Air India should be partly privatised, says study

KOLKATA: Loss-making national carrier Air India should be partly privatised as private investors will focus on maximising profit and in turn solve the carrier's operational issues, a study commissioned by the Corporate Affairs Ministry has said.

"Bringing in private players and capital to operate India's national carrier will help address some of the airline's operational issues, while freeing government funds for other purposes".

"Partially privatising Air India would create incentives for the carrier to compete with other airlines, since Air India's private investors would seek to maximise return on their investment," said the Study Report on 'Competitive Framework of Civil Aviation Sector' of the Indian Institute of Corporate Affairs (IICA).

However, Civil Aviation Minister Ajit Singh recently ruled out any move to privatise Air India as government was pumping in Rs 30,000 for its restructuring.

IICA had nominated Nathan India as consultants to carry out an analysis on competition-related issues in the civil aviation sector.

The report pointed out that the Air Corporation Act 1953 provided a legislative framework within which the Government could provide funds for capital expenditures as well as potential bailout funds for the national carrier.

However, "this regulation gives Air India an unfair competitive advantage, by creating a framework through which it may apply for government financial assistance. The Act lacks competitive neutrality with regards to airlines in terms of access to government funds for capital expenditures and potential bailout," it said.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/air-india-should-be-partly-privatised-says-study/articleshow/16610936.cms

AI should be partly privatised: IICA

Loss-making national carrier Air India should be partly privatised as private investors will focus on maximising profit and in turn solve the carrier's operational issues, a study 'Competitive Framework of Civil Aviation Sector' of the Indian Institute of Corporate Affairs (IICA), commissioned by the Corporate Affairs Ministry has said.

"Bringing in private players and capital to operate India's national carrier will help address some of the airline's operational issues, while freeing government funds for other purposes".

"Partially privatising Air India would create incentives for the carrier to compete with other airlines, since Air India's private investors would seek to maximise return on their investment," said the Study Report

However, Civil Aviation Minister Ajit Singh recently ruled out any move to privatise Air India as government was pumping in Rs 30,000 for its restructuring.

IICA had nominated Nathan India as consultants to carry out an analysis on competition-related issues in the civil aviation sector.

The report pointed out that the Air Corporation Act 1953 provided a legislative framework within which the Government could provide funds for capital expenditures as well as potential bailout funds for the national carrier.

However, "this regulation gives Air India an unfair competitive advantage, by creating a framework through which it may apply for government financial assistance. The Act lacks competitive neutrality with regards to airlines in terms of access to government funds for capital expenditures and potential bailout," it said. The report further said the regulation which prescribes that operational plans submitted by the national carrier would be considered before allocation of traffic rights to other eligible applicants, was deterrent to competition in the market.

"This rule lacks competitive neutrality in assigning traffic rights. In order to increase its customer base, Air India will take the best available routes, thus maintaining an unfair competitive advantage over other eligible Indian international carriers," it said.

The report recommended that aviation regulator DGCA should consider abandoning preferential international route assignments to the national carrier, which would allow private carriers to compete with Air India.

Taking away Air India's right to priority route assignments, it said, would also help other Indian international carriers expand service to additional global destinations, leading to expansion in the range of choices for consumers.

http://www.indianexpress.com/news/ai-should-be-partly-privatised-iica/1009947/0

Air India should be partly privatized

Loss-making government carrier Air India [ Images] should be partly privatised, as private investors would focus on maximising profit and, in turn, solve the carrier's operational issues, a study commissioned by the corporate affairs ministry has said.

"Bringing in private players and capital to operate India's national carrier will help address some of the airline's operational issues, while freeing government funds for other purposes."

"Partially privatising Air India would create incentives for the carrier to compete with other airlines, since Air India's private investors would seek to maximise return on their investment," said the study report on 'Competitive framework of civil aviation sector', from the Indian Institute of Corporate Affairs (IICA).

However, Civil Aviation Minister Ajit Singh recently ruled out any move to privatise Air India, as the government was pumping in Rs 30,000 for its restructuring.

