Supreme Court issues notice to CBI, CVC and Centre on Air India scam

NEW DELHI: The Supreme Court on Friday sought responses from the Centre, the CBI and the Central Vigilance Commissionon a petition seeking probe by either the CBI or a special investigation team (SIT) into the functioning of the civil aviation ministry during 2004-2008.

The Delhi High Court had turned down the petition. Hearing an appeal by NGO 'Centre for Public Interest Litigation', which said the Delhi HC had erred in not ordering a probe even after finding that "all is not well" with Air India, a bench of Justices H L Dattu and C K Prasad sought the response of the concerned agencies.

The apex court's decision to entertain the petition on Air India scam, just a week after it agreed to take up a PIL on Coalgate, will add to the woes of a beleaguered UPA government reeling under political fire over corruption and price hike.

Seeking either a CBI probe or an SIT investigation into the Air India scam, the petitioner through advocate Prashant Bhushan listed out four charges against the ministry -- "purchase of 111 aircraft for Rs 70,000 crore to benefit foreign aircraft manufacturers; several aircraft taken on lease costing thousands of crores of rupees; bilateral rights given to foreign airlines without any reciprocal benefit to Air India; at the same time, Air India was asked to give up profitable routes and timings to benefit private airlines".

"After all this, the ministry merged Air India and Indian Airlines. Air India, which was showing a profit of about Rs 100 crore (it did not have the capacity to purchase even a few aircraft) immediately went into huge losses, which increased every year to reach tens of thousands of crores of rupees," the petitioner alleged.

"All of the above actions and decisions ruined our national carriers, cost the exchequer huge amount of money and the only beneficiaries of the above decisions were foreign aircraft manufacturers, private and foreign airlines," it said.

After being shown the reports of the parliamentary committee on transport, parliamentary committee on public undertakings and the Comptroller and Auditor General on June 1, the Delhi High Court was critical of several decisions of the ministry including aircraft acquisition but had refrained from issuing any direction to the government or Public Accounts Committee. However, the HC did outline several areas which needed special focus and fixing of accountability.

It had said, "The comments and critique by these expert bodies put a big question mark on the bona fides of the Aircraft Requisition Programme, the lease of aircraft, giving away profitable air routes to private airlines and retaining only loss making routes and even the unprofessional decision of merger of Indian Airlines and Air India. Prima facie it appears that 'all is not well'."

http://timesofindia.indiatimes.com/india/Supreme-Court-issues-notice-to-CBI-CVC-and-Centre-on-Air-India-scam/articleshow/16497678.cms

SC notice to govt, Air India over purchase of aircraft

The Supreme Court on Friday issued a notice tothe Centre and Air India (AI) on a petition seeking a probe intothe alleged irregularities in recent purchase of aircraft and surrendering profitable routes to private carriers.

A bench of Justice HL Dattu and Justice CK Prasad

sought a response on an appeal filed by NGO Centre for Public Interest and Litigation (CPIL) represented by activist-lawyer Prashant Bhushan .

The CPIL in its petition has demanded either probe bythe CBI or by a SC-appointed special investigation team (SIT).

The CPIL has assailed several ofthe government's decisions, includingthe "massive" purchase of 111 aircraft forthe national airlines costing about Rs. 70,000 crores, taking a large number of planes on lease, giving up profit-making routes and timings in favour of private airlines andthe merger of Air India and Indian Airlines (IA).

AI's losses sincethe merger in 2007 stood at Rs. 28,045.92 crore. Its outstanding debt, including short-term working capital loans, stood at more than Rs. 44,000 crore.

In April,the government had announced a cash-booster of Rs. 30,000 crore that will be infused intothe airline spread over a eight-year period.

http://www.hindustantimes.com/News-Feed/SectorsAviation/SC-notice-to-govt-Air-India-over-purchase-of-aircraft/Article1-933438.aspx

FDI will spur small carriers to serve new routes, feels Ajit Singh

With the government allowing 49 per cent FDI (foreign direct investment) in aviation sector, the focus will now be on encouraging use of smaller aircraft to connect Tier-I, Tier-II and Tier-III cities with metros, according to Union Civil Aviation Minister Ajit Singh.

“No doubt the aviation sector is going through a difficult phase. The decision to allow 49 per cent FDI will certainly push things in the positive direction. I am looking towards entry of smaller aircraft to serve new destinations in India’s Tier-I, Tier-II and Tier-III cities which hold a great potential. We are looking towards connecting these cities with metros. We have to tap the vast middle class segment, which wants to travel by air. We will urge the airlines to make connectivity with such cities to tap this potential,” Mr. Singh said on the sidelines of an Assocham conference on Indian civil aviation sector here.

Mood upbeat

To a question, Mr. Singh said only time would tell how many foreign airlines would show interest in acquiring stake in domestic carriers. Nevertheless, he felt, the mood was upbeat. Allowing FDI in aviation would pave way for much-needed equity infusion in Indian carriers, which were in dire need of funds, he added.

