Airlines go all out to make money

NEW DELHI: Using an aircraft toiletmay remain the only free service for air travellers in coming days as financially-strained Indian carriers have started looking at every possible way to make money. Desi airlines, which collectively lost $2 billion last fiscal, have hiked existing fees and introduced a host of new ones in last two to three months to boost revenue.

The free check-in baggage limit of 20 kg for domestic flyers is all set to be reduced by 20% to 25% and carrying more weight will mean shelling out Rs 200 per kg. This excess charge used to be Rs 100 per kg in domestic airlines till about two months ago.

Cancelling or changing travel date had so far meant paying Rs 750 for both domestic and international tickets. Now this charge has risen to Rs 950 for domestic and Rs 1,750 for international flights. Taking your licensed weapon on a flight is no longer free. Airlines have started charging Rs 5,000 for this service. Asking the airline reservation counter to give a printout of your e-ticket now means coughing up Rs 50.

Airlines used to take unaccompanied minors (children till 12 years of age) free of cost so far. Now low-cost carriers have started charging Rs 1,500 on domestic and Rs 3,000 on international flights for taking care of your child travelling alone. A leading full service carrier has started charging Rs 1,000 and Rs 2,000 for taking an unaccompanied minor on domestic and international flights, respectively.

All airlines are going to offer passengers pre-booking of seats at the time of buying tickets itself for a charge. People will have to pay more for the front rows. While all the new charges listed above are optional, which can be avoided through proper planning, some airlines have also introduced new or higher charges like convenience and transaction cess which have to be paid at the time of booking tickets.

Coupled with fares, which have gone up by 20-25% after Kingfisher shifted to a curtailed schedule since last November and steep new airport charges at Delhi, air travel is no more a low-cost affair.

Airlines, however, justify hiking charges or levying new ones. "We do not want to raise basic ticket price beyond a point and are looking at ancillary revenue. Some of those charges are deterrent in nature like charging Rs 50 for a printout or getting strict with baggage. If we carry less baggage weight on aircraft, there's more room for cargo and through that indirect revenuefares can be kept in check. It is better than many foreign airlines' practice of making people pay for checking-in even one bag. Passengers who book online should come with ticket printouts and not queue up at airport counters. In just two months of levying this charge, those queues have vanished," said an airline official. European carriers like RyanAir and EasyJet charge £10 for giving a printout at airports

http://timesofindia.indiatimes.com/business/india-business/Airlines-go-all-out-to-make-money/articleshow/15368984.cms

Airport Authority of India refuses to let lessors seize Kingfisher Airlines aircraft

MUMBAI: Airport Authority of India (AAI) has refused to allow the lessors to take back about half a dozen aircraft rented out to Kingfisher Airline, sources said.

The lessors want the aircraft back as Kingfisher Airlineshas defaulted on rentals. "AAI has said no... to Kingfisher lessors to allow them to take back six aircraft parked at Chennai airport," sources said.

One of the lessors has sent a legal notice to AAI for not passing the releasing order. AAI's contention is that it cannot let the aircraft go, as it too has to recover dues of about Rs 300 crore on account of landing and parking fees from the near-bankrupt KFA. Agencies

When contacted, an AAI spokesperson confirmed the development, and added that the authority is exploring several options to recover its long-pending dues.

The airline, which has not paid salaries to its employees for the past five months (some have not been paid for six months), has been defaulting on payments to AAI, oil companies, aircraft leasing companies and the government tax authorities.

A KFA spokesperson could not be contacted for comments.

http://timesofindia.indiatimes.com/business/india-business/Airport-Authority-of-India-refuses-to-let-lessors-seize-Kingfisher-Airlines-aircraft/articleshow/15368921.cms

DGCA's aim is not to kill an airline: Arun Mishra

Interview with Director General of Civil Aviation

Arun Mishratakes over as Director General of Civil Aviation at a time when questions are being raised on its leniency with airlines. Being also grossly understaffed, it faces an International Civil Aviation Organisation safety audit this December. The new DG talks to Disha Kanwar on these and other issues. Edited excerpts:

What action are you planning on Kingfisher (KFA), mired in financial problems and thus probably also compromising on safety?
The last audit report had said we would follow with another audit, due in August-September. I am concerned with safety. The moment I have conclusive proof that the operation is unsafe, I will stop it. There is no conclusive proof right now.

