Sunday, 7 October 2012

Straighter Routes


GAGANwill catapult India into an elite league in air navigation: this is only the fourth such system in the world, after that of the US, European Union and Japan (see graphic). "It's an eye in the sky," says Amber Dubey partner, aviation, KPMG. "With ground-based systems (the current system), there's a need to have systems at every few kilometre. Here, one satellite tracks everything, and far more accurately."

GAGAN is a superior version of the current GPS system: it can detect activity at a finer level. So, while aircraft in India currently keep a distance of 80-100 miles, GAGAN will reduce this to 30 miles. This will allow thrice as many planes to fly, and reduce congestion on busy routes, as well as make Indian skies safer. Raman expects a six-fold increase in time. He also estimates airlines to reduce their flying time on the Delhi-Mumbai route by 10 minutes.

A senior SpiceJet technical official, speaking on the condition of anonymity, confirms that airlines don't take a straight line between two destinations. "We take pre-determined routes set by the air traffic control centre. For example, between Delhi and Bangalore, we have to take a detour over Bhopal and do a series of deviations that add up to a much longer route," he says. "After GAGAN, we will have what is called 'freedom flights', leading to reduced fuel burn by 18-20%."

GAGAN will also make Indian skies safer. For example, while landing, the current system gives an aircraft the coordinates of a landing strip in a range of 20 metres. By comparison, GAGAN will give it in a range of 20 feet, thus reducing the possibility of human error. The signals on GAGAN will be beamed by three satellites of the Indian Space Research Organisation (ISRO), located at a height of about 36,000 km. Two of these satellites have been launched. A third one is expected to be launched in 2013.
Fifteen ground stations in India, being set up by US-based defence technology company Raytheon, will back the three satellites. "The certification by the Directorate General of Civil Aviation (DGCA, the aviation regulator) is scheduled soon after completion of the operational testing performed by AAI in 2013," says William L Blair, president, Raytheon India.

The fourth partner in the project is Mitre Corporation, another American engineering and technology company that is doing the certification of the AAI equipment, something it had done for the corresponding American system.

More Air Traffic

Besides boosting the financial numbers of airlines, GAGAN will also help Airports Authority of India (AAI). In 2010-11, the latest period for which its financials are available, AAI earned 65% of its Rs 5,139 crore revenues from air-navigation services.

Basically, AAI charges every plane flying over Indian air space, even those that don't land on it. Raman says AAI expects to treble its revenues from air-navigation services by 2015, riding on GAGAN. "About 8-12% of the operating cost of an airline goes to air-navigation charges," says Dubey of KPMG.

As can be seen by its circle of influence in the world map in the graphic, GAGAN can position itself as an alternative to the Japanese MSAS system for airlines flying between Australia/Asia and Europe. That's the pitch AAI plans to make.

"We would attract foreign airlines flying from the Gulf to Europe to use our more efficient airspace after the GAGAN rollout. This will boost our revenues considerably," says Raman. "We may even plough back the greater revenues and lower charges to draw more aircraft traffic."

According to Raman, AAI has drafted a memorandum of understanding with all Asia-Pacific countries so that their airlines can use Indian air space. Also, in order to provide a continuous corridor on GAGAN, AAI is talking to its counterparts in Pakistan and Afghanistan, through the ministry of external affairs, to install ground stations in those countries.

GAGAN can also be used for wide range of applications in surveying and mapping, disaster management, transport and mining. For example, it can alert a regulator to mining activity outside a lease area. Those other uses will follow in time. First off, it will be Indian airlines who will tap GAGAn --- profitably.


Indian Carriers
When Flights of Fancy Touch Down As GAGAN Takes Off,Fuel Cost Plummets

Two new technologies landing in Indian airspace bring,along with bragging rights,supreme utilitarian value.For Indian carriers,its the promise to slash 20% of their fuel bill,their biggest cost head.For air passengers,its the appeal to surf the Internet even in the skies

ANINDYA UPADHYAY NEW DELHI


There are many reasons for Indian airlines,a perpetually struggling lot,to be hopeful: more foreign funding,more overseas routes and cheaper oil.Yet,more than all this,what could embellish the bottom line of Indian carriers next year is a new navigation system in Indian skies that,its makers say,will knock off 20% of the fuel bill of airlines and increase air traffic.The effect can be potent as fuel costs swallow about 50% of an airlines revenues.At 20% savings,a crude calculation on 2011-12 numbers shows that Jet Airways would have turned a Rs 1,236 crore loss into a Rs 90 crore profit,and SpiceJet would have shaved off Rs 439 crore of its Rs 605 crore loss.And if Kingfisher hadnt since gone into a freefall,even it would have knocked off Rs 589 crore of its Rs 651 crore loss for the year.Heres how.Today,when an aircraft takes off in Indian skies,it doesnt trace a straight vertical line to a cruising height.It,instead,rises in fits and starts,with bursts of acceleration.Likewise,between two destinations,it doesnt trace the straight line -- the shortest distance.It,instead,zigs and zags.Both manoeuvres mean airlines end up burning more fuel than ideal because current Indian air-navigation systems dont allow for the greater accuracy and surety available in some other parts of the world.This is set to change in July,2013,when the Airports Authority of India (AAI) launches GPS-aided GEO augmented navigation system (GAGAN).Airlines can save 20% on their fuel costs, reckons S Sundara Raman,executive director (communication,navigation & surveillance),AAI.