He said he would bring a Bill in the winter session of Parliament to set up of a Civil Aviation Authority which would revamp the aviation regulator, Directorate-General of Civil Aviation . The government was also working on constituting a dedicated civil aviation security force, as the Central Industrial Security Force, currently looking after aviation security, was formed for a different purpose. He said the government was looking at replicating the public-private-partnership model to develop airports in small cities. There was also a need to build low-cost airports at smaller cities.

http://www.thehindu.com/todays-paper/tp-business/article3924676.ece

‘Capital flights’ figure in India, Pakistan talks

With the prospects of bilateral trade growing as a result of reciprocal efforts to dismantle the bottlenecks that India and Pakistan had built over years of hostility, the two countries have now decided to work towards improving air connectivity between New Delhi and Islamabad.

This was decided at the meeting of the two commerce secretaries here with both sides agreeing to set up a Joint Working Group before November 15 to work out a more liberalised regime of reciprocal bilateral rights for commercial flights to ensure economic viability of this air route. At present, there is no direct connectivity between the two capitals and only Pakistan International Airlines offers direct flights between the two countries.

From the joint statement issued after the two-day deliberations, it appeared that considerable stress was placed on improving connectivity between the two countries. Both sides agreed that more trade traffic should be carried through the railways and, to this end, it was decided that the two railway ministries would hold joint coordination meetings on a monthly basis at appropriate levels.

Though bulk of trade traffic has been through the Wagah-Attari border, both sides acknowledged the need to strengthen infrastructure. The Customs Liaison Border Committee will meet monthly, and also explore the possibility of organising meetings between relevant importers and exporters at the border. Further, it was decided that the Land Customs Station would operate daily. Simultaneously, work is on to open the Munabhao-Khokhrapar land route.

Welcoming India’s decision to remove restrictions on inbound and outbound investments to Pakistan, the Pakistani delegation sought clarifications from Indian authorities on investment through the “Government Route” and its implications. Both sides agreed that procedures would have to be simplified to enhance investor confidence across the border.

Non-Tariff Barriers (NTBs) — particularly on the Indian side which are a key irritant for Pakistani traders — were discussed at some length. According to Pakistan, certifications/licensing/lab testing/ are not the only NTBs but issues such as delays in customs clearance, non-availability of railway wagons for cargo transport, absence of direct flights or any problem which delays the clearance of goods with no end results or change, faced by importer/exporter is an NTB. Pakistan reiterated that concrete solutions of all such issues are crucial for ensuring market access in the Indian markets for Pakistani exporters.

Pakistan informed India that its offer to export up to 5 million cubic metres of gas a day for an initial period of five years was under active consideration. Also pending is a Bharat Heavy Electricals’ offer to cooperate with Pakistan to set up 500-2000 MW capacity in coal/hydro or gas power plants, and meeting Pakistan Railways requirement of up to 100 locomotives.

http://www.thehindu.com/todays-paper/tp-business/article3924672.ece

Airport: positive response to land value finalisation

cquisition after approval of purchase committee report

The next phase of land acquisition for the Kannur International Airport, coming up near Mattannur, is expected to begin after the approval of the report to be submitted by the district-level purchase committee (DLPC) that concluded the negotiations with landowners of 640-odd acres of land being acquired.

The negotiations held with the landowners in various sessions during the three-day DLPC meeting concluded here a few days ago, with the landowners largely responding positively to the land value finalised during the sessions.

The land value finalised during the negotiations ranged between Rs.45,000 and Rs.95,000, depending on the area where the plots identified for acquisition is located.

According to Revenue officials, the owners of land located on the side of the Mattannur-Anjarakkandy and Mattannur-Kannur roads will get the highest land value.

Consent letters

The DLPC is expected to send its report on the negotiations, including the minutes, to the Chief Secretary-headed State-level empowered committee in two weeks.

The District Collector has already urged the landowners to accept the finalised land value and submit their consent letters by September 30.

The land takeover process would begin after the empowered committee approved the value finalised by the DLPC, an official said here on Friday.

He said that the landowners would be directed to produce title documents, tax receipt and encumbrance certificates to start the acquisition procedure.

Minimum price

The official said that a major demand of the landowners was that the minimum value of the land to be acquired should be Rs.45,000 a cent, the rate fixed for acquiring land at Mattannur for developing Kinfra Park two years ago.

The negotiation was hassle-free as that demand of the landowners was accepted, he added.

An official press release here said that the landowners who would lose their houses located on plots to be acquired would be given 10 cents of land each and would be ensured that basic amenities, including road, electricity and drinking water facilities.

The value of the houses would be calculated by adding 50 per cent of the cost of the house after deducting the depreciation amount.

The house owners would be allowed to take all items after dismantling their houses.

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·  640 acres to be acquired at Mattannur

·  People losing houses to be given 10 cents each

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/article3925185.ece

Air India to pay passenger Rs. 50,000

“Not allowing a passenger to board and travel in a flight even after issuing a boarding pass amounts to unfair trade practice,” a city consumer forum here has ruled. It also ordered Air India to pay a compensation of Rs. 50,000 to a passenger.