DGCA’s intention is not to catch and kill an airline, but to improve safety. Whenever we do an audit, we find problems and then we ask the airline to rectify that problem and we see if it has complied.

What about cannibalisation of aircraft and non-payment of salaries by KFA?
There is a misconception about cannibalisation. It is done everywhere and is not disallowed by DGCA. It is just that when a part is taken out from one plane to another, the airlines is supposed to keep records of both the planes. As far as the salary is concerned, it is not in DGCA’s domain.

There has been criticism that the DGCA is very lenient with safety standards, not just with KFA but with other airlines, too.

You see our accident record and that will tell you if we are a lax regulator. Of course, there are other ways to judge safety, but the most important is the accident record. It is quite good; in the past two years, these are mainly in helicopters. Many were primarily because they did not follow the SOP (Standard Operating Procedures).

There are many officials in DGCA against whom an enquiry is on. Of 130 officials, 20 to 25 are implicated on account of illegal use of their posts. Will they continue to serve in DGCA?
They will continue to serve till the ministry completes its enquiry.

DGCA is to be audited by the ICAO this December. The audit will determine for other countries if India is safe for flying. How are you preparing for that audit, with DGCA highly understaffed and the aviation rules archaic?
We have set up a task force here and have drawn people from outside. On a daily basis, a big effort has been made to prepare ourselves for this audit.

DGCA is highly understaffed. We have 130 permanent officials and 100 are contractual ones. Our strength is 230. We require 500 people. I hope, within a year, we should be able to fill the posts. We are going to take some experienced people who are retired on a contractual basis till we recruit permanent people. We are also getting some people on deputation also from Air India and the Airports Authority of India.

We are also looking into modifying the archaic aircraft law of 1932. We need to get rid of provisions no longer relevant. We are latecomers to aviation and there are developed countries in the sector. They have made rules, regulations and systems which have stood the test of time.

Our job is simple, that we take the best practices; we don’t have to go through experimentation. That is the advantage in aviation, as we don’t have to reinvent the wheel. Definitely, it is a challenge, but I am quite sure we will do it.

What will be your priority in safety during the initial part of your tenure?
Particularly in operations, which include flight standards and airworthiness of aircraft and procedures at the airport, air traffic management, training institutions and the quality of training imparted in these.

We have very strict requirements for licensing and I would like to implement them for safe operations.

Another important aspect would be frequent collaboration and interaction with the industry to understand their needs and nurture it. Whatever we do has to be safe and sustainable.

When DGCA asks airlines to check their fares, don’t you think it hardly makes any sense, as the price band of a ticket is so wide and airlines are always within that band?
Statutorily, we can’t ask airlines to check fares, as these are deregulated. We understand that competition will take care of fares. DGCA says this as there are also clauses for consumer protection.

http://www.business-standard.com/india/news/dgcas-aim-is-not-to-kill-an-airline-arun-mishra/482486/

Air India likely to resume key international routes by month-end

Mumbai, Aug 5: 

National flag carrier Air India, which was forced to scale down its international operations massively following the recent two-month strike by a section of pilots, will resume most of its international operations by the end of the month.

“We will be ready to restart our full international operations by the end of August. We will restore New York, Chicago and Paris flights by then...also resume flights to Hong Kong and Shanghai,” an airline official said.

The airline will also add more services to the busy Southeast Asian regions by mid-August.

Around 400 pilots, members of the now de-recognised Indian Pilots Guild, had gone on a 58-day strike from May 7 to protest the decision to allow the erstwhile Indian Airlines pilots to train on the Boeing Dreamliners.

The strike forced AI to cancel several profit-making as well as loss-making sectors, which caused a loss of around Rs 600 crore in unrealised sales to the already cash-strapped airline, which is sitting on a debt of Rs 67,000 crore.

