Boeing permitted to conduct flight tests of DreamlinerWashington, Feb 8:

The US Federal Aviation Authority (FAA) has allowed Boeing to carry out flight tests of its 787 Dreamliner in order to help it check its troubled electrical system and batteries which is suspected to be the root cause of battery fire in one of its planes last month.
 The entire Dreamliner fleet had been grounded ever since the January 7 incident.
 In a statement late yesterday, the FAA said these flight tests will allow Boeing to gather additional data.
 “These test flights will be an important part of our efforts to ensure the safety of passengers and return these aircraft to service,” Transportation Secretary Ray Lahood and FAA Administrator Michael Huerta said in a joint statement.
 They said the primary purpose of the test flights will be to collect data about the battery and electrical system performance while the plane is air-borne.
 These test flights, however, will be subject to a number of restrictions including extensive pre-flight testing and inspections and in-flight monitoring in order to ensure the highest levels of safety.
 The flights will be conducted in defined airspace over unpopulated areas, they said.
 NTSB zeroed down on root cause
Earlier in the day the National Transportation Safety Board (NTSB), which is carrying out probe into incident, said it has zeroed down on the root cause.
 NTSB Chairman Deborah Hersman said the flight data recorder data showed the battery voltage had unexpectedly dropped from a full charge of approximately 32 volts to approximately 28 volts.
 This drop is consistent with the charge voltage of a single cell, she said. “Based upon findings from the examinations and identifying thermal and mechanical damage, we believe that the evidence points to a single cell as the initiating event,” she said.
 Hersman said short-circuit was caused in cell number six of the battery which was the root cause of the fire.
 “At this time, we’ve been able to rule out two possible causes. We have ruled out the mechanical impact damage to the battery. All mechanical damage to the cells and the battery case occurred after initiating the short-circuiting in cell number six,” she said.
 The board, in its probe, has also ruled out external short-circuiting of the cells or battery, she said, adding several potential causes for the short-circuiting in cell number six are being examined.
 “We are looking for evidence of contamination, electro folds, wrinkles and pinches in the assembly of cells and the battery. And because the 787 battery is really a collection of eight individual cells packaged together in a box, we’re looking at the total design of the battery”, she said.
 NTSB blames FAA’s certification process
The NTSB also blamed the FAA certification process for having given approval for the battery.
“Because the 787 incorporated a number of what the FAA calls ‘novel or unusual design features’, the applicable airworthiness regulations at the time did not address those new features.”
“So as a result, in 2007, the FAA issued nine special conditions for the 787 with regard to the use of lithium ion batteries. These special conditions contained additional safety requirements that the FAA deemed necessary to ensure an equivalent level of safety,” Hersman said.
 “Our investigators found that during the certification process, Boeing studied possible failures that could occur within the battery.
 “They, number one, assessed the likelihood of the failure occurring, and two, they assessed the effects that failure would have on the battery,” she said.
 “To do this, various tests were performed on battery cells. One test was characterised as abusive, and it was intended to short-circuit the induce short-circuiting and cell venting,” she said.
 “Boeing has indicated that these tests that were conducted prior to certification showed no evidence of cell-to-cell propagation or fire in the battery. However, our investigative findings with respect to the event battery show that when a short circuit did occur, it resulted in cell-to-cell propagation in a cascading manner and a fire,” Hersman said.Another condition considered by Boeing during certification was whether a failure that resulted in a single cell venting through its ruptured disk would create smoke emission from the battery, she said.
 Boeing assessed that the likelihood of a smoke emission event from a 787 battery will occur less than once in every 10 million flight hours.
 The 787 fleet has accumulated less than 1,00,000 flight hours, yet there have now been two battery events resulting in smoke less than two weeks apart on two different aircraft, Hersman observed.
 She said the investigation has demonstrated that a short circuit in a single cell can propagate to adjacent cells and result in smoke and fire.
 “The assumptions used to certify the battery must be reconsidered. As we move forward, we will begin testing of some of the batteries that have been removed from the 787 fleet from the field,” she said.
 Meanwhile in a separate joint statement, Lahood and Huerta said the FAA is looking at the certification process and specifically at the required tests and design of the aircraft’s lithium ion battery.
 The FAA invited the NTSB to observe this FAA-led process,” they said.
Welcoming the progress reported by the NTSB, Boeing said the findings will provide the public with a better understanding of the nature of the investigation.
http://www.thehindubusinessline.com/industry-and-economy/logistics/boeing-permitted-to-conduct-flight-tests-of-dreamliner/article4392575.ece