STRAIGHTER ROUTES


GAGAN will catapult India into an elite league in air navigation: this is only the fourth such system in the world,after that of the US,European Union and Japan (see graphic).Its an eye in the sky, says Amber Dubey partner,aviation,KPMG.With ground-based systems (the current system),theres a need to have systems at every few kilometre.Here,one satellite tracks everything,and far more accurately. GAGAN is a superior version of the current GPS system: it can detect activity at a finer level.So,while aircraft in India currently keep a distance of 80-100 miles,GAGAN will reduce this to 30 miles.This will allow thrice as many planes to fly,and reduce congestion on busy routes,as well as make Indian skies safer.Raman expects a six-fold increase in time.He also estimates airlines to reduce their flying time on the Delhi-Mumbai route by 10 minutes.A senior SpiceJet technical official,speaking on the condition of anonymity,confirms that airlines dont take a straight line between two destinations.We take pre-determined routes set by the air traffic control centre.For example,between Delhi and Bangalore,we have to take a detour over Bhopal and do a series of deviations that add up to a much longer route, he says.After GAGAN,we will have what is called freedom flights,leading to reduced fuel burn by 18-20 %. GAGAN will also make Indian skies safer.For example,while landing,the current system gives an aircraft the coordinates of a landing strip in a range of 20 metres.By comparison,GAGAN will give it in a range of 20 feet,thus reducing the possibility of human error.The signals on GAGAN will be beamed by three satellites of the Indian Space Research Organisation (ISRO),located at a height of about 36,000 km.Two of these satellites have been launched.A third one is expected to be launched in 2013.Fifteen ground stations in India,being set up by US-based defence technology company Raytheon,will back the three satellites.The certification by the Directorate General of Civil Aviation (DGCA,the aviation regulator ) is scheduled soon after completion of the operational testing performed by AAI in 2013, says William L Blair,president,Raytheon India.The fourth partner in the project is Mitre Corporation,another American engineering and technology company that is doing the certification of the AAI equipment,something it had done for the corresponding American system.

MORE AIR TRAFFIC


Besides boosting the financial numbers of airlines,GAGAN will also help Airports Authority of India (AAI).In 2010-11,the latest period for which its financials are available,AAI earned 65% of its Rs 5,139 crore revenues from air-navigation services.Basically,AAI charges every plane flying over Indian air space,even those that dont land on it.Raman says AAI expects to treble its revenues from air-navigation services by 2015,riding on GAGAN.About 8-12 % of the operating cost of an airline goes to air-navigation charges, says Dubey of KPMG.As can be seen by its circle of influence in the world map in the graphic,GAGAN can position itself as an alternative to the Japanese MSAS system for airlines flying between Australia/Asia and Europe.Thats the pitch AAI plans to make.We would attract foreign airlines flying from the Gulf to Europe to use our more efficient airspace after the GAGAN rollout.This will boost our revenues considerably, says Raman.We may even plough back the greater revenues and lower charges to draw more aircraft traffic. According to Raman,AAI has drafted a memorandum of understanding with all Asia-Pacific countries so that their airlines can use Indian air space.Also,in order to provide a continuous corridor on GAGAN,AAI is talking to its counterparts in Pakistan and Afghanistan,through the ministry of external affairs,to install ground stations in those countries.GAGAN can also be used for wide range of applications in surveying and mapping,disaster management,transport and mining.For example,it can alert a regulator to mining activity outside a lease area.Those other uses will follow in time.First off,it will be Indian airlines who will tap GAGAn --profitably.

Flight Path to Profits




What is GAGAN


GPS-aided GEO augmented navigation system.Its a new air-navigation system for India,coming in July 2013.It is GPSbased and detects activity at a finer level.It is only the fourth such system in the world after those from the US,EU & Japan

How does it help Indian carriers


They can reduce fuel costs by 20% by attaining cruising height faster and by charting straight routes,instead of zig-zag ones

How does it help AAI


It can make a pitch to foreign airlines flying between Europe/Middle-east and Asia to use Indian air space.if they do,they will boost Airports Authority of Indias revenues

What are its other applications


Surveying and mapping,precision farming,transport,mining

Air Travellers
Now Surf the Net While Airborne

NEENU ABRAHAM BANGALORE

Its one more thing to do on a flight,and it doesnt come too soon in a connected world.Four Lufthansa routes between India and Germany have started providing wi-fi broadband as a paid in-flight service -- one of the first airlines to do so on Indian skies.Passengers in all three classes on these flights can now browse the Internet on their laptops and tablets without interfering with radio signals from the cockpit.Lufthansa plans to extend this to mobile phones also by year end,enabling text messaging and data transfer..More airlines flying to India will join Lufthansa in offering in-flight Internet access once they overcome two hurdles: some of the planes are still fine-tuning their wi-fi-gear (notably,Boeing 787s) and those that are need clearance from Indian regulators (for example,Emirates).We hope to offer this (service) later this year, says Scott Lefeber,the spokesperson for Boeing (787) Communications.

THE TECHNOLOGY


In India,Lufthansa will,to start with,offer this service on four flights: Delhi-Munich,Mumbai-Frankfurt,Mumbai-Munich and Chennai-Frankfurt.Its a paid service : 10.95 euros (about Rs 740) for one hour,or 19.95 euros (Rs 1,350) for 24 hours,which passengers can extend to Lufthansa lounges and Lufthansa long-haul flights.This is how it happens.Any laptop /tablet/smartphone can be connected on to Lufthansas onboard wi-fi broadband network,called FlyNet,which provides a link to Deutsche Telekoms HotSpot.A satellite link connects the aircraft to the HotSpot,enabling Internet connectivity.Officials of OnAir,the company that enables wi-fi connectivity in 16 airlines and one of whose shareholders is Airbus,say in-flight wi-fi tech is almost similar to that provided in an Internet caf.A wi-fi hotspot is provided in the aircraft,which enables passengers to use any wi-fi-enabled device to access the Internet, says Aurelie Branchereau,director (communications ) of OnAir.For an aircraft to be wi-fi-compatible,a small hardware needs to be installed.A wi-fi access point is installed in the aircraft cabin connected to an antenna which communicates to the ground network via satellite.Interference with cockpit communications has been a major reason why wi-fi was not provided in planes earlier,a problem OnAir has been able to overcome.Small cellphone masts are kept sufficiently close to the passengers device so that only lowpower signals that do not travel far are needed, says Aurelie.

