Reliance Infrastructure plans to exit non-metro airport business

MUMBAI: Reliance Infrastructure is looking for buyers for its unit that handles non-metro airport projects, people close to the development told ET.

The company, promoted by billionaire Anil Ambani, has invested about Rs 100 crore in five non-metro, brownfield airport projects in Maharashtra through its subsidiary Reliance Airport Developers Private Ltd (RAPDL). Reliance Infrastructure is now considering selling the business as it has shifted focus to larger projects, the persons, including a civil aviation ministry official, said.

Reliance Infrastructure, which in the past has failed to bag any project for modernisation of the airports at Delhi and Mumbai, has maintained that it will consider bidding as part of an international consortium for larger projects, including those at Nagpur and Pune. Besides, the returns from the non-metro projects have not been as per the company's estimates.

Lalit Jalan, the chief executive officer of Reliance Infrastructure, however, said: "We would not like to comment on market speculation."

separate entities with the aim to create value for our shareholders," Jalan said, adding, "We will look at value unlocking in different businesses when the time is right."

Reliance Infrastructure operates regional airports at Nanded, Yavatmal, Baramati, Latur and Osmanabad. The company acquired the lease rights to develop these airports for 95 years from the Maharashtra government for Rs 63 crore. It has since invested about Rs 10 crore in each of the airport for upgradation, people close to the projects said.

Reliance Infrastructure is incurring an expense of Rs 2 crore a month for each of these airports, one of the persons said.

People in the know said the company could seek valuation upwards of 150 crore. "Since the company has invested close to Rs 100 crore and got the airports functional with improved airstrips and ATC towers, along with licences and terminal buildings, RInfra would look for anything between Rs 150 crore and Rs 200 crore," the source said.

Reliance Infrastructure had planned to rope in a private equityplayer for its airports business but has not succeeded so far. Although Jalan denied giving the mandate for a stake sale to any firm, the people quoted earlier said consultancy major KPMG has done a preliminary valuation for the business.

A person familiar with the airports business, who did not wish to be named, said, "The move indicates that RInfra has not been able to develop this business. Infrastructure projects have long gestation period and for meaningful returns to come it takes time. RAPDL wanted quick returns."

In 2010, consultants Louis Berger Group and Knight Frankhad prepared a development plan for the five airports, which, according to Reliance Infrastructure, entailed an investment of about Rs 500 crore till 2014. However, the plan has remained only on paper and the company has not been able to recover operational costs.  Among the airports operated by Reliance Infrastructure, Nanded is the only one where scheduled commercial flights operate. GoAir operates 12 flights a week, connecting the pilgrim town to Mumbai and Nagpur. Operations at the airport are driven mainly by fuel sops offered by the Maharashtra government. Budget airline SpiceJet now plans to withdraw flights from Nanded due to poor load. The other airports operated by RAPL receive only small private aircraft and helicopters.
Reliance Infrastructure reported a 2 per cent rise in consolidated net profit for the first quarter of the current fiscal at Rs 412 crore. Its consolidated income was up 4 per cent at Rs 5,383 crore.

http://economictimes.indiatimes.com/news/economy/infrastructure/reliance-infrastructure-plans-to-exit-non-metro-airport-business/articleshow/16289130.cms

Government to extend duty hours of Air India pilots, crew

NEW DELHI: Air Indiapilots and cabin crew would now have to work as much as their peers in other private airlines as the civil aviation ministry has decided to bring their flight duty time at par with what aviation regulator DGCA has mandated for the industry.

As per an agreement of about 700 erstwhile Indian Airlinespilots, unionised as Indian Commercial Pilots Association (ICPA), their maximum is restricted at 6.5-7 hours, much lower than 9-10 hours stipulated by the Directorate General of Civil Aviation (DGCA) in its Civil Aviation Requirements (CAR), revised in August 2011.

Meanwhile, Air India cabin crew unions have a lesser flight-time limit at 100-80 hours for a month as per their union agreements, compared with 125 hours stipulated by the DGCA. Their minimum rest time (time between two flights) is 10-12 hours as opposed to eight hours stipulated by the regulator.

"The civil aviation minister, Ajit Singh, has taken a very serious view of the fact that they (unions) follow its own rules and wants the regulator's CAR to prevail, especially at this difficult time for the airline. The duty time for cabin crew will also be standardised," a senior official from the ministry told ET.