On taking back the 101 sacked IPG pilots, the official said management had informed Aviation Minister that they will be taken back only on case-to-case basis. Despite a court direction last month, the management is yet to start processing the applications of sacked pilots.

350 IPG pilots, who were not terminated during the strike, have started flying.

Whether Air India can win back passengers is to be seen, as private operators such as Jet Airways, SpiceJet and IndiGo will soon start operating in the Gulf and Southeast Asia, two key markets for the flag carrier, following the Aviation Ministry decision to end Air India’s first right of refusal on international routes.

IndiGo has received approval to operate over 60 new international flights every week, of which nearly 30 are for Dubai and seven for Jeddah, while SpiceJet can now operate nearly 50 new overseas flights a week, including seven each to Dubai and Riyadh.

Market leader Jet Airways can now add nearly 60 more flights every week, including 14 to Kuwait.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3730677.ece?homepage=true&ref=wl_home

AAI refuses to allow Kingfisher lessors to take back aircraft

The lessors want the aircraft back as Kingfisher Airlines (KFA) has defaulted on rentals

Airport Authority of India (AAI) has refused to allow the lessors to take back about half a dozen aircraft rented out to Kingfisher Airline, sources said.

The lessors want the aircraft back as Kingfisher Airlines (KFA) has defaulted on rentals

"AAI has said no...To Kingfisher lessors to allow them to take back six aircraft parked at Chennai airport," sources said.

One of the lessors has sent a legal notice to AAI for not passing the releasing order.

AAI's contention is that it can not let the aircraft go, as it too has to recover dues of about Rs 300 crore on account of landing and parking fees from the near-bankrupt KFA.

An AAI spokesperson confirmed the development, and added that the authority is exploring several options to recover its long-pending dues.

The airline, which has not paid salaries to its employees for the past five months (some have not been paid for six months), has been defaulting on payments to AAI, oil companies, aircraft leasing companies and the government tax authorities.

A KFA spokesperson could not be contacted for comments.

http://www.business-standard.com/india/news/aai-refuses-to-allow-kingfisher-lessors-to-take-back-aircraft/181588/on

Weak rupee, higher ATF price may ground Jet Airways

Jet Airways' rebound in the quarter to June 2012 is a reflection of the fact that full service carriers benefit, even in a weak operating environment when there are fewer players.

The airline clawed back its way to the black in the June quarter after posting losses for five consecutive quarters with a net profit of Rs 24.7 crore compared to a loss of 123 crore a year ago. This growth has been supplemented by a strong increase in yields and passenger revenues partly boosted by a reduction in capacity because of the troubles being faced by Kingfisher and Air India.

Jet's operating revenues grew 29.5 per cent to Rs 4,587 crore in the June quarter, boosting the company's consolidated yield by an impressive 16 per cent to 4.3 during this quarter on a year on year basis.

This growth comes at a time when passenger growth in the airline industry was a meagre 3.7 per cent in the January to June period. Coupled with the growth in operating revenues, the company's total income was boosted, thanks to its non-operating revenues which trebled to Rs 124 crore in Q1.

These revenues include sale and leaseback of aircraft, and income from non-ticket avenues such as on-board food and baggage fees. The decision to stop operating on loss-making routes such as Sharjah-Trivandrum and Delhi-Colombo also helped. All these helped boost revenues by 31.5 per cent to Rs 4,711 crore during the quarter.

Over 56 per cent of total revenues of Jet Airwaysare accounted for by its international operations. The yields for international operations have improved compared to local operations with a rise of 21.2 per cent to 3.5 on a year-on-year basis, bolstering the airline's consolidated earnings before interest tax depreciation and rentals (EBITDAR) two-fold to Rs 739 crore.

It was a quarter marked by a strengthening of its consolidated load factor to 82 per cent. Much will hinge on Jet's international operations in enhancing its performance. In the next quarter, Jet plans to carry out sale and leaseback transaction of eight to nine aircraft from its fleet of 103. This will help the airline reduce its debt, which was Rs 13,000 crore at the end of March 2012, and also provide revenues in the quarter to September, which is normally a lean business period for the industry. A growing focus on ancillary revenues will also help keep costs under control. Through these initiatives, the company plans to pare its debt by $400 million this fiscal.

