No transaction fee on air passengers: SC

The Supreme Court on Wednesday said that the airlines operating in the country could not levy transaction fee on air passengers in any form and that the same should not be collected under any other name.

A Bench comprising Justice D K Jain and Justice Madan B Lokur, in the process, directed the Directorate General of Civil Aviation (DGCA) to examine the tariff structure of the airlines in view of their wide range of base prices for air tickets.

“There is lack of transparency as far as passengers are concerned and the poor passengers do not know what is happening,” the Bench remarked, referring to the transaction fee being levied. There are several bands for fixing the base price which in certain cases ranges from Rs1,120 to Rs 36,000...We are of prima facie view that regarding wide range of basic fare it would be necessary for the DGCA to examine the tariff structure of the airlines, the Bench said.

The Bench came down on the DGCA for not enforcing its own directive contained in its circular dated December 17, 2012, wherein it had restrained the airlines from charging transaction fee on the passengers. We regret to note that despite the circular not to charge transaction fee, the DGCA failed to enforce its own directive, the Bench said.Therefore, it needs our immediate intervention in view of the non-compliance of the DGCA directive. We are of the view that the circular of the DGCA dated December 17, 2012 is still in vogue and transaction fee cannot be charged by the airlines, the Bench said.

When senior counsel U U Lalit, appearing for the Federation of Indian Airlines (FIA), urged the apex court not to pass any order as it would challenge the DGCA circular before an appropriate authority, the Bench said: “We cannot shut our eyes that the circular is being violated and that the DGCA is not able to enforce it.”

http://newindianexpress.com/nation/article1433212.ece

Paramount air to take off in April

At a time when the aviation industry is going through turbulent times, grounded Chennai-based carrier Paramount Airways is all set to take to the skies in April, industry sources told Express on Wednesday.

Paramount Airways, promoted by M Thiagarajan, lost its licence in 2010 when the aviation regulator Directorate-General of Civil Aviation (DGCA) grounded it for failing to maintain the mandatory five aircraft in its fleet. Industry sources say that Paramount Airways is first looking to restore its southern network, where it earlier occupied 26% market share. The carrier plans to eventually go national with its services.

Sources add that the company management met the Aviation Minister Ajit Singh and DGCA officials in the capital on Wednesday. The officials are learnt to have discussed the carrier’s plans to restart operations early next fiscal.

Paramount Airways recently won a lawsuit at a British court worth `1,650 crore. The dispute was over a lease agreement payment with GE Capital Aviation Services and Celestial Aviation Trading. In 2010, Paramount was flying only one aircraft, with three planes getting de-registered due to default in payment.

Meanwhile, Paramount was in talks with several foreign carriers for Foreign Direct Investment (FDI). This newspaper has learnt that while Paramount Airways was speaking to Etihad Air ways, Air Asia, Lion Air and Qatar Airways among others, it is unclear whether it would go in for FDI or FIIs ahead of its launch.

“The company is very cash-rich, something that is uncommon nowadays in the aviation industry. While the situation is fluid, it is unlikely that the carrier would go in for FDI ahead of the launch. Any FDI, and the quantum of it, will be looked at post the April-launch,” an official said.

Paramount Airways will start its second stint with six aircraft and hopes to fly at least 60 flights a day. The airlines will initially operate using French small aircraft, ATR turbo-props, and subsequently move to jets. Paramount Airways is expected to stick to providing cost-effective business class travel.

http://newindianexpress.com/business/news/article1433258.ece

Flight tickets to get cheaper, SC stops transaction fee

A bench comprising Justices D K Jain and Madan B Lokur ordered implementation of a circular issued by the Director General of Civil Aviation (DGCA) on December 17, 2012, abolishing collection of transaction fee.

NEW DELHI: Flight tickets booked online or through agents will soon get cheaper as the Supreme Court on Wednesday restrained them from charging transaction fee ranging between Rs 200 and Rs 350 per passengers.

A bench comprising Justices D K Jain and Madan B Lokur ordered implementation of a circular issued by the Director General of Civil Aviation (DGCA) on December 17, 2012, abolishing collection of transaction fee.

The order came on a petition filed by one T G N Kumar who had challenged the levying of user development fee by airlines from passengers. The bench said henceforth, no airline would charge transaction fee in any form.

The bench also found it strange that the base fare for airlines for flights having identical origin and destination points varied considerably and directed the DGCA to examine the issue. It also asked the government to investigate whether the airlines had adopted an unfair practice.

DGCA had informed the Court that under Section 135 of the Aircraft Rules, airlines were allowed to make reasonable profits. This meant that the variation in ticket price could only be with regard to profit component with other components such as base fare, taxes, passenger service fare, airport development fare, and user development fare, etc remaining constant. In case the airlines altered with the above contents, it was open to the DGCA to carry out prosecution under Schedule VI of the Rules.

But the Federation of Indian Airlines (FIA) opposed stoppage of transaction fee claiming that DGCA had no jurisdiction to issue guidelines in this regard. The FIA had challenged the December 17, 2012 circular in the Delhi High Court, which is still seized of the issue.

The bench said the legal challenge to other components of the fare charged by the airlines would be decided by the High Court and Tribunal under the Air Act in appropriate proceedings.

http://www.indiaeveryday.in/finance/fullnews-flight-tickets-to-get-cheaper-sc-stops-transaction-fee-1023-4999543.htm

Boeing to compensate Air India for grounded Dreamliners

Boeing would give compensation to Air India for the period the latter’s Boeing 787 Dreamliners remain grounded.

Yesterday, Air India had grounded all six planes in its Dreamliner fleet after the US Federal Aviation Administration issued a global directive to airlines that used the 50-odd Dreamliner aircraft around the world.

Air India would resume Dreamliner services only when the Directorate General of Civil Aviation ( DGCA) clears this.