Higher flying-time is expected to both increase utilisation of fleet and manpower, and decrease human resource costs for a long time to come.

"With this change in FDTL, it has been assessed that there will be 22 surplus pilots for narrow-bodied aircraft and about 100 for wide-bodied ones till 2015," the official said.

Among other perks for ICPA pilots is the two-day rest at five-star hotels whenever they make flights to nearby regions like South-East Asia or Gulf, while other airlines make a quick return back instead of making such expenditures. The flight and duty time limitations (FDTL) for the other 700-odd pilots belonging to the union Indian Pilots Guild, which went on a two-month strike from May this year, will also be brought to the regulator's standards, wherever relaxed.

The ministry's attempt at standardisation of FDTL is especially focused to have sufficient manpower as 27 new Dreamliner aircraft join AI's fleet over the next four years.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/government-to-extend-duty-hours-of-air-india-pilots-crew/articleshow/16289256.cms

Lufthansa cancels hundreds more flights as strikes hit

Deutsche Lufthansa cancelled hundreds more flights on Tuesday as cabin crew launched a second round of strikes in a row over pay and conditions that threatens to drag on for weeks and cost Germany's biggest airline tens of millions of euros.

The strike action in Frankfurt, Berlin and Munich follows a walkout on Friday that left 26,000 passengers stranded.

"It is difficult for the company to cushion the impact. We cannot just get new flight attendants, and the personnel buffer is limited," Lufthansa spokesman Klaus Walther said.

By early afternoon, Lufthansa had cancelled over 300 flights, or more than one in six of its daily total.

Its Austrian Airlines unit, unaffected by the strikes because its staff are on separate contracts, said it was using larger aircraft on routes to Germany to help out its parent.

While Germany has a track record of mostly harmonious labour relations compared with other major European countries such as France, its airlines and airports have been hit by a string of disputes in recent years as companies battle to cut costs to cope with the rise of low-cost carriers, soaring fuel prices, fast-growing Middle East airlines and an air travel tax.

A strike by Lufthansa pilots in 2010 caused more than 2,800 flight cancellations, and earlier this year a strike by airfield staff at Frankfurt airport also hit Lufthansa's business.

U.S. soldier Ron Smith, travelling home to Denver, said it seemed each time he flew through Frankfurt he ended up getting stranded. "This wouldn't happen in the U.S.," he complained.

Trade union UFO, which represents around two thirds of Lufthansa's 18,000 cabin crew, called for eight hours of strikes in Frankfurt and Berlin and 11 hours in Munich on Tuesday.

Talks between Lufthansa and UFO broke down a week ago, having failed to result in an agreement for 13 months, and have so far not resumed.

The union wants a 5 percent pay increase and guarantees against outsourcing and the use of temporary workers.

Lufthansa, which is slashing costs in a bid to boost its earnings by 1.5 billion euros, says it will not improve its offer to raise pay by 3.5 percent in exchange for longer hours.

BIGGER THREATS

UFO head Nicoley Baublies threatened the next step could be full-day walkouts by Lufthansa cabin crew across Germany "if this arrogance continues". He has previously said the union was prepared to strike into the autumn or winter.

Analysts estimate the strikes could cost about 5-10 million euros a day, but Equinet analyst Jochen Rothenbacher warned that sum could jump to as much as 50 million euros if full-day strikes across Germany shut down all flights.

Lufthansa's Walther said the airline was mulling legal steps against the union.

At its main hub in Frankfurt alone, Lufthansa scrapped around 200 flights on Tuesday, with about half of short- and medium-haul flights affected, but also one-third of its more lucrative long-haul flights.

The airline, which normally operates about 1,800 flights per day around the world, also cancelled half of long-haul trips due to depart Munich and expects to cancel about a quarter of short-and medium-haul flights.

By mid-morning, Lufthansa had sent 18,000 text messages to customers' mobile phones to inform them of flight cancellations and delays, and it was supplying stranded passengers at airports wi t h drinks and snacks.