That said, a further weakening of the rupee and higher ATF prices, which are now at close to Rs 65,900 per kilolitre, could well mean that airline's revenues may fall on a quarter-on-quarter basis.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/weak-rupee-higher-atf-price-may-ground-jet-airways/articleshow/15368886.cms

Aviation essential for economic growth: Naresh Goyal

MUMBAI: The clear blue skies may well be a mirage in the Indian aviation sector, even as two Indian private airlines posted profit.

In uncharacteristic candour, Naresh Goyal, the founder and promoter of Jet Airways, which reported on Saturday a profit for the June quarter, after five gruelling quarters of losses, said high taxes and levies in the aviation sector are killing airlines in India and argued for a need to rationalise taxes for the sector to survive.

With rare candour, normally not associated with Jet's promoter when it comes to reacting on government policies and taxation issues, Goyal quipped: "Aviation should not be treated as luxury, it is essential for the economic growth of the country."

On Saturday, Jet had reported an impressive growth in revenues - up 31.5 per cent from the same quarter last year on a standalone basis - which it attributed to the prevailing "sanity in the market" for the past six months as competitors stopped undercutting peers and selling tickets below cost price.

Jet reported a profit of Rs 24.7 crore for the June quarter, a huge improvement from the Rs 298.12-crore loss it posted for the preceding March quarter. Jet had reported a Rs 123.2-crore loss in the quarter ended June 2011. To be sure, the profit accrued from exceptional items such as sale and leaseback of aircraft that amounted to Rs 52.4 crore and unamortised portion of foreign exchange losses of Rs 288.7 crore. Earlier, SpiceJet, India's third largest in terms of market share, had reported a net profit of Rs 56.2 crore.

Analysts such as Arun Kejriwal, CEO, KRIS Research, were however not impressed by the turnaround of SpiceJet and Jet Airways. "They are trying to ride the sentiments which is currently prevailing in the sector - that there is a turnaround with one competitor (read Kingfisher) in the intensive care unit. All other numbers do not give comfort and until a dramatic fall in operating costs happen, the future (for airlines in India) continues to remain uncertain."

Goyal, a self-made entrepreneur who started his career with a travel agency before launching Jet Airways in 1993, is acutely aware of the challenges facing the industry.

"Tomorrow, there is a possibility some other player might lower fares," said the baron of India's largest airline by market share. Domestic airlines are sitting on a cumulative loss of Rs 12,000 crore.

Goyal bemoaned the high operating costs for airlines here, saying they threaten the survival of the industry. Exorbitant fuel prices coupled with high fuel taxes comprise 50 per cent of its operating cost whereas, "it is 35 per cent for international airlines," he pointed out. Exacerbating the situation further is the lack of pricing power.

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Tickets in China are 87% higher than India. Airfares in Australia are 182% higher than India’s domestic fares and in the US they are priced 119% more than India. - Naresh Goyal; Founder, Jet Airways

Goyal claimed that by international yardstick ticket prices in India are either one-third or half the price they are sold internationally. Reeling out statistics of ticket fares in other countries, Goyal said: "Tickets in China are 87 per cent higher than India. Airfares in Australia are 182 per cent higher than India's domestic fares and in the US they are priced 119 per cent more than India."

"Any increase in fares in India (necessitated because of high operating costs and taxation) will have a direct negative impact on passenger growth," Goyal said.

Striking a note of caution on the high tax levy on air turbine fuel, which he hoped would be rationalised, and the double whammy of steep airport levies, the balance sheets of airlines have been adversely impacted. "This is the burden neither the airline nor our passengers can afford to bear any longer," said Goyal.

Stating that Jet needs about $180 million to improve the balance sheet for this financial year, Goyal said he is finding it difficult to raise money in the current negative environment though it renewed the shareholders' approval to raise $400 million. "Investors want the fundamental problems of the sector to be resolved first and they are watching the sector closely."