Even if the aircraft are grounded for a short time, Air India would seek compensation and the sum would be based on the number of flights operated daily, passenger load factors and average fares in those flights, said a senior aviation ministry official.

In an interview with Business Standard, Civil Aviation Minister Ajit Singh had said, “We expect if an aircraft causes a commercial problem, Boeing would have to compensate. At this point, we are not clear about how serious the problem is, what the commercial implications are and how long it would take. If we say anything now, it would be speculation.”

Air India would start inspecting its six Boeing 787 Dreamliners from Tuesday. “Boeing is expected to send inspection guidelines, also called the service bulletin, to FAA (Federal Aviation Administration). The FAA-approved guidelines are expected by Tuesday,” said an Air India official. Every Boeing 787 has two batteries and inspection would be carried out at Air India hangar in Mumbai to find out whether these have manufacturing defects.

A senior company executive said, “It will take 24 hours to inspect batteries in each plane. The findings would be shared with the DGCA and the FAA. If there is no defect, the planes will be redeployed on receiving a clearance from the regulator. However, if a defect is found, the batteries may need replacement and that would delay the restoration of Boeing 787 operations.”

Air India had used the Boeing 787s on three domestic and three international routes. According to a statement by the airline, it is deploying a Boeing 747-400 plane on the Delhi-Dubai route and clubbing the Paris and Frankfurt routes using a Boeing 777.

About 80 Air India pilots are trained to fly the Boeing 787. With the Boeing 787s grounded, the airline would have to deploy Boeing 777s on the Frankfurt and Paris routes and airbus A320 for its domestic flights. Pilots from the 787 fleet cannot fly other aircraft, unless they attend a refresher course (simulator training and route checks) for a particular plane (for instance, Boeing 777).

FAA’s directives followed two incidents involving lithium ion batteries in Dreamliners. “The battery failures resulted in the release of flammable electrolytes, heat damage and smoke on two Model 787 airplanes. The root cause of these failures is currently under investigation. These conditions, if not corrected, could result in damage to critical systems and structures, and the potential for fire in the electrical compartment,” FAA had said in a release.

http://www.business-standard.com/india/news/boeing-to-compensate-air-india-for-grounded-dreamliners/499325/

Air India not liable for compensation under current insurance policy

The co grounded all 6 planes in its Dreamliner fleet after US Federal Aviation Administration issued a global directive to airlines that used the aircraft

Air India may have to rely solely on Boeing for compensation for the loss caused due to its Boeing 787 Dreamliners being grounded, as the insurance cover it has taken does not cover financial losses due to glitches occurring on account of technical and other factors.

Recently, Air India had grounded all six planes in its Dreamliner fleet after the US Federal Aviation Administration issued a global directive to airlines that used the 50-odd Dreamliner aircraft around the world. Air India would resume Dreamliner services only when the Directorate General of Civil Aviation (DGCA) clears this.

Air India has taken a fleet insurance from public sector general insurer New India Assurance after the latter bagged a contract to insure the entire fleet of the former. However, as per the existing conditions of the policy, only accidents and loss due to other disasters caused to the fleet are covered by the policy. "In this case, Air India will not be awarded any compensation as the planes have been grounded for other reasons and not due to fire, accident or blast. Only such damages are covered by the policy," said a senior official from New India Assurance.

In traditional fleet insurance policies, only damages caused by major accidents and natural catastrophe are covered. Hence, if an airline's fleet if grounded due to regulatory issues, the insurance company is not liable to pay.

But certain policies do offer a discount in premiums, if a flight is grounded for a long period. Private general insurer ICICI Lombard General Insurance for example, under its aviation hull insurance policy has a provision for concession in premium if the aircraft is grounded. The underwriters usually charge 35 per cent of the full flight risk rate for the period the aircraft is grounded.

Brokers also feel that airline companies have felt the need for having some riders in fleet policies for grounding of flights. "In the past few months, it has been noted that some airline companies have had their fleet grounded due to financial and regulatory issues. But, since the present policies do not offer  compensation for these incidents, the genuine airline companies who have not committed any fault are at a loss," said the chief executive of a broking firm specialising in commercial insurance. The executive added that insurers were also not in a position to offer high payouts in these cases, as these conditions were risky and would push their books into the red.

Air India, in the meanwhile, is hoping that the situation gets resolved quickly. A senior Air India official confirmed that that the fleet insurance policy does not cover revenue loss due to grounding. "We hope that it is a temporary issue. The Boeing 787 is fuel efficient and we have 15 per cent saving in fuel cost and our Delhi-Frankfurt route had turned cash positive for us," he added. 

In a recent interview with Business Standard, Civil Aviation Minister Ajit Singh had said, "We expect if an aircraft causes a commercial problem, Boeing would have to compensate. At this point, we are not clear about how serious the problem is, what the commercial implications are and how long it would take. If we say anything now, it would be speculation."

http://www.business-standard.com/india/news/air-india-not-liable-for-compensation-under-current-insurance-policy/203758/on

GMR Aviation Academy to start second term/ for states

Hyderabad, Jan. 23:  

2ND BATCH OF GMR AVIATION ACADEMY

GMR Aviation Academy is all set to begin its second term here at Rajiv Gandhi International Airport. An authorised training centre for International Air Transport Association (IATA) courses, the academy has recently completed its first batch of training. The ongoing training programmes include IATA (three-month part-time) courses in travel and tourism, airport operations and cargo introductory course. Candidates who have completed their 10+2/Intermediate are eligible. Students who are pursuing graduation and working professionals may also apply. Admission is open till February 15 and classes will begin from March. The academy offers two day airport visit for IATA course participants.

http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/gmr-aviation-academy-to-start-second-term-for-states/article4337378.ece