At 1235 GMT Lufthansa shares, which have fallen 17 percent over the past year, were down 1.5 percent at 9.659 euros.

http://in.reuters.com/article/2012/09/04/germany-lufthansa-strikes-idINDEE88304120120904

Tokyo, Kabul surprising destinations that help airlines make money

If you have thought that the most profitable international routes for direct flights from India are to the busiest US or European cities, then think again.

For international carriers flying from India, the Delhi-Tokyo (Japan) route. offers the highest yield per seat for every kilometre travelled. War-torn Afghanistan might make many people think twice about visiting that country, but the Delhi-Kabul route is the second most profitable route, according to analysis undertaken by airport developers.

The yield per seat-kilometre between Delhi and Tokyo, at Rs 14.54, is over three times the yields on Delhi to Singapore, London or New York. Similarly, the yield on Delhi to Kabul, at under Rs 9, is far attractive than other popular routes.

This fact has caught the attention of airlines, too. Many new airlines are planning to introduce new flights on these routes. Apart from Japanese Airlines that has a direct flight on the Delhi-Tokyo route, All Nippon Airways is also joining the party. Come October, it will start flying between Delhi and Tokyo. Several other airlines fly indirectly with one or two stops.

Last month, budget carrier SpiceJet Ltd started direct flights from New Delhi to Kabul. Prior to that, Air India, Safi Airways Co and Ariana Afghan Airlines were the carriers that offered direct services between the cities.

“Response to our flights on the Delhi-Kabul route is encouraging and is picking up. A lot of passengers from both counties prefer SpiceJet as we are low-cost and affordable airline on the route,” SpiceJet spokesperson said.

Trade between India and Afghanistan is increasing in recent years, while several Indian companies are involved in construction projects in the neighbouring country. This enhanced economic ties are raising air travel demand. Besides, people in Afghanistan are coming to India for medical tourism.

If you book today a one-way direct economy flight (seven-and-a-half hours) from Delhi to Narita airport in Tokyo on travel websites for November 1, the ticket will be charged anywhere between Rs 67,000 and Rs 120,000. Compare it with a direct flight from Delhi to New York by Air India: it takes double the time, but the ticket is available at under Rs 47,000.

A one-way direct economy ticket from Delhi to Kabul for the same day can be yours for Rs 10,745 on low-cost carrier SpiceJet and as much as Rs 29,000 on Air India for the two-hour journey. Yet, a three-and-a-half-hour flight from the capital city to Muscat, Oman, will cost you Rs 12,941. Another budget carrier, IndiGo, is offering a Mumbai-Muscat flight for Rs 7157.

To be fair, many of these routes can hardly offer the kind of passenger volumes that popular destinations like London, Singapore and Frankfurt can generate. But airport planners say that with competition for traditional routes so intense, many carriers are now looking at routes which are under-served but where one can generate good margins.

“Airlines and airports have to look at innovative route planning. So for instance, there are so many Japanese companies based in the north, who have to travel to and fro to their headquarters. So there is a large opportunity and not too many direct flights” says an airport planner in one of the country’s leading airports.

In the domestic skies, it is the short-haul routes which provide airlines the best yields and not the big metros. So, a flight from Delhi to Chandigarh offers airlines yields that are three to four times a Mumbai-Bangalore flight could generate.

But interestingly, airlines between Delhi and Mumbai still get the highest yields among the metros, surpassing that of Bangalore, Chennai, Hyderabad and Kolkata — a clear indication that there is scope for more capacity.

http://www.business-standard.com/india/news/tokyo-kabul-surprising-destinations-that-help-airlines-make-money-/485632/

AI gets Cabinet okay to create two subsidiaries

The government, on Thursday, approved a Rs.768-crore proposal to hive off engineering and ground handling services of Air India into two wholly-owned subsidiaries as part of its turnaround plan.

A meeting of the Union Cabinet, chaired by Prime Minister Manmohan Singh, cleared the proposal to create the two subsidiaries — Air India Engineering Services Ltd. (AIESL) and Air India Transport Services Ltd. (AITSL), an official spokesperson said.

The green signal came two years after the Air India Board approved operationalisation of the two subsidiaries, and submitted a note to the Civil Aviation Ministry to get the Cabinet nod. The Ministry had cleared the proposal in April.

With this decision, Air India would begin the process of transferring the assets and manpower to AIESL and AITSL, which would be treated as separate profit centres.