Jet, which has a debt burden of $2.46 billion, is looking to raise money through sale and leaseback of its aircraft, to get the much-needed $180 million for the current financial year. It sold four of its old Boeing 737-400s and also plans for a sale and leaseback of more Boeing aircraft to get capital. "We target $25-30 million from each aircraft," Jet said.

Also realising that his low-cost competitors are slowly strengthening regional presence, Goyal said Jet Airways wants to take full advantage of the government encouragement towards regional connectivity and is evaluating a possibility of adding a different aircraft type for these routes like what SpiceJet has done with its Bombardier Q400s.

"There is now a think tank in the airline that is specifically looking at enhancing regional connectivity and we are also looking at regional jets, like those from Embraer and Bombardier for Tier-II and -III routes," Goyal said

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/aviation-essential-for-economic-growth-naresh-goyal/articleshow/15368841.cms?curpg=2

Can Air India be run like the Baghpat khap panchayat

At the Manesar plant of Maruti Udyog in Haryana, an agitation launched by workers unions turned violent, resulting in the death of one executive and large-scale arson. Losses ran into crores and production was suspended.

In contrast, about 450 pilots ofAir India agitated for nearly 60 days. No rasta roko, rail roko or violence against management representatives. Towards the end of their agitation, the pilots launched relay fasts.The agitation was supposed tobe over but no one knew what was happening.

Clueless

Civil Aviation Minister Ajit Singh and the rest of the management hadbeen claiming that everything was ‘normal’ and flights were operating at near-full strength. This was a blatant lie. The InternationalAir Transport Association pointed out that theIndian aviation scene was dismal.Air India was on government life-support, while privateairlines lsuch as Kingfisher were in deep financial crisis. Former Union Civil Aviation Minister Rajiv Prasad Rudy estimated a total loss and accumulated debts of around Rs 1.2 lakh crore caused by costlier aviation turbine fuel, highairport tariffs and the uncertainty overAir India’s future.

Also, the move towards increasing foreign direct investments (FDI) in the aviation sector has made no progress. If the situation is not remedied, much of the promised foreign investment would not come.

In a logjam

Look at the current situation. ForAir India, its Gulf routes were a gold mine. However, in the current peak season (Ramzan, Onam and so on)Air India was unable to maintain its usual number of flightsbecause of a shortage of pilots. As a result, the Kochi-Dubai fares shot up to Rs 79,000, even higher than the average US flights.

Air India’s winter schedules were in a messbecause theairline obviously did not know how many pilots wouldbe available to handle normal flights as well as those to new destinations. As one crisis followed another, the Minister and his advisersbegan to act as tough as John Wayne in an American Western.

Not a bit concerned with the pilots’ agitation, the minister abruptly sacked Bharat Bhushan, a no-nonsense bureaucrat who was the Director General of Civil Aviation (DGCA), and shifted him to the Steel Ministry. His crime? Initialising a memo that recommended strong action against KingfisherAirlines, which had violated security norms and not paid its staff salaries for several months. His temporary successor, Sukul, announced that the important memo had disappeared and appeared to question its very existence.

Morale had neverbeen high inAir India and went down further after the ill-fated mergerbetweenAir India andIndianAirlines, the brainchild of the then Civil Aviation Minister Praful Patel, who had come under criticism for giving away lucrativeair routes to otherairlines, particularly JetAirways. The merger,besides opening old wounds, created new ones.

The newAir India Board was heavily biased in favour ofIndianAirlines. In 2010,IndianAirlines pilots went on a strike, and within ten days all their demands, such as parity of salaries, were conceded. Their derecognised union got back its recognition and additional increments were offered.

On every issue, money as well as promotion policy, there was a bias against theAir India pilots despite the worldwide system that pilots who handled wide-bodiedaircraft were paid more.