IICA had nominated Nathan India as consultants to carry out an analysis on competition-related issues in the civil aviation sector.

The report pointed out that the Air Corporation Act 1953 provided a legislative framework within which the government could provide funds for capital expenditures, as well as potential bailout funds for the carrier.

http://www.rediff.com/business/report/air-india-should-be-partly-privatised-study/20121001.htm

Maldivian Open to Investing in Indian Private Carrier

Maldivian, the national carrier of Maldives, which recently announced its expansion plans with flights to Mumbai and Chennai from November, has said that it is not averse to investing in some of the Indian private carrier if there is an opportunity.

"If given an opportunity, we will definitely do so (investing in some private carriers)," Maldivian managing director Abdul Harris said here.

He said that the policy change allowing up to 49 per cent foreign direct investment by the foreign carriers in the domestic airlines is a "great initiative" by the government and will provide a level-playing field.

Nevertheless, Maldivian, the airline division of Island Aviation Services Ltd, already has collaborations with Indian companies in the segment for providing different services to the carrier.

"Our bank is State Bank of India, the catering services are provided by the TajSats, the ground handling job of our airline is taken care by Air India-SATS joint venture and even the insurance services providers is an Indian company," he said.

Maldivian, which has only been in operation for 12 years, began its international operations in 2007 with a flight to Thiruvananthapuram.

Harris said that Maldivian is eyeing a 70 per cent seat-factor from its expanded India operations. "We will strive to increase it to 80 per cent on both Chennai and Mumbai sectors as we consolidate over a period of time," he said.

He added that the airline plans to have a fleet of five Airbus aircraft in as many years and aims to launch flights to some other destinations in Asia over a period of time.

Currently, the airline has a fleet of five aircraft, comprising 37-seater Dash 8-200 and 50-seater Dash8-300.

It is scheduled to receive its first Airbus 320 plane next month, while the second Airbus is expected to be delivered next year, he said.

Maldivian will operate domestic routes with smaller planes while our international operations will be serviced by the Airbus fleet, he said adding "we are evaluating some routes in Asia and hope to have them operational them in the next 2-3 years."

The airline will be operating three flights a week to Chennai-Dhaka on Tuesday, Thursday and Saturday and to Mumbai on Wednesday, Friday and Sunday.

"We are entering new passenger markets, where we see a need for more air services, particularly where such markets are under served and in need for extra capacity," he said.

http://news.outlookindia.com/items.aspx?artid=776799

Maldives to launch direct air services to Mumbai from Nov 15

Maldives, which is looking at India as one of its key markets to enhance tourism, is planning to launch a direct flight to Mumbai starting from November 15.

“We want to enhance the connectivity between the two countries. For this, we are planning to have direct Maldivian Airlines flights between Mumbai and Male from November 15,” Maldives Tourism, Arts and Culture Minister Ahmed Adeeb Abdul Gafoor told PTI here.

Initially, the Maldivian Airlines will fly from Mumbai to Male thrice a week and depending on the traffic it will slowly be enhanced to five days a week, he added.

“We are also planning to fly directly to New Delhi from next year,” he said. Currently, Maldivian Airlines fly to Thiruvananthapuram five times a week.

Maldives, which is globally positioned as a luxury destination, is still working on its India marketing strategy.

Economically, Asia is on the rise, especially India and China. We are still working on our strategy to position Maldives for Indian Tourists though we plan to cater to upper middle class, luxury segment and youth, he said.

Maldives ecology is very fragile and for this the country is not looking at catering to the mass segment, he added.

Maldives is also ramping up its infrastructure to make it an attractive destination for Bollywood.

“We are setting up infrastructure and working out on incentives that make our country an attractive destination for Bollywood,” he said.

In 2011, total arrivals from India were about 11,500, which Gafoor said is expected to go up to 30,000 by 2013, after all its strategies are put in place

Maldivian not averse to investing in Indian pvt carrier

Maldivian, the national carrier of Maldives that recently announced its expansion plans with flights to Mumbai and Chennai from November, has said it is not averse to investing in some of the Indian private carrier if there is an opportunity.