AIESL would carry out the maintenance, repair and overhaul (MRO) business, not only for Air India but also for other airlines, and tap the potential of the nearly $1.5-billion MRO business in the Asia-Pacific Region.

At present, Indian carriers have to send most of their planes to Europe and even Dubai and Singapore to get them repaired or for mandatory checks.

Equity infusion

Air India would provide AIESL an equity of Rs.375 crore for capital expenditure over three years, sources said, adding that this would be based on equity support received by the national carrier from the government.

The subsidiary was projected to make profits in five years. About 7,000 employees of Air India would migrate to it.

AITSL, which would carry out the ground handling services, would be provided equity worth Rs.393 crore by Air India over 12 years. About 12,000 employees will shift to it.

This new subsidiary was projected to make profits from the current financial year itself, the sources said.

Air India has total staff strength of about 29,000.

It’s aircraft-manpower ratio last year was 263 as against 150 in Jet Airways, 111 in Kingfisher and 102 in Indigo. With the hiving off, this ratio was expected to come down considerably, the sources said.

Air India, which reported an estimated loss of Rs.7,853 crore in 2011-12, has an accumulated loss of Rs.20,000 crore over the past five years. Under the government-approved turnaround and financial restructuring plans, a total equity infusion of Rs.30,000 crore has been planned till 2021

http://www.thehindu.com/todays-paper/tp-business/article3868389.ece

Air India Express to withdraw Abu Dhabi service

Under new winter schedule effective October 28 despite commanding load factor of about 80%; travel industry disappointed

Air India Express, a major air operator from the city, has decided to withdraw its twice-a-week service on the Chennai-Tiruchi-Abu Dhabi/Abu Dhabi-Tiruchi-Chennai sector under its winter schedule, effective October 28, much to the discontent of the travel industry here.

The move, coming after repeated curtailment of various services in December last year and in February this year, has come as a shock to the travel industry here. According to sources, the service to Abu Dhabi currently operated on Thursdays and Saturdays would stand withdrawn under the winter schedule that would be in effect till March end next year. However, the thrice-a-week Tiruchi-Dubai-Tiruchi service would be made a daily service under the winter schedule.

The withdrawal of the Abu Dhabi service would also entail cancellation of a couple of flights a week on Chennai-Tiruchi/Tiruchi-Chennai sector too.

Travel industry representatives are flabbergasted by the continuing action of Air India Express to withdraw services on profitable routes from Tiruchi such as the Abu Dhabi service.

The service was one of the earliest services being operated by the national carrier from Tiruchi and had been commanding a good load factor of about 80 per cent.

Migrant workers

A large number of migrant workers from the Central and Southern districts have been patronising the service and the withdrawal of the service would cause much inconvenience to them, they said.

Notwithstanding the strong opposition from the travel trade here, Air India Express has been continuously withdrawing flights ex-Tiruchi over the past 10 months.

In December last year, it withdrew 10 flights a week from Tiruchi citing crew constraints.

The Abu Dhabi service was curtailed to twice a week instead of three services and daily direct Tiruchi-Kuala Lumpur service was reduced to three days a week. Subsequently, the Kuala Lumpur service was fully withdrawn in February and instead a connection was offered from Chennai four days a week, evoking strong protests from the travel industry here.

“We are pained by Air India’s decisions to withdraw services from Tiruchi. The Abu Dhabi service was very popular among semi-skilled migrant workers from the southern districts, especially those working in oil companies in Abu Dhabi. The withdrawal of the service would force them to depend on services from Chennai,” said M.S.Paramasivam, chairman, Travel Agents Association of India, South Tamil Nadu Chapter.

The travel industry representatives have had already registered their strong opposition to the frequent cancellation of flights over the past several months. It is regrettable that more and more flights are cancelled from Tiruchi.

Despite being a highly profitable station for the airline, Tiruchi was being accorded a step-motherly treatment, they said and added that decisions would only help the private carriers. Representations to the Civil Aviation Minister have not received a favourable response so far, they regretted

http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/article3868729.ece

Kannur airport: consultancy pact with STUP cancelled

Kannur International Airport Limited (KIAL) cancels its consultancy agreement with Mumbai-based M/s STUP Consultants Pvt Ltd after it has been found that the RFP (request for proposal) conditions had been violated by the Indo-French consortium.