Hard times

They also had to reach difficult destinations abroad and fly theaircraft in snow, blizzard and over vast stretches of water. Nowhere was this bias revealed more clearly than in the new promotion and training policies, which were highly erratic and whimsical. As a result, around 70Air India First officers, slated tobecome Commanders in six to eight months, were still languishing. While flying the 777aircraft, they were pulled out and sent for command training withAir India Express Boeing 737aircraft.Because of seniority and red tape they had to cool their heels for nearly two years. They went sent back for 777 command training with a new syllabus and an extended training programme. TheIndianAirlines pilots objected to thisbecause they feared such training would make their colleaguesbetter qualified. Ready to exploit every avenue, theIndianAirlines pilots would not allowAir India pilots to train on theAirbus A 320, which had a long waiting-list.

Biased

Sharing this bias formerIndianAirlines Human Resource Director Vinita Bhandari, who was sent to inquire into the health of theAir India pilots who were on a fast, was clearly told to ignore the health conditions of the pilots, who hadbeen sacked.

One mistakeAir India pilots made was launching an agitation without notice. They were provoked as the management walked out of the negotiations over major issues last May. Throughout the agitation the media made issues out of non-issues, such as the Dreamliner (newaircraft) training schedule to whichAir India pilots had agreed without any qualms. Anchors screamed day-in and day-out about pilots earning more than Rs 8 lakh daring to go on a strike.

Only the senior-most pilots earn that much. Pilots globally are highly paid but Merchant Navy captains earn more. MBAs fresh from college are snapped up for Rs 3-6 lakh.

Ajit Singh claimed thatAir India could do without the 440 agitating pilots, many of whom worked round the clock without privileged leave for long periods.

If these pilots were not needed, why were they denied privileged leave? No one knows when all the striking pilots wouldbe taken back or when the situation willbe normalised. In the meantime, a lot of hatred, distrust and mutual contempt simmered among the different sections ofAir India employees, most of whom had notbeen paid salaries for months.

Up until now the management hadbehavedlike the Baghpat khap panchayat to which Ajit Singhbelonged. If such an approach continues,Air Indiacannotbe saved.

Issues raised by the pilots of the troubledairline deserve an unbiased hearing.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3731879.ece

Kingfisher dues: Leasing firm wants planes back, but AAI doesn’t want to lose security

New Delhi, Aug. 4: 

A tussle is on between theAirports Authority of India (AAI) and anaircraft leasing firm, which wants to take back three ATRaircraft (small turboprop planes) that were being operated by KingfisherAirlines.

The leasing company has written to AAI seeking permission to take back the threeaircraft parked in Chennaiairport, as Kingfisher has not been able to meet its lease payments.

AAI has told the leasing company that Kingfisher owed it also over Rs 260 crore. Allowing the leasing company to take theseaircraft would reduce AAI’s chances of recovering its dues from the cash-strapped private sectorairline. At present, Kingfisher is being allowed to operate its flights from AAIairports only after it pays in advance for using the various facilities, such as parking and navigation charges, sources said.

"We are seeking a legal opinion on how to move forward," a senior AAI official told Business Line.

This is not the first time that Kingfisheraircraft are sought to be repossessed. In March, a law firm wrote to the authorities seeking deregistration and return of five ATRaircraft.

The decision to repossessaircraft has seen Kingfisher curtail the number of its daily flight drastically. It now operates about 100 flights daily, down from over 400 at the beginning of the year. It has completely withdrawn from the international market. Kingfisher, which had 63aircraft earlier, now has 13 operational.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3727774.ece?homepage=true

Air India likely to resume key international routes by month-end

Mumbai,Aug 5: 

National flag carrier Air India, which was forced to scale down its international operations massively following the recent two-month strike by a section of pilots, will resume most of its international operations by the end of the month.

“We will be ready to restart our full international operations by the end ofAugust. We will restore New York, Chicago and Paris flights by then...also resume flights to Hong Kong and Shanghai,” an airline official said.

The airline will also add more services to the busy Southeast Asian regions by mid-August.

Around 400 pilots, members of the now de-recognisedIndian Pilots Guild, had gone on a 58-day strike from May 7 to protest the decision to allow the erstwhileIndian Airlines pilots to train on the Boeing Dreamliners.

The strike forced AI to cancel several profit-making as well as loss-making sectors, which caused a loss of around Rs 600 crore in unrealised sales to the already cash-strapped airline, which is sitting on a debt of Rs 67,000 crore.