THE CHALLENGES


Many aircraft from the latest Airbus fleet are equipped with this facility,but the lack of regulatory clearances from respective countries is preventing them from providing this service in all flights.OnAir wi-fi is available on the entire fleet of A380 aircraft on all Emirates routes,except that to mainland China, Patrick Brannelly,VP (communication),Emirates.However,the service will not operate until regulatory approval is obtained from from countries like India,China and the US. Likewise,for mobile phones.Although this service,provided through OnAir and Aeromobile,is available in around 91 Emirates aircraft,it is unavailable in India.Neither provider now has the authorisation to provide these services over India, says Brannelly.But in the case of the Boeing,wi-fi is not available on any of the latest 787 aircraft because it is still testing out several systems.Boeings 787 has a post-delivery retrofit to provide in-flight use of mobile phones and wi-fi connectivity for passengers,explains Lefeber.Integrating different platforms in the in-flight infotainment gear can be a challenge,with different technologies evolving very fast.When several features like videoon-demand,iPod connectivity or wi-fi need to be integrated,software platforms that facilitate this need to be extremely smart, says Sandeep Kishore,VP and global head (sales),ERS,HCL Technologies.HCL does about 38% of the software integration in the latest Dreamliners.A good part of our task involves testing and validating the equipment provided so that it does not interfere with radar signals, says Kishore.



Air navigation system GAGAN to help Jet Airways, Indian Airlines, others to cut fuel cost by upto 20%

NEW DELHI: There are many reasons for Indian airlines, a perpetually struggling lot, to be hopeful: more foreign funding, more overseas routes and cheaper oil. Yet, more than all this, what could embellish the bottom line of Indian carriers next year is a new navigation system in Indian skies that, its makers say, will knock off 20% of the fuel bill of airlines and increase air traffic.

The effect can be potent as fuel costs swallow about 50% of an airline's revenues. At 20% savings, a crude calculation on 2011-12 numbers shows that Jet AirwaysBSE 0.96 %would have turned a Rs 1,236 crore loss into a Rs 90 crore profit, and SpiceJetBSE 0.81 % would have shaved off Rs 439 crore of its Rs 605 crore loss. And if KingfisherBSE -4.91 %hadn't since gone into a freefall, even it would have knocked off Rs 589 crore of its Rs 651 crore loss for the year.

Here's how. Today, when an aircraft takes off in Indian skies, it doesn't trace a straight vertical line to a cruising height. It, instead, rises in fits and starts, with bursts of acceleration. Likewise, between two destinations, it doesn't trace the straight line -- the shortest distance. It, instead, zigs and zags.

Both manoeuvres mean airlines end up burning more fuel than ideal because current Indian air-navigation systems don't allow for the greater accuracy and surety available in some other parts of the world. This is set to change in July, 2013, when the Airports Authority of India(AAI) launches GPS-aided GEO augmented navigation system (GAGAN). "Airlines can save 20% on their fuel costs," reckons S Sundara Raman, executive director (communication, navigation & surveillance), AAI.

Banks likely to give Kingfisher Airlines two months to salvage itself


NEW DELHI: State-run banks are likely to give grounded Kingfisher AirlinesBSE -4.91 % another two months before liquidating the pledged securities, giving the airline one last chance to come back from the brink, said people familiar with the development.

The move is backed by the finance ministry, which is opposed to the idea of restructuring loans till the airline's promoter Vijay Mallya brings in a new investor or pumps in more money from the group company, United Breweries HoldingsBSE -4.63 %. Last week, country's largest bank State Bank of India's chairman Pratip Chaudhuri had said that if they (banks) pull the plug now, all possible investors will walk away.

"Having waited so long, we might as well wait a little longer," he had said. Chaudhuri had also ruled out any further lending to Kingfisher Airlines as the company does not have any asset to hypothecate and there's no room for fresh debt. "Within two months, they need to bring someone to the table. Even if the money is not infused, decision on the broad contours such as managerial issues need to be taken," said another banker privy to the discussions. Yet another banker, who is part of the lenders' committee, told ET that the airline has assured bankers that with the government allowing 51% foreign direct investment ( FDI) in aviation, there has been a renewed interest from investors.

"We have been told that they are in advanced talks with some Middle-East based airline. And they (Kingfisher) will be able to sign some sort of agreement in the next one month or so," he said, requesting anonymity.

Chairman of a state-run bank even confirmed that Kingfisher had told them that discussions were going on.

"There were issues with valuations but now the urgency is there. We expect them to induct a partner, and come out with broad contours at the earliest," he said. A finance ministry official said that the government is not in favour of banks restructuring the airline's account. "The call to go for enforcement of securities lies with banks. As far as restructuring is concerned, it does not make any economic sense," he added.

Kingfisher Airlines has an outstanding exposure of around Rs 7,000 crore towards 11 state-run banks. SBI, the leader of the consortium, has an exposure of Rs 1,458 crore followed by IDBI BankBSE -0.64 % ( Rs 728 crore), PNB ( Rs 710 crore), Bank of India ( Rs 575 crore) and Bank of BarodaBSE -1.35 % ( Rs 537) towards the airlines.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/banks-likely-to-give-kingfisher-airlines-two-months-to-salvage-itself/articleshow/16717065.cms

Kingfisher needs concrete plan on funds, salaries to satisfy DGCA: Ajit Singh


Civil Aviation Minister Ajit Singh today reiterated that crisis-ridden Kingfisher Airlines would have to satisfy aviation regulator DGCA on all aspects including safety and issue of non-payment of salaries to its employees in its reply to a show cause notice that was issued to them.
“DGCA has served a show-cause notice to Kingfisher to reply within 15-days…They (Kingfisher) have to come out with concrete plans on (how they are) arranging the finance and how it will pay salaries of employees and make other arrangements to run the airline,” Singh told reporters on the sidelines of an event in Hyderabad.
Asked whether his ministry would initiate any action in to the matter or cancel the flying license of the ailing carrier, Singh said, “DGCA has served the notice. It is up to Kingfisher to reply and satisfy DGCA on all issues including operational safety and how it will solve its financial problems and pay the salary dues of employees.”
“It (license cancellation) will depend on what reply Kingfisher gives and DGCA will decide that,” he said.
Referring to the alleged suicide by the wife of a Kingfisher employee apparently over financial stress due to non-payment of salary to her husband, the minister said “it was sad and unfortunate that such a thing happened.”
“…if they (Kingfisher employees) don’t get salaries for seven months it is natural that it will definitely lead to problems. Despite that they were working as they had hope that the airline may get revived and their jobs may be retained…but the developments in the last few days indicate that any such hopes have faded,” Singh said.
Directorate General of Civil Aviation (DGCA) had issued a show-cause notice to Vijay Mallya-owned carrier on 5 October asking why its flying license should not be suspended or cancelled as it had grounded its entire fleet and failed to offer safe, efficient and reliable service.
It has given the airline 15 days to reply.