Chinnadurai, a businessman from Chennai, had booked a ticket with Air India for his return journey from Singapore to Chennai on October 31, 2009 and he was issued with a confirmed ticket.

He said he reached Singapore Airport well in time on the same day. Though he was issued a boarding pass, he was not allowed to travel on the flight.

In his complaint before the consumer forum, he said the boarding pass was snatched from him and he was advised to come the next day. He claimed that as he could not travel and he had to stay back in Singapore, his business was affected. Hence, he filed the complaint seeking compensation.

The airlines said the complainant being a frequent flyer, should be aware that the doors of the aircraft are closed 15 minutes before the scheduled departure time. The complainant feeling confident that he had got the boarding pass came late, by which time the doors of the flight were closed. So, the duty officer offered to send him by next available flight on the same day.

Rejecting the contention that the complainant failed to board the flight on time, the District Consumer Disputes Redressal Forum, Chennai (South) comprising its president V. Gopal and member L. Deenadayalan said the airline failed to prove it by adducing evidence.

“The opposite party (the airline), having issued a boarding pass to the complainant, ought to have made necessary announcements to procure the complainant and call upon him immediately to board the flight.

The opposite party’s act in not allowing him to board and travel the flight even after issuing a boarding pass amounts to unfair trade practice and deficiency in service” said the forum.

http://www.thehindu.com/todays-paper/tp-national/article3924732.ece

Capital structure of airlines to improve, says report

The decision to allow foreign airlines to invest up to 49 per cent stake in domestic carriers is expected to improve the capital structure of airlines with viable business models, according to a report by India Ratings and Research.

The possible equity infusion would not only de-leverage the sector but also provide funds for long-term growth. However, structural challenges may limit its attractiveness for such foreign investors, at least in the medium term, the report has said.

In addition to equity infusion, stronger strategic and operational ties with foreign partners with stronger credit profile may potentially improve the credit profile of domestic airlines. This may have a beneficial impact on the funding cost of the sector, known for being highly capital intensive.

Lack of control

While the long-term growth potential of the Indian market may draw interest from international airlines, the continuing structural weakness and regulatory risks may increase the perceived risk in such tie-ups. Other key considerations of pospective joint venture partners would be the lack of majority equity control in addition to specific board constitution, the IRS report added.

The key structural weakness of the Indian airlines industry is its higher operating costs, driven primarily by a higher tax on aviation fuel, compared with that of the other emerging markets. The cost of infrastructure development is also higher for the Indian industry — which usually translates into higher airport usage charges. This is in addition to the currently limited airport infrastructure, which acts as a bottleneck to significantly improving scheduling efficiency. The latter, the report adds, is a direct drag on operating cost.

For the financial year ended March 2012 (FY12), EBITDA margin of three of the listed airlines ranged between one per cent and a negative 37 per cent. In India, aviation turbine fuel (ATF) accounts for 40-50 per cent of the airlines’ operating costs compared with a standard of 30 per cent. This is mainly because of higher taxes on ATF, at around 35-40 per cent.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3923856.ece

Government clarification on FDI in aviation

The Government has clarified that when foreign airlines invest in the capital of Indian airline , they can do so up to the limit of 49 per cent of the paid-up capital of these companies irrespective of whether it is a foreign institutional investor or financial institution making the investment.

The Union Cabinet had recently changed the policy and allowed foreign airlines to acquire a 49 per cent stake in domestic airlines.

The changed FDI norms were notified on Thursday.

Industry analysts say that FII is short-term capital which will not flow in to the company running the airline while allowing FDI into the sector has long-term strategic implications.

“Clubbing the two is diluting the policy. Legally and theoretically the two are different,” said Dhiraj Mathur, Executive Director and Head of National Aerospace and Defence Practice, PwC.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3923828.ece

bl22_bmniv_Air India special faresOur BureauMumbai, Sept. 21 Air India has intro

Air India special fares

Air India has introduced special fares on advance purchase aimed at the leisure and holiday market. The advance purchase fare is to be sold for travel commencing 30 days and beyond, and is lower by about 15 per cent of the current lowest fares in the market, excluding taxes, the airline said. As compared to the existing instant purchase fare, the new fares represent a 40-50 per cent discount on the fare level (excluding taxes). A passenger will need to purchase the ticket 30 days in advance to avail himself of the special offer. Under the offer, a Mumbai-Goa ticket will cost Rs 2,970, Mumbai-Delhi Rs 4,931, Delhi-Srinagar Rs 3,516, Kolkata-Delhi Rs 4,818 and Chennai-Port Blair Rs 4,378 under the offer. These fares are inclusive of taxes. The airline expects the new initiatives to spur growth in the air travel market and promote festive season travel. The fares are available for sale from September 21 through all travel agents, on-line travel agents, Air India booking offices and Air India Web site

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3923826.ece