Bhargava said.

Subsequently, wage agreements of the erstwhile Indian Airlines’ pilots let them have an additional wage for operating hub and spoke flights which have no rhyme and reason for such a classification. “A pilot who does Delhi-Chennai with the code 143 on a day is his regular flight. However, a second flight with the code 043 on the same route is a hub and spoke flight for which he gets paid additional. All this made sense when IC pilots were not paid for a fixed amount of flying and their flying allowance was dictated by the amount of flying they did. Now they are paid for a fixed amount of 72 hours and still continue to draw the extra perks,” an Air India official said.

A wage agreement of 2007 with Air India pilots states, “Till such time the induction of twelve B787 aircraft in the fleet is completed, the conversion of Commanders onto B787 will be as per line seniority from B747-400/B777/A310. The IPG cite this as a promise that they would get to operate the first 12 Boeing 787 Dreamliner aircraft. They also claim that this clause was never amended. As the facts stand, not honoring this promise will adversely affect hundreds of IPG pilots,” an ex-employee of the airline highlighted. In such a scenario, does the argument of a merged entity with merged pay scales hold good?

“Some of the arguments that work well for running Air India and Indian Airlines as two business verticals under the NACIL umbrella are -different working cultures, different aircraft types- while AI flies Boeing, IA flies Airbus and the flight crew is not interchangeable. Both the airlines have different maintenance philosophies, standards and requirements and lastly human resources which could not be brought under one roof. The only reason, that a single airline, could have worked, would have been for the seamless connectivity for a passenger and the extensive connectivity the airlines could have offered,” noted Ratan Shrivastava, Director, Aerospace & Defence, Frost & Sullivan.

http://newindianexpress.com/business/news/article543765.ece

ATF rates cut by a steep 5 pc, biggest reduction since 2010

NEW DELHI: In a major relief to cash- strapped airlines, jet fuel (ATF) prices were today reduced by a massive 5 per cent, the steepest reduction in rates since February 2010.

The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was reduced by Rs 3,260 per kl, or 5 per cent, to Rs 62,410 per kl with effect from midnight tonight, according to Indian Oil Corp, the nation's largest oil firm.

The fifth straight cut in jet fuel rates since mid-April, is the steepest reduction in price in 27 months. On February 1, 2010, ATF price was cut by 5.48 per cent or Rs 2,260.05 per kl. Today's reduction is larger than that in absolute number but as a percentage it is slightly lower than the February 2010 cut.

State-owned oil firms had on June 1 slashed rates by 2 per cent (Rs 1,376.81 per kl) and Rs 753.8 per kl cut in prices in three previous fortnights.

After today's reduction, ATF price have come down to November 2011 levels after hitting a high of Rs 67,800.3 on April 1 this year. Jet fuel had hit an all-time high peak of Rs 71,028.26 per kl in August 2008 shortly after international oil rates touched a record USD 147 per barrel.

In Mumbai, jet fuel will cost Rs 63,178 per kl from tomorrow as against Rs 66,587.90 a kl now.

Jet fuel constitutes over 40 per cent of an airline's operating cost and the reduction in prices will ease the burden of the cash-strapped airlines.

No immediate comment was available from the airlines on the impact of the price reduction on passenger fares.

The three fuel retailers -- IOC, Hindustan Petroleum and Bharat Petroleum -- revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/atf-rates-cut-by-a-steep-5-pc-biggest-reduction-since-2010/articleshow/14152221.cms

ATF rates cut by 5%; steepest reduction since 2010

In a major relief to cash-strapped airlines, jet fuel (ATF) prices were today reduced by a massive 5%, the steepest reduction in rates since February 2010.
The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was reduced by Rs 3,260 per kl, or 5%, to Rs 62,410 per kl with effect from midnight tonight, according to Indian Oil Corp , the nation's largest oil firm.
The fifth straight cut in jet fuel rates since mid-April, is the steepest reduction in price in 27 months. On February 1, 2010, ATF price was cut by 5.48% or Rs 2,260.05 per kl. Today's reduction is larger than that in absolute number
but as a percentage it is slightly lower than the February 2010 cut.
State-owned oil firms had on June 1 slashed rates by 2% (Rs 1,376.81 per kl) and Rs 753.8 per kl cut in prices in three previous fortnights.
After today's reduction, ATF price have come down to November 2011 levels after hitting a high of Rs 67,800.3 on April 1 this year. Jet fuel had hit an all-time high peak of Rs 71,028.26 per kl in August 2008 shortly after international oil rates touched a record USD 147 per barrel.
In Mumbai, jet fuel will cost Rs 63,178 per kl from tomorrow as against Rs 66,587.90 a kl now.
Jet fuel constitutes over 40% of an airline's operating cost and the reduction in prices will ease the burden of the cash-strapped airlines.
No immediate comment was available from the airlines on the impact of the price reduction on passenger fares.
The three fuel retailers -- IOC, Hindustan Petroleum and Bharat Petroleum -- revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.
http://www.moneycontrol.com/news/business/atf-rates-cut-by-5-steepest-reduction-since-2010_718583.html

India may see Finnair's first long-haul flight on bio-fuels

Nordic carrier Finnair will launch its first long-haul flight powered by bio-fuels to Asia, where India is a strategic market, to show its commitment towards environment protection and sustainable air transportation.