Frequent flight cancellations leave passengers stranded


INDORE: Pawan Mishra, a software engineer from the city could not appear for an interview in Mumbai and lost a possible job as his flight was cancelled at the last moment. Mishra is not the only one from the city who has faced problem due to frequent cancellation of flights at the last moment. There are many who are facing inconveniences due to it, more so for last two weeks.
The biggest sufferers are international travellers, people who have connecting flights and travellers who had booked ticket months in advance to save few bucks.
I learnt about the cancellation of flight only after arriving at the airport," said Mishra. The intimation came at the eleventh hour and there was no way that I could have made an alternate arrangement, he added.
Prem Singh Chawla, an entrepreneur had to catch an international flight from Mumbai in the evening. For that he had booked a ticket on Indore-Mumbai flight that leaves in the afternoon, but he failed to catch international flight as the afternoon flight from Indore was cancelled at the last moment.
"I had to catch an international flight from Mumbai in the evening so I had booked a ticket in Indore-Mumbai Jet Konnect flight which was scheduled to take off from Indore at 1.40 pm. But when I reached the airport, I was informed that my flight has been cancelled and the next flight from Indore to Mumbai was at 8.40 pm. There was no way to reach Mumbai on time to catch my international flight, which I ultimately missed," said Chawla adding that he was not communicated in advance about the cancellation of flight.
Similarly Jacob Bimla and five of her associates who are working with a missionary organization in the city are facing inconvenience due to last minute cancellation of flight. Bimla told TOI that she had booked tickets for six people for the Cochin-Hyderabad-Indore sector three months back. Her flight was supposed to take off from Cochin at 8.25 am and reach Hyderabad at 10.45 am from where she had a flight for Indore at 12.05 pm.
"Now the airline has discontinued the afternoon flight for Hyderabad-Indore few days ago so I am forced to reschedule my travel and reach Indore via Mumbai. I have to reach Indore on October 8 and it will now cost me heavily to book ticket two days before the scheduled travel," said Bimla adding that now she will not be able to reach Indore in night and will not be able to attend the programme scheduled at 3 pm on Monday.
T K Jose of Jose Travels said that the cancellation of flights has caused great inconvenience to air travellers from Indore for the last fortnight.
"Flights are cancelled at the last moment leaving the passengers who have to take connecting flights stranded," said Jose adding that they also face problem in booking as they don't know whether there will be flights the next day or not.
Afternoon flights for Mumbai, Delhi, Hyderabad are being cancelled regularly. Main problem is with the flights of Jet Airwayswhich has maximum flights from Indore.
Sources in the industry said that flight cancellation in tier-two cities happens mainly because of discontinued operation of Kingfisher Airways. Airlines are shifting their flights from tier-two cities to profitable routes like connecting metro cities.
Tapan Kulkarni, station manager of Jet Airways said on being inquired about the reason for frequent cancellation of flights told TOI, "Flights are being cancelled due to operational reasons." He however refused to elaborate on the operational reasons.

AI flight cancelled after being hit by vehicle


Chennai, Oct 8: 
A Jeddah-bound Air India flight carrying over 400 passengers was cancelled after it suffered damage when a vehicle hit it.
The incident occurred this morning when a tractor carrying passengers’ luggage hit the aeroplane on its side, following which the flight was cancelled, airport sources said.
The passengers, most of them Haj pilgrims, would be flown to their onward destination in a separate flight later in the day, they added

A-I sees burden mount in absence of government cover


New Delhi: The finance ministrys decision to hold back unconditional government guarantee for Air Indias Rs 7,400 crore bond issue may push up the national carriers restructuring plan beyond the Rs 30,000 crore cleared by the Cabinet six months ago.
Sources said that even civil aviation minister Ajit Singhs fervent pitch for a guarantee sans any conditions with finance minister P Chidambaram has failed to move North Block.They said that after the meeting,Singh told his officers that the finance ministry had agreed to his plea but there has been little movement beyond that.
Already,the bond issue,meant to be subscribed by longterm investors such as Life Insurance Corporation and the Employees Provident Fund Organization,has been deferred and with only a conditional cover in hand,the Air India management is yet to fix a fresh date.
On September 24,TOI was the first to report that the conditional guarantee will only be available if the airline meets the specified parameters.Bankers as well as the A-I management have questioned the rationale for a virtually unprecedented move saying that if the parameters are met,the airlines financial health would be sound and in that situation the chances of a default are minimal.
An Air India executive,who did not wish to be identified,said that the national carriers cost of servicing debt remained high as it was unable to complete the plan to replace loans that were taken at a high cost.