“If given an opportunity, we will definitely do so (investing in some private carriers),” Maldivian Managing Director Abdul Harris said here.

He said the policy change allowing up to 49 per cent foreign direct investment by the foreign carriers in the domestic airlines is a “great initiative” by the government and will provide a level-playing field.

Nevertheless, Maldivian, the airline division of Island Aviation Services Ltd, already has collaborations with Indian companies in the segment for providing different services to the carrier.

“Our bank is State Bank of India, the catering services are provided by the TajSats, the ground handling job of our airline is taken care by Air India-SATS joint venture and even the insurance services provider is an Indian company,” he said.

Maldivian, which has only been in operation for 12 years, began its international operations in 2007 with a flight to Thiruvananthapuram.

Abdul Harris said that Maldivian is eyeing a 70 per cent seat- factor from its expanded India operations. “We will strive to increase it to 80 per cent on both Chennai and Mumbai sectors as we consolidate over a period of time,” he said.

He added that the airline plans to have a fleet of five Airbus aircraft in as many years and aims to launch flights to some other destinations in Asia over a period of time.

The airline at present has a fleet of five aircraft, comprising 37-seater Dash 8-200 and 50-seater Dash8-300.

It is scheduled to receive its first Airbus 320 plane next month, while the second Airbus is expected to be delivered next year, he said.

Maldivian will operate domestic routes with smaller planes, while our international operations will be serviced by the Airbus fleet, he said, adding, “We are evaluating some routes in Asia and hope to have them operational in the next 2-3 years.”

The airline will be operating three flights a week to Chennai-Dhaka on Tuesday, Thursday and Saturday and to Mumbai on Wednesday, Friday and Sunday.

“We are entering new passenger markets, where we see a need for more air services, particularly where such markets are under served and in need for extra capacity,” he said.

http://www.thehindubusinessline.com/industry-and-economy/logistics/article3951535.ece?homepage=true&ref=wl_home

Airport: samiti contests company claim

The claim of the KGS Aranmula International Airport Limited that the company has completed all formalities for setting up the private airport in Aranmula is suspicious and misleading, Thiruvaranmula Paithruka Grama Karma Samiti (TPGKS) president K. Haridas has said.

In a statement here on Saturday, he alleged that the company official’s announcement on the proposal to set up a special economic zone in Aranmula amounted to challenging the government. The three villages of Aranmula, Mallappuzhassery and Kidangannur were declared industrial areas through the backdoor, keeping people in the dark, he alleged. Mr. Haridas said the government should clarify whether the announcement of the private company was with the knowledge of the State authorities.

He said the vacation court here had issued an injunction order preventing the KGS Group from entering the illegally converted portion of paddy land in Aranmula. The Kerala High Court too had maintained that no construction activity be carried out there without complying with legal formalities. He said the people of Aranmula would never permit construction of the proposed airport by converting paddy lands.

http://www.thehindu.com/todays-paper/tp-national/tp-kerala/airport-samiti-contests-company-claim/article3950860.ece

PAC to meet on CAG report on Delhi airport next week

New Delhi, Sept. 27: 

The Public Accounts Committee of Parliament, headed by BJP leader Murli Manohar Joshi will begin consideration of the Comptroller and Auditor General’s (CAG) report on the implementation of public-private partnership in the Delhi International Airport Ltd (DIAL) next week.

The Civil Aviation Ministry will appear before the panel with its defence next Thursday.

Sources in the panel said the CAG would also make a presentation in the meeting, as the Government and the private developer have questioned the auditor’s findings. The panel is likely to probe the issue in detail, as there are differences between the CAG and the Government. The Congress, it is learnt, is in two minds on the issue.

A section in the party believes that there is “merit” in the CAG report and a CBI probe would clear the apprehensions. Though the party was ready, no Opposition party, except the CPI(M), demanded a probe into the issue.

The Rajya Sabha’s committee on subordinate legislation is already studying the Airports Authority of India (Major Airports) Development Fees Rules, 2011, which empowered DIAL’s operator to levy the development fee from passengers.