"We were the first to fly the longest commercial bio-fuel flight flown anywhere in the world," said Kati Ihamaki, vice president for sustainable development with Finnair, referring to the flight in July last year between Amsterdam and Helsinki.

"We have now planed a long-haul flight powered by bio-fuels. It could be end of this year or beginning of next year. It could be to anywhere in Asia. It could be India too," Ihamaki said.

Environment-friendly bio-fuels are extracted from renewable organic raw material such as plants and have potential to reduce aviation emissions by up to 80 percent in the long-term. Finnair used bio-fuel made from used vegetable oil for the maiden flight.

Ihamaki said engine emissions account for the biggest environmental impact on flying; so investing in research on alternative fuels is the natural way to try to reduce the load on the environment.

"For us it is very important to find a fuel solution that is socially, ecologically and economically sustainable," she said, adding bio-fuel, though more costly, is carefully tested and meets all the quality and safety requirements of aviation fuel.

But bio-fuel is not the only initiative. Finnair has other sustainability strategies under its wings and among them is to deploy the most modern fleet of planes -- a step that also reduces emissions.

In fact it flies its modern fleet of aircraft to India. The average age of all its long-haul aircraft is three years and for Finnair as a whole, the average age of aircraft is seven years.

"One of the best things an airline can do for the environment is to renew its fleet as and when possible -- each new generation of aircraft has one-fifth less emission than its predecessor," Ihamaki said.

Another strategy is to reduce the weight of the cargo. Finnair is also making lighter life-saving vests and oxygen bottles and planning to reduce the weight of trolleys that are used by the crew to deliver food and beverages to passengers.

A major focus is also making the seats lighter with the same comfort. "We have nice looking but lighter seats that have helped us reduce emissions. Our aim is to reduce emissions by 24 percent per seat from 2009 to 2017."

The airline also recycles more than 60 percent of in-flight waste. "On our flights, we sort aluminium, glass and organic waste which can be used as industrial energy source. In our group, more than 60 percent of waste is recycled."

Finnair first started to report on environment sustainability in 1997. In 2008, it also became one of the first carriers to report according to the global reporting initiative guidelines.

http://www.theweekendleader.com/Innovation/1185/eco-flight.html

Operator refutes IATA's ‘most expensive' tag for Delhi airport

Global lobby's allegation not reflection of actual state of affairs, says GMR Group CFO

New Delhi, June 15:

The Delhi International Airport Ltd (DIAL) has refuted the International Air Transport Association's (IATA's) allegation that Delhi Airport is the most expensive in the world. DIAL is a part of GMR group which also operates the Hyderabad airport.

The Chief Financial Officer (Airports) of GMR Group, Mr Sidharath Kapur, in a letter to the Director-General and CEO of IATA, Mr Tony Tyler, said: “We do not agree with the statement (Delhi as the most expensive airport) as it does not reflect the actual state of affairs.”

IATA sent an email to the Ministry of Civil Aviation which was forwarded to DIAL. The travel body compared airport charges of various international airports. Subsequently, various statements made by IATA in respect of revision of airport charges by the Airport Economic Regulatory Authority (AERA) mentioned Delhi as the most expensive airport in the world.

According to DIAL, barring a nominal 10 per cent hike in 2009, the airport charges in India have not increased in the last 10 years.

In the Indian context, the charges have been uniform across airports and the same is followed at IGI airport as well. The airport charges before revision were much lower than those of other international airports, it explained.

Development fee

The airport operator, quoting an independent analysis by aviation consultant Leigh Fisher, claimed that for an aggregate total passenger traffic at around 90 per cent (69 per cent domestic and 20 per cent international), the Delhi Airport is not amongst the expensive airports even after considering Airport Development Fee (ADF).

It also said that even with ADF, which is strictly not an aeronautical charge but a pre-funding for a limited period of time, Delhi airport charges are the highest only in the long-haul international segment.

It also said that the pricing structure proposed by DIAL and approved by AERA is aimed at keeping domestic charges low. This would, therefore, result in a higher charge on the long-haul international segment.

Considering high cost of tickets in this segment, the proportionate impact of the charges vis-à-vis the ticket priceswould be very low, it explained.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3533820.ece

IndiGo to start new international flights

Mumbai, June 15:

IndiGo will be introducing new flights between Hyderabad-Dubai, Chennai-Dubai and Kochi-Dubai to expand its international operations. In addition, IndiGo will start its second daily and direct flights between Delhi-Dubai and Delhi-Bangkok sectors. These new flights will be operational from August.

The airline will be offering introductory return fare of Rs 11,200 on the new flights. Bookings for the Dubai and Bangkok sectors have opened from Friday.

IndiGo had recently started its international flights from Delhi to Muscat and Kathmandu, Dubai, Singapore and Bangkok as well as Mumbai to Bangkok and Dubai.

The airline offers 351 daily flights connecting 32 destinations - Agartala, Ahmedabad, Bangkok, Bangalore, Bhubaneswar, Coimbatore, Chennai, Delhi, Dibrugarh, Dubai, Goa, Guwahati, Hyderabad, Imphal, Indore, Jaipur, Jammu, Kathmandu, Kochi, Kolkata, Lucknow, Mumbai, Muscat, Nagpur, Patna, Pune, Raipur, Singapore, Srinagar, Trivandrum, Vadodara and Vishakhapatnam.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3533863.ece