Kerala set to fly solo


What does a state with three international airports, another in the offing and seven million passengers passing through it annually do next? Open its own airline, of course. And that's what Kerala is doing. If that sounds audacious and unrealistic at a time when most airlines are in the red, those heading it are unfazed. After all, they ask, didn't Kerala give India its first airport based on the PPP (public-private participation) model in Cochin in 1999? And it's running profitably, garnering Rs 100 crore last year alone.
But what compelled this sliver of a state to think of starting its own airline, says Kerala chief minister Oommen Chandy, was the step-motherly treatment meted out by AI Express. "It cancelled flights recently to the Gulf at the drop of a hat. Despite knowing two weeks beforehand, it didn't inform our passengers. We don't expect this from a national carrier. Also, the fares of other airlines are too exorbitant for workers in the Gulf." (see box) Interestingly, this is probably the first instance globally when a state/provincial government will hold equity stake in an airline , says an aviation adviser at Ernst & Young. "Globally, there haven't been any instances of provincial, regional or municipal governments owning carriers. But in June this year, Lithuania's Vilnius City Municipality announced plans to have an airline, Air Lituanica," he says.
The idea of starting an airline began in 2005 and Air Kerala International Services was registered in 2006. What's given many the confidence that it will take off is that it's based on the same business model as Cochin International Airport Limited (CIAL). Both are funded by the people of Kerala, a capital where there will be no exit pressures. Also, the architect of CIAL's success and its present MD, V J Kurian, will also be heading the proposed Air Kerala. Chandy hopes it will take off by early next year.
However, running an airport and an airline are two different things. But Kurian cites the example of profitable airlines such as Indigo, Air Asia and Air Arabia. "Any company should make its captive audience shareholders in the venture. In CIAL's case, it received investments from some 10,000 NRIs and those whose lands were acquired were given jobs at the airport, making it as much their airport as the state's ," he says. "CIAL also has 10% lesser landing charge than other airports in India and no user development fee, making it attractive for airlines."
Air Kerala will be a low-cost carrier (LCC). It's looking at an initial investment of Rs 200 crore and expects a base of two lakh shareholders, says Kurian. "Shares will be sold at Rs 10,000 each. Discount coupons will be given to the shareholders and is likely to be 10% of the amount invested." Kerala government and CIAL will hold 26% stake, while the rest will come from individuals and NRIs.
Already, M A Yousuf Ali, MD of the LuLu chain of supermarkets in the Gulf and who was part of AI's board before resigning this year, has pledged that 22,000 of his employees will buy shares. NRI industrialist Ravi Pillai too said 35,000 of his employees will buy the shares, says Kurian, bringing in an investment of Rs 57 cr straightaway.
Speaking to Sunday Times from Dubai, Ali says, "We are not looking at Air Kerala as a 100% business model, but we want many to invest in it." Kurian says that out of the 25 lakh Malayalees in the Gulf, he expects 2-3 lakh to invest here.
A state-owned carrier, in fact, has a lot going for it. The E&Y adviser says it serves a larger purpose of bringing in economic benefits to the region. "Air Kerala will have high volume traffic between Kerala and the Gulf, ready availability of airport infrastructure (Kerala will eventually have five international airports) and ready-made routes," he says. In fact, there are many unexplored routes which this airline can service , says Ali. "This includes Fujairah, an emirate of UAE, which has some 50,000 Indians staying there."

DGCA gives KFA 15 days to reply to show cause notice


Cash trapped Kingfisher Airlines will need to have a “concrete” plan for operating the carrier. The civil aviation minister Ajit Singh said that KFA will have to satisfy the Directorate General of Civil Aviation (DGCA) on all aspects, including safety, surety of continuation of hassle-free operations and clearance of dues.
Speaking to the media on the matter, Singh said, “the DGCA has issued a show cause notice to Kingfisher Airlines to let us know what their concrete plans are and not just that they will get investments from here and there. Tell us a concrete plan on how you will pay salaries and how you will make arrangements to run the airlines.”

He further said that the airline would have to satisfactorily ensure the aviation regulator that “there will be no safety issues and there will be no problems due to the financial crisis.”

In the show cause notice issued to Kingfisher Airlines on Friday, DGCA has asked the airlines to explain ‘why its flying licence should not be suspended or cancelled, as it had grounded its entire fleet and failed to offer safe, efficient and reliable service’. The regulator has given KFA 15 days to reply to the notice.

“It (licence cancellation) will depend on what reply Kingfisher gives and DGCA will decide that,” Singh said

Kingfisher gears up to resolve crisis


The management of Kingfisher Airlines has expedited the process of convincing its employees to resume work by considering partial payment of their salaries.
The management is now willing to pay as the unrest is spilling over to the streets and licence cancellation is looming large.
The move by the bankers to release money from an escrow account and the tax authorities’ decision to unfreeze the Kingfisher's accounts have helped the airline mobilise money to clear employees’ dues.
The UB group, which has been infusing money everyday into the airline to keep it flying, has also conserved some cash that could go into clearing large part of the employees’ dues.
“Earlier, the management was adamant. Now they are asking. We demand our seven-month salary, but we can still consider joining work if the minimum four months’ salary gets credited on Monday,” said a striking employee.
The monthly wage bill for 4,000 employees is around Rs.30 crore.
No protests
On Saturday, there was no protest as both parties were inching towards a settlement.
Employees are anxious as the airline’s Chairman Vijay Mallya is expected to arrive in India to take stock of the situation.
http://www.thehindu.com/todays-paper/tp-business/kingfisher-gears-up-to-resolve-crisis/article3973547.ece

Emirates flight makes emergency landing


An Emirates flight on its way to Bangkok from Dubai made an emergency landing in Hyderabad, after one of its passengers developed cardiac complications on Saturday morning.
The passenger identified as Schuch Joni, a Brazilian, and aged 58 years, has been rushed to Apollo Hospital in Jubilee Hills in the city.
His condition is stated to be progressing. Doctors were planning a surgery.
The A-380 aircraft (EK-381) was diverted to Rajiv Gandhi International Airport after a medical emergency was declared aboard the flight.
It landed in Hyderabad at 9 a.m. and left at 10.54 a.m
http://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/emirates-flight-makes-emergency-landing/article3973691.ece