The CAG had said in its report that the Civil Aviation Ministry violated the bid conditions for the benefit of GMR-led DIAL of over Rs 3,415 crore. The CAG had recommended fixing responsibility on the matter.

The report said that DIAL could earn Rs 1,63,557 crore over a 60-year period from the land given to it on a lease of Rs 100 annually.

It also criticised the Government’s decision to allow DIAL’s operator to levy a development fee. The CAG said it vitiated the sanctity of the bidding process and led to undue benefit of Rs 3,415.35 crore to the private firm.

“It was noticed that the Ministry of Civil Aviation and Airports Authority of India, on some occasions, violated the provisions of the transaction documents in the interest of the concessionaire,” the report said.

“In fact, only 19 per cent of the project cost came from equity, approximately 42 per cent came from debt. The remaining project costs were met from security deposits and development fees,” the report added.

http://www.thehindubusinessline.com/industry-and-economy/article3942342.ece

Delta Air Lines seeks $1.7 b loan

Delta Air Lines Inc, the worlds second-biggest carrier, is seeking $1.7 billion in loans to refinance debt. The transaction will consist of a $1 billion, six-year term loan B, a $250 million term loan B-2 that matures in three and a half years and a $450 million revolving credit line, Delta said in a regulatory filing.

The Atlanta-based company, which is also seeking $250 million of other debt financing, will hold a bank meeting on October 1 in New York to discuss the loans, according to a person with knowledge of the deal.

Barclays Plc, Bank of America, BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley and UBS AG are arranging the loans, said the person, who asked not to be identified because the transaction is private.

Delta has speculative-grade ratings of B2 at Moody’s Investors Service and B at Standard & Poors.

Under a revolver, money can be borrowed again once its repaid; in a term loan, it cant. A term loan B is sold mainly to non-bank lenders such as collateralised loan obligations, bank loan mutual funds and hedge funds.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3952308.ece

IATA renews Air India’s safety registration for ground operations

IATA has renewed Air India’s registration for safety audit of ground operations at the Mumbai airport, the airline has said. Air India is the first ground service provider in India to have obtained the ISAGO (IATA Safety Audit for Ground Operations) registration in 2010. The ISAGO certification also highlights Air India’s commitment and proactive initiative to progress beyond the minimum safety and quality standards in all spheres of aviation. The ISAGO audit exercise reviews the airline’s headquarters organisation and management systems as well as the station’s management system, passenger and baggage handling, load control, aircraft handling and loading, aircraft ground movement, cargo and mail handling.

http://www.thehindubusinessline.com/todays-paper/tp-economy/article3952261.ece

Kingfisher flights hit as engineers strike work demanding salary

New Delhi, Sept 30:  

Operations of Kingfisher Airlines were affected , including in Delhi, Mumbai and Bangalore, on Sunday as engineers struck work protesting non-payment of salaries.

Sources told Business Line that on Sunday evening, passengers were stuck inside an Airbus A-320 of the airline in Mumbai after engineers refused to open its doors.

The engineers, as also pilots and other employees, have not been paid for the past seven months. Sources claimed that a similar incident also occurred at Delhi airport on Saturday, when passengers were made to wait inside the aircraft for about 20 minutes.

Cancellation

On Sunday, at least five flights from Delhi were delayed by up to 30 minutes because of problems with engineers, sources said.

The airline also cancelled four flights from Delhi on Sunday.

Sources claimed that engineers also roughed up an airline manager in Mumbai

Incidentally, this is not the first time that the airline’s schedule has been disrupted due to sections of employees striking against non-payment of wages.

Earlier this year, the airline’s employees at various airports walked off duty to protest non-payment of salaries.

Similarly, pilots too resorted to strikes several times for the same reason.

When contacted, Kingfisher officials said that they “will have to crosscheck” this latest development.

Declining fleet

The cash-strapped airline, which owes over Rs 7,000 crore to various banks, has seen a huge reduction in the number of daily flights that it operates.

The airline currently has a fleet of under 20 aircraft, down from over 64 in January this year.

http://www.thehindubusinessline.com/todays-paper/article3952273.ece