The agreement signed with STUP, appointing it as project consultant, on August 17 has been cancelled and KIAL has decided to call fresh bids for selecting a new project consultant, KIAL Managing Director V. Thulasidas told The Hindu on Thursday.

The decision comes in the wake of the STUP’s reply to a show-cause notice served on it by KIAL. It is now found that STUP was blacklisted by the Punjab Infrastructure Development Board when it submitted bids for the Kannur project, as pointed out by another firm that lost the bids. Legal opinion also has come against STUP.

Earlier, KIAL had served a show-cause notice on STUP after it was pointed out by a firm that the consortium had been disqualified/blacklisted in two earlier contracts with the Uttarakhand Infrastructure Development Corporation and the Rajkot municipal corporation.

Then STUP submitted an affidavit that it was not blacklisted or disqualified in any other contracts.

STUP had formed a consortium with M/s Darashaw Pvt. Ltd., Mumbai, for providing project consultancy to KIAL. In addition, STUP has engaged experts from TERI, New Delhi, and Air Transport & Tourism Advisors India Pvt Ltd., New Delhi, for providing specialist services.

No money given

Although KIAL has not given any money to the project consultant, the MD said it had commenced work in Kannur. KIAL is now thinking of including new riders for selecting the new consultant. It has decided to claim damages from STUP on account of the cancellation of the agreement. The consortium won the bid for Rs.14.5 crore.

The selection and appointment of the new project consultant will be made through a transparent bidding process.

The bids will be evaluated by an evaluation committee appointed by the board, strictly in accordance with the norms and eligibility criteria to be prescribed in the RFP documents.

The KIAL board is being convened next week in Kochi and a decision to call fresh bids will be taken at the meeting. Efforts are on to call the bids at the earliest and appoint the project consultant by October first week.

http://www.thehindu.com/todays-paper/tp-national/article3868854.ece

‘AAI prepared Arunachal airport master plan’

Union Civil Aviation Minister Ajit Singh has informed Arunachal Pradesh Chief Minister Nabam Tuki that the Airports Authority of India (AAI) had prepared a master plan for development of the Holongi airport at Itanagar after a nod by the State government.

Mr. Tuki met Mr. Singh in the Capital and discussed with him the status of development of airports at Itanagar, Along, Daparizo, Pasighat, Tezu and Ziro in Arunachal Pradesh. The Minister told Mr. Tuki that AAI construction of Greenfield Airport at Itanagar will commerce soon after the master plan is approved.

It was noted that the terrain at the Holongi site permits operations on runway from both directions as compared to the Banderdewa site. The AAI has forwarded requirement for acquisition of 320 hectare to the State government in this regard. 

The AAI has also submitted the master plan to Arunachal and Air Force as the IAF has been mandated the development of the aerodrome. 

http://www.thehindu.com/todays-paper/tp-national/article3868437.ece

Air India all set to fly Dreamliner at last

Airline takes delivery of first long-haul, fuel efficient aircraft at South Carolina Boeing facility

After a four-year delay, Air India on Thursday took delivery of the first long-haul Boeing 787 Dreamliner at the South Carolina facility of Boeing in U.S.

It will take off on Friday and land in Delhi on Saturday.

With “the most technologically advanced and fuel efficient airplane in the world” joining its fleet, Air India can open new routes in a dynamic marketplace and provide the best in-flight experience to passengers, Chairman and Managing Director Rohit Nandan said in a statement here.

Delayed schedule

The national carrier, which placed orders for 27 of these aircraft six years ago, will get delivery of two more airplanes within the next few weeks.

The first batch was supposed to be delivered in September 2008 but design and production issues at Boeing caused delay.

The Union Cabinet recently cleared the compensation package between AI and Boeing for the delayed delivery of aircraft. AI intends getting 14 of them by March next and plans to launch flights in long-haul international sectors, including new services to Australia.

The airline proposes to operate the Dreamliner in the next few weeks in the domestic sectors, including Delhi-Mumbai, for pilots and crew to get accustomed to its landing and take-off.

The 787 has the range and capability to allow AI to deploy the Dreamliner on many routes including the Middle East, Europe, Asia and Australia. The plane is made of carbon composite material, which makes it lightweight and therefore fuel efficient. Boeing claims it consumes 20 per cent less fuel than similar-sized B-767s. The airplane has 18 business class seats and 238 in the economy class.