Inaugural Haj flight takes off


This year’s Haj flight services from Kerala under the banner of the State Haj Committee began when a Saudi Airlines plane took off from Calicut International Airport at Karipur at 10.20 a.m. on Saturday, carrying 300 pilgrims.
Union Minister of State for External Affairs and Human Resource Development E. Ahamed flagged off the inaugural flight in the presence of a bevy of dignitaries, including Tourism Minister A.P. Anil Kumar and MPs M.I. Shanavaz and E.T. Mohammed Basheer. Mr. Ahamed said all efforts would be made to avoid congestion in the apron during the Haj flight operations.
The Minister said Saudi Arabian Airlines would provide Zamzam (holy water) to all pilgrims on the same day of their return.
Saudi Airlines operated its second flight to carry 250 pilgrims on Saturday afternoon. The flight left Karipur at 1.20 p.m.
Two flights today
There will be two flights on Sunday. The first flight will leave at 8.10 a.m. and the second at 11.10 a.m.
As many as 8,585 pilgrims from Kerala have so far been chosen for the pilgrimage under the State Haj Committee. Haj panel chairman Kottumala T.M. Bapu Musliar told The Hindu that some more waitlisted applicants might be selected for Haj depending on the cancellations across the country.
Apart from the Kerala pilgrims, 313 Hajis from Lakshadweep and 68 from Mahe are also flying to Makkah from Karipur, the sole embarkation point for them. Saudi Airlines are to operate 32 services from Karipur — 31 for Kerala pilgrims and one for Lakshadweep pilgrims — before October 20. It will fly two services each on October 7, 16, and 19, three services on October 8, 9, 11, 18, and 20, and four services on October 13. The airline will fly one flight on October 10, 12, 14, 15, and 17. The first batch of pilgrims from Lakshadweep reached the State Haj Camp at Karipur on Friday. The second batch will reach Karipur in a couple of days. The Lakshadweep pilgrims will be ferried to Jeddah on October 11, said Mr. Bapu Musliar.
The Haj Committee chairman expressed happiness at the smooth functioning of the Haj operations. Pilgrims reaching the Haj House 14 hours before the departure have enough time to rest in the camp. All travel procedures, including check in and emigration and customs clearance, are done at the camp. The pilgrims are entering Ihram, a sacred state compulsory for Haj and Umra, at the camp. They undergo the final process of security check at the airport.
The pilgrims reaching Jeddah will be led to Makkah, where they will perform Thavaf and Sahee, after which they will be free to come out of Ihram.

Will Kingfisher fly again?


Has the end-game begun for Kingfisher Airlines? After flapping its wings about and trying to stay airborne for the better part of the last two years, Kingfisher has finally run out of fuel and seems headed for a belly landing. The government has sent a notice to the airline asking why its flying licence should not be cancelled on grounds of safety.
The airline needs urgent funds to pay up dues to banks, employees and the government and to cover at least a part of its accumulated losses estimated at Rs.7,200 crore. Yet, with banks refusing to touch the company with a bargepole — rightly so too — and Vijay Mallya unable to find a partner, Kingfisher appears headed for infamy as one more in a long list of badly-run free-market enterprises that bit the dust. Unless, of course, if Mr. Mallya brings in his own money, something that he has not shown any inclination to do until now.
Hubris in the sky
The reasons for Kingfisher’s predicament are all well documented — over-ambition to lord it over Indian skies, bad strategy in acquiring Air Deccan and competing on price in an environment of rising costs, especially of fuel. That the airline has never reported a profit ever in its 7-year life says it all.
Kingfisher is probably paying a just price but what about its stakeholders — employees, shareholders, customers and lenders — who will also now suffer? Employees have been working without a salary for six months now and the human tragedy was highlighted by the suicide of an employee’s spouse last week. What is the answer to these employees and why is the government not leaning on the company to find funds for at least salaries?
Lenders have agreed to release Rs.60 crore from an escrow account to pay salaries but the company needs more than that to pay the six-month dues to its employees. Though there are other airlines where Kingfisher’s employees can possibly find jobs, the fact is that they have to under-sell themselves as they will be bargaining from a position of weakness.
Collateral damage
Customers are the next big losers. Kingfisher, at its peak, had a market share of around 23 per cent but it is down to a little over 3 per cent now. It used to fly to more than 25 destinations in the country with 63 aircraft; that is now down to just 10 planes. When such a significant player goes down, the impact on passenger fares can well be imagined. Indeed, fares have been rising steadily over the last few months as Kingfisher gradually pulled out of some destinations and routes and with holiday season approaching now, they are bound to rise further.
Shareholders may well be holding worthless paper in the context of the ongoing troubles. The Kingfisher share was trading close to Rs.200 in early-2008 but since then it has been on a secular downtrend and is now worth just Rs.13.25, which is an improvement over the single-digit prices that it was trading at in August.
The biggest losers of all though will be the lenders who restructured their loans in early 2011. Out of the then outstanding bank term loans of Rs.4,263 crore, as much as a third or Rs.1,303 crore was converted into shares. A consortium of lenders led by State Bank of India got Rs.750 crore worth of equity shares and Rs.553 crore of preference shares. This granted banks a 23.37 per cent stake in Kingfisher. Notably, the Kingfisher share was valued at Rs.64.48 in March 2011 for the purpose of conversion against the then prevailing market price of Rs.39.90 a share. So, the banks lost straightaway. With the share at Rs.13.25 now, the loss to banks from this conversion of loans to equity is Rs.596 crore. Simply put, the banks will get just Rs.154 crore if they were to offload their entire stake in Kingfisher in the market now. Of course, this is assuming that they will find buyers, which is rather optimistic! Besides, the Rs.553 crore of preference shares were supposed to be converted to equity during a planned GDR issue, which may never happen now. Banks also gave other concessions such as lower interest rates. It is interesting that the airline never really flew out of the turbulent zone despite this bailout.
Too big to fail?
Lobbies have been and still are at work trying to convince the government to push banks for another bailout. The banks are clear that it is not an option sitting as they are on big losses already. But it begs the question: why should the government use taxpayer money to rescue a private commercial enterprise that has been run to the ground by a combination of inept management and circumstances? If at all anybody is to be rescued it is the employees and then the banks. Kingfisher Airlines should be allowed to fail if only for reasons of flight safety. The DGCA has questioned the maintenance of the aircraft and their airworthiness. There can be no compromise on this score.
http://www.thehindu.com/todays-paper/tp-business/will-kingfisher-fly-again/article3976023.ece

Kingfisher Airlines directed to compensate passenger


The State Consumer Disputes Redressal Commission has ordered the Kingfisher Airlines to pay compensation of Rs. 10,000 to a passenger for misrouting a check-in baggage to New Delhi instead of Chennai.
Rama Ananthakrishnan of Madipakkam flew in Kingfisher Airlines to Chennai from Goa on October 18, 2008. At the time of boarding she checked-in the hand baggage which contained cash of Rs. 8,000 and a diamond ring worth Rs. 40,000. Unfortunately, the baggage could not be received at the destination in Chennai but she was informed that the same was misrouted to New Delhi.
Following a complaint from Ms. Rama Ananthakrishnan, a district consumer forum directed the airline to pay compensation to her for the loss of her goods and negligence on the part of airline.
The Commission headed by its president Justice R. Regupathi said it could not endorse view taken by the district forum and also said the Commission was unable to appreciate the allegations that such valuables were kept in the baggage in the absence of any declaration made by the complaint.
Disposing the appeal, the Commission modified the order of district forum reducing the compensation awarded towards deficiency from Rs. 25,000 to Rs. 10,000. The award of compensation towards loss of baggage was set aside.