On taking back the 101 sacked IPG pilots, the official said management had informed Aviation Minister that they will be taken back only on case-to-case basis. Despite a court direction last month, the management is yet to start processing the applications of sacked pilots.

350 IPG pilots, who were not terminated during the strike, have started flying.

Whether Air India can win back passengers is to be seen, as private operators such as Jet Airways, SpiceJet and IndiGo will soon start operating in the Gulf and Southeast Asia, two key markets for the flag carrier, following the Aviation Ministry decision to end Air India’s first right of refusal on international routes.

IndiGo has received approval to operate over 60 new international flights every week, of which nearly 30 are for Dubai and seven for Jeddah, while SpiceJet can now operate nearly 50 new overseas flights a week, including seven each to Dubai and Riyadh.

Market leader Jet Airways can now add nearly 60 more flights every week, including 14 to Kuwait.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3730677.ece

GMR’s Maldives airport project flies into rough weather

Male/New Delhi, Aug 5: 

Indian corporate giant GMR’s $500 million Male airport project has run into rough weather, as the Maldives government has temporary halted work on a new terminal building and the company has moved an arbitration court in Singapore over development charges.

GMR had won the airport contract when government headed by former President Mohamed Nasheed was in place, but the project, the largest single investment in the history of Maldives, began facing problems soon after a regime change in the country earlier this year.

The new government, headed by President Mohamed Waheed, has asked GMR to temporarily halt the development of a new terminal at Ibrahim Nasir International Airport (INIA).

Construction for the new terminal was part of the airport modernisation package. It started in December last year and is scheduled to open in 2014.

The dispute aggravated further after GMR moved an arbitration court in Singapore over Airport Development Charge (ADC) of $25 per passenger.

When contacted, a GMR spokesperson told PTI that GMIAL (GMR Male International Airport Pvt Ltd) has obtained requisite approvals in compliance with the prevailing regulations at the time of commencement of construction.

“We have received a letter from Maldives Civil Aviation Authority asking us to seek its approval pursuant to a recent regulation, for the construction works related to the proposed new Passenger terminal building,” the spokesperson said.

“Pending the approval, MCAA has directed stoppage of the said works. This has no impact on the operations of the airport at the existing terminal,” GMR said but did not offer any comments on the arbitration issue.

GMR had signed a 25-year concession agreement with Maldives to upgrade and manage the airport, under which an ADC of $25 was to be levied on all outgoing passengers.

The ADC was later successfully challenged in court by the then opposition party leaders, who are now in the government.

Some members of the current government, however, want the matter to be resolved amicably.

Dhivehi Rayyithunge Party chief Ahmed Thasmeen Ali, whose party is in the government, told PTI during his visit to New Delhi that he wants all business deals to be respected.

“We believe that it is the obligation of the government to honour all valid contracts that have been entered into by the state,” he said.

“We have to ensure that investor confidence is maintained and it should be dealt in a manner that it does not negatively impact investor confidence in Maldives particularly at a time when world financial crisis has made investments difficult at this stage,” he added.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3730711.ece

AAI refuses to allow Kingfisher lessors to take back aircraft

Mumbai, Aug 5: 

Airport Authority of India (AAI) has refused to allow the lessors to take back about half a dozen aircraft rented out to Kingfisher Airline, sources said.

The lessors want the aircraft back as Kingfisher Airlines (KFA) has defaulted on rentals.

“AAI has said no...to Kingfisher lessors to allow them to take back six aircraft parked at Chennai airport,” sources said.

One of the lessors has sent a legal notice to AAI for not passing the releasing order.

AAI’s contention is that it can not let the aircraft go, as it too has to recover dues of about Rs 300 crore on account of landing and parking fees from the near-bankrupt KFA.

When contacted, an AAI spokesperson confirmed the development, and added that the authority is exploring several options to recover its long-pending dues.

The airline, which has not paid salaries to its employees for the past five months (some have not been paid for six months), has been defaulting on payments to AAI, oil companies, aircraft leasing companies and the government tax authorities.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3731044.ece