Celebrating another “historic moment” in the company’s nearly seven decades-long relationship with AI, senior vice-president of Asia Pacific and India Sales for Boeing Commercial Airplanes Dinesh Keskar said: “I am sure Air India and their customers will be thrilled to experience the revolutionary features on the 787, an airplane that will be the key focus of the airline’s turnaround plan.”

---

·  In next few weeks, it is to be operated in domestic sector

·  14 other planes may be delivered by March next

http://www.thehindu.com/todays-paper/tp-national/article3868378.ece

Air India all set to fly Dreamliner at last

Airline takes delivery of first long-haul, fuel efficient aircraft at South Carolina Boeing facility

After a four-year delay, Air India on Thursday took delivery of the first long-haul Boeing 787 Dreamliner at the South Carolina facility of Boeing in U.S.

It will take off on Friday and land in Delhi on Saturday.

With “the most technologically advanced and fuel efficient airplane in the world” joining its fleet, Air India can open new routes in a dynamic marketplace and provide the best in-flight experience to passengers, Chairman and Managing Director Rohit Nandan said in a statement here.

Delayed schedule

The national carrier, which placed orders for 27 of these aircraft six years ago, will get delivery of two more airplanes within the next few weeks.

The first batch was supposed to be delivered in September 2008 but design and production issues at Boeing caused delay.

The Union Cabinet recently cleared the compensation package between AI and Boeing for the delayed delivery of aircraft. AI intends getting 14 of them by March next and plans to launch flights in long-haul international sectors, including new services to Australia.

The airline proposes to operate the Dreamliner in the next few weeks in the domestic sectors, including Delhi-Mumbai, for pilots and crew to get accustomed to its landing and take-off.

The 787 has the range and capability to allow AI to deploy the Dreamliner on many routes including the Middle East, Europe, Asia and Australia. The plane is made of carbon composite material, which makes it lightweight and therefore fuel efficient. Boeing claims it consumes 20 per cent less fuel than similar-sized B-767s. The airplane has 18 business class seats and 238 in the economy class.

Celebrating another “historic moment” in the company’s nearly seven decades-long relationship with AI, senior vice-president of Asia Pacific and India Sales for Boeing Commercial Airplanes Dinesh Keskar said: “I am sure Air India and their customers will be thrilled to experience the revolutionary features on the 787, an airplane that will be the key focus of the airline’s turnaround plan.”

---

·  In next few weeks, it is to be operated in domestic sector

·  14 other planes may be delivered by March next

http://www.thehindu.com/todays-paper/tp-national/article3868378.ece

Air India to hive off engg, transport services

MRO unit projected to turn profitable by 2017-18

New Delhi, Sept. 6:  

The Cabinet has given its nod for Air India to hive off Air India Engineering Services and Air India Transport Services into wholly owned subsidiaries of the airline.

The Engineering Services subsidiary will take care of maintenance, repair and overhaul (MRO); while the Transport Services will take care of ground handling services, which includes jobs like ticket check-in.

MRO TO BE PROFITABLE

The decision to set up two separate subsidiaries of Air India is part of the turn around and financial restructuring plan for the state-owned airline.

The MRO company is projected to turn profitable from 2017-18. About 7,000 employees of Air India will migrate to this new subsidiary company. The MRO activities of Airbus and Boeing aircraft will also allow Air India to look at garnering business from other airlines.

Civil Aviation Minister Ajit Singh recently said that the proposal to hive off MRO business of Air India Engineering Services Ltd will allow the firm to tap an estimated $1.5-billion MRO business in the Asia Pacific Region.

To ensure that the two subsidiaries can also provide services to other airlines, the staff in these companies will strive towards providing improved quality services benchmarked to global standards. If the companies provide services to other airlines, they can also achieve reduction in overhead costs, apart from improved productivity on a low cost platform, accountability for growth and profits, officials said.

Air India has supported the move to hive off the MRO business from Air India and develop it as an independent business and profit centre.

In August 2010, the board of directors of Air India Ltd approved a proposal to hive off Air India Engineering Services.

The board had also sent a note to the Ministry of Civil Aviation to approach the Cabinet for starting the subsidiary.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3867447.ece