Plan to start chartered flights for Dasara under study


The possibility of introducing chartered flight services to Mysore during Dasara, to give a boost to tourism during the festival period, is under consideration.
Spate of agitations
This was stated by the Deputy Commissioner P.S. Vastrad in an online chat with presspersons here on Saturday. The attention of Mr. Vastrad was drawn to the spate of agitations, disruption in train services and road blockade that had reduced the flow of tourists to a trickle. It may be recalled that chartered flight services were introduced during Dasara in 2010, and the Tourism Department had tied up with the now beleaguered Kingfisher Airlines.
With the disruption in train and road services, chartered flights could be an option worth exploring, but the moot question will pertain to identifying the flight service provider.
While the drought and the Cauvery agitation may have lent an element of uncertainty to Dasara celebrations, the district administration is going ahead with preparations. Mr. Vastrad said his team was working towards making Dasara a success. The Yuva Sambrahma programme to be held as part of Dasara will kick off from October 17 and conclude on October 22.
http://www.thehindu.com/todays-paper/tp-national/plan-to-start-chartered-flights-for-dasara-under-study/article3976142.ece

Kingfisher crisis to have minimal impact on air fares: Travel portals


Mumbai, Oct. 6:  
Even as the cash-strapped Kingfisher Airlines shut all its operations from October 1 due to the employees’ strike, it has failed to make an impact on air fares.
Aviation industry experts and travel agents told Business Linethat this is because Kingfisher has a market share of just three per cent, and hence, there is unlikely to be any significant movement in air fares in the near future.
“The airline’s load factor had been less than 30 per cent in the past three-four months. In fact, even in the busy sectors of Bangalore-Delhi and Mumbai-Delhi where KFA had some presence, there have been no visible hikes in air fares,” said Sanjay Bhasin, Managing Director, Goibibo, an online travel portal.
Kingfisher’s position amongst top Indian airlines slipped from the second position to the last within less than a year. The airline has been facing a severe financial crisis with banks together having an exposure of nearly Rs 7,000 crore in the airline.
The Directorate General of Civil Aviation on Friday served a show-cause notice to the airlines, which could ultimately lead to Kingfisher losing its licence to fly. The debt-ridden airline has not been able to adhere to its approved schedule for the last 10 months, leading up to a partial lockout this week.
Though several doubts were raised about the airline limping back and flying anew, online travel portals say that there is enough inventory still available.
According to Manmeet Ahluwalia, Head of Marketing, Expedia, “The impact of Kingfisher’s absence has been minimal, as the load factor with other airlines is around 70 per cent.”
Travel industry players expect fares to increase by not more than 10 per cent for immediate travel on high traffic routes such as Mumbai-Delhi and Bangalore-Delhi.
http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3972764.ece

Pending reply to DGCA notice, Kingfisher offers bookings from Oct 13


New Delhi/Mumbai, Oct. 6:  
Kingfisher Airlines has till October 20 to reply to the DGCA’s show-cause notice, but it seems confident of taking to the skies from October 13 (its Web site is accepting bookings from that date). However, at least one travel portal is not so optimistic.
Travel portal Goibibo is selling only the Delhi-Mumbai sector on the airline and that too from October 20.
This is the date on which the 15-day period for the airline to reply to the Directorate-General of Civil Aviation’s show-cause notice expires.
The notice, issued on Friday, seeks to know why Kingfisher’s licence should not be “suspended or cancelled” as it has failed to establish “safe, efficient and reliable service.”
An SMS to the airline seeking clarification on the issue remained unanswered.
Goibibo is also giving a statutory message that the Kingfisher “flights are subject to cancellations, which is likely to cause inconvenience.”
“We expect the partial lock-out to get extended beyond October 12, and hence, we have given a warning on our Web site for all Kingfisher bookings,” said Sanjay Bhasin, Managing Director, Goibibo.
The site also says that the airline is following an erratic schedule and if passengers prefer, the site could guide them to other airlines.
The Yatra Web site is not displaying Kingfisher’s flights due to the uncertainty of operations.
Some travel agents, however, feel there is nothing wrong in taking bookings despite the DGCA notice.
“Issuing a notice does not mean that the airline has to suspend services. It just means the airline has to convince the DGCA that it is adhering to the safety standards.
“If the regulator suspends or cancels the licence then there is no question of flying or taking bookings,” a travel agent said.

Fasten your FDI and take off


In a landmark decision, the Government has permitted foreign airlines to invest up to 49 per cent in Indian carriers. Until now, foreign airlines were not allowed any stake in Indian carriers. Currently, the country’s airline sector is beset by high taxes, rising fuel prices and steep airport charges. All carriers, except IndiGo, declared losses in the year ended March 2012. The sector hopes to infuse financial stability and operational improvements through FDI.
The Government’s decision may result in foreign airlines taking stake in Indian carriers, or setting up new airlines in collaboration with Indian partners. The beneficiary carriers are expected to gain access to capital, global connectivity, technology, and management and operational best practices. Increased competition would also lead to improved offerings, greater efficiency, cheaper airfares, and more power to the passenger.
The long-term outlook for India’s aviation market appears positive. The country’s growing economy, large middle-class, and low air travel penetration indicate high growth potential. FDI for global airlines may lead to significant action over the next 12-18 months. For instance, Lufthansa has inked a strategic alliance with Jet Airways, which allows them to sell seats on each other’s network. Emirates is looking at a 52 per cent increase in weekly seats on the India sector. Qatar Airways, Etihad, Singapore Airlines, and AirAsia have also indicated expansion plans for India.
While low-cost carriers with relatively better balance sheets are likely to attract a lot of attention, airlines with huge losses would also be an attractive target, given their low valuation. Air India’s equity is not up for sale at the moment — the government recently approved a Rs 30,000-crore revival package for Air India, subject to specific improvements in its operational and financial performance.
It is important to note that airline FDI will not happen through the automatic route. Applications from foreign airlines would be scrutinised by security agencies and relevant government ministries. Furthermore, the Chairman and two-thirds of the Board of Directors in the joint venture should be Indian.
Issues of national security and anti-competition behaviour may be used to prevent entry of certain airlines. There are fears that global airlines with strong financial muscle may indulge in predatory undercutting of airfares. These issues are likely to be resolved when the Government lays down detailed rules and procedures for approving FDI applications.
Buying a stake in an airline is a complex decision, and may take several months to fructify. Interested airlines that are currently in talks with prospective Indian partners are closely watching the political developments here. No one would like to commit unless they are sure there would be no rollback on the decision. Those planning new start-ups would need suitable joint venture partners. Airlines can also limit their exposure by taking a non-scheduled operator licence, or explore other strategic options.
Domestic airlines are seeing enquiries from interested parties, and as they have time on their hands, they can drive a good bargain. However, the bold decision on FDI needs to be followed up with reduction in aviation turbine fuel taxes, and abolition of indirect taxes on MRO (maintenance, repair and operations). If that happens, India could aspire to become one of the top aviation markets in the world, alongside the US and China.
Sonal Mishra, Consultant, contributed to the article.

The airline sector hopes to gain financial stability and operational efficiency, while competitive fares and offerings promise more power to the passenger.

http://www.thehindubusinessline.com/todays-paper/tp-others/tp-accountancy/article3975333.ece

Air India Express plans more flights from Kerala, Mangalore


Mangalore, Oct. 7:  
Air India Express (AIE) will operate 27 flights more a week to Gulf destinations from Kerala and Mangalore from October 28.
A press release by AIE said here on Saturday that it has increased its services from Kerala and Mangalore airports to Gulf destinations from 92 services a week to 119 services in its winter schedule — an increase of 27 flights a week.
Under the winter schedule, Mangalore will see AIE flying twice daily to Dubai; three times a week to Muscat and Abu Dhabi; and twice weekly to Doha and Bahrain.
AIE will also operate a daily flight from Tiruchi to Dubai and back. Singapore will also be connected with Tiruchi by a daily flight. Chennai will have a daily flight to Colombo and Singapore.
Kuala Lumpur will be connected four times a week from Chennai, it said.
http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/article3975387.ece

New laws may help avert Kingfisher-like crisis


That suicide by a Kingfisher employee’s wife on Thursday because her husband had not been paid for five months and even though the airline has got a reprieve from the banks to withdraw Rs 60 crore have cut no ice with the striking employees indicate that a viable and long-term solution is needed for the airline.
On Friday, the Government finally woke up to its responsibilities and issued a show-cause notice to the airline seeking replies in 15 days as to why its licence should not be “cancelled or suspended” as it had failed to establish a “safe, efficient and reliable service”.
This time the airline also accepted that it had received the notice, something which it denied when former Directorate General of Civil Aviation (DGCA) E.K. Bharat Bhushan reportedly sent a similar notice in March this year.
Fed up with empty assurances from the management and the dilly-dallying of the authorities, sections of Kingfisher Airlines employees had struck work on October 1 paralysing the airline’s operations Consequently, the management was left with no option but to declare a partial lockout. Though initially the partial lockout was till October 4, it was later extended till October 12.
Little wonder then that experts are suggesting a change in law to have something on the lines of chapter 11 bankruptcy in the US. According to www.uscourts.gov, chapter 11 provides “for reorganisation, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganisation to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11)”.
Long-drawn process
One significant aspect of chapter 11 is that a company can in anticipation of its financial problems opt for this legal course rather than waiting till it is bankrupt. Over the last few months, Kingfisher’s management knew that the situation was going to only get worse. In hushed tones several key people in the airline had told journalists that the situation could not be allowed to continue beyond September. Would a chapter 11 type of recourse have helped matters?
Of course, changing the law is not easy. In India, the closest that we have to the US bankruptcy law is the Sick Industrial Companies (Special Provisions) Act 1985 (SICA). SICA was enacted to take preventive or remedial measures for sick companies. The sickness of a company is linked to default of payment to its creditors or if a demand is made by a secured creditor representing half or more of its debt. A board was set up under SICA to deal with the revival and rehabilitation of sick industrial companies. Experts, however, maintain that SICA lacks teeth and declaring bankruptcy in India is a long-drawn-out process, which many companies are not inclined to follow.
For one and all
Having a chapter 11 kind of law will mean that it will have to be applicable across sectors and industries. Civil Aviation Minister Ajit Singh told Business Line that having such a type of law in India may be a good idea but quickly added that the law would have to be for all, not just civil aviation. Dhiraj Mathur, Executive Director and Head of National Aerospace and Defence Practice, PriceWaterhouseCoopers, concurs with the Minister.
Clearly this can be nothing but a long-term solution. And till that happens or till the Government carries out its threat of cancelling or suspending Kingfisher’s licence, the situation will continue to become messier. For instance, in very many ways stopping its operations is helping Kingfisher curtail its losses pretty much in the manner in which Air India saw its losses drop when the Maharaja curtailed its flights following a 58-day agitation by its pilots.
At a meeting with the DGCA, Kingfisher’s CEO Sanjay Aggarwal is believed to have said that the airline was incurring a daily loss of Rs 8 crore by operating its severely curtailed flight schedule, while shutting the airline had brought down losses by half.
Then comes the employee dues. While many think that the Rs 60 crore that the airline is getting could be used to pay off the backlog of salaries, what options do the employees really have to ensure that they are paid not only the backlog but also future salaries? While sympathising with the plight of the employees, Government officials say that they should look at the various labour laws in the country to get their unpaid wages.
So till such time as a permanent solution is found, there could be many more Kingfishers where the situation will remain going going…

The Sick Industrial Companies (Special Provisions) Act 1985 lacks teeth and the long-drawn-out process of declaring bankruptcy dissuades companies, say experts
http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3975399.ece