Singapore’s Changi Airport to build fourth terminal

Singapore will build a fourth terminal at the busy Changi International Airport at a cost of $1.05 billion to cope with increasing tourism and air traffic.
T4, with a planned capacity of 16 million passenger movements a year, would raise Changi Airport’s handling capacity to 82 million a year, the Changi Airport Group said.
The Group said total development of the proposed Terminal 4 (T4) costing S$1.3 billion ($1.05 billion), would be completed by 2017.
T4 would be designed with the flexibility to meet the operational needs of both regional full-service and low-cost carriers, said the Group.
It would primarily handle narrow body aircraft and be designed to enable quick turnaround of flights.
It would be a two-storey building with a height of 25 metres and a gross floor area of about 160,000 sq m.Concurrent with the development of T4, major airfield works would also be undertaken to increase the number of aircraft parking stands to support the needs of all airlines at Changi Airport, said the group.
The T4 building would cost S$600 million while additional parking stands, supporting airfield infrastructure, security requirements, specialised airport systems, ancillary buildings and road and drainage works would cost S$680 million.
The T4 is at the site of the former Budget Terminal for budget airlines which was demolished.
 ://www.thehindubusinessline.com/industry-and-economy/logistics/singapores-changi-airport-to-build-fourth-terminal/article4393732.ece

Kingfisher dues: Banks to meet on Feb 12 to initiate recovery proceedings

A consortium meeting of 17 lenders led by State Bank of India is likely to take a call on February 12 on initiating recovery proceedings, including change of management, against the beleaguered Kingfisher Airlines, said a senior banker clued in to the development.
 With no sign of either capital infusion or a strategic partner being roped in to revive the grounded KFA, banks are facing a tough call on how to recover the Rs 7,000 crore they lent to the airline.
The KFA loan account has become a non-performing asset for almost all the banks concerned. If banks press for recovery, then they may be able to recover just about 20 per cent of their loans.
 The airline’s management has held several parleys with banks in the last one year or so to get banks to loosen their purse strings. However, banks first want the promoters to pump in fundsinto the airline as it will serve as an assurance that they are serious about its revival, said a banker.
 Power supply cut
Meanwhile, spelling fresh trouble for KFA, the power supply to the airline’s Mumbai office, The Qube, was snapped last week for non-payments, according to sources.
While the amount of unpaid electricity bills could not be ascertained, the airline employees’ were reportedly asked not to attend office till further orders. The once second-biggest airline of the country has been grounded since October 1 last year and lost its flying licence on December 31.
 KFA promoter Vijay Mallya on Thursday met Law Minister Ashwani Kumar in Delhi to reportedly discuss ways/alternate solutions to deal with the situation.
 The grounded Kingfisher Airlines reported a loss of Rs 755 crore in October-December 2012.
Apart from salaries to employees, the airline has outstanding service tax dues and payments to oil companies . Besides, the airline has huge debts to the lessors of its aircraft and to Airports Authority of India (AAI). The airline owes Rs 290 crore to AAI towards landing and parking fees.
 AAI has insisted on dues being cleared before the airline is allowed to fly again by aviation regulator DGCA.

Kingfisher dues: Banks to meet on Feb 12 to initiate recovery proceedings

A consortium meeting of 17 lenders led by State Bank of India is likely to take a call on February 12 on initiating recovery proceedings, including change of management, against the beleaguered Kingfisher Airlines, said a senior banker clued in to the development.
 With no sign of either capital infusion or a strategic partner being roped in to revive the grounded KFA, banks are facing a tough call on how to recover the Rs 7,000 crore they lent to the airline.
The KFA loan account has become a non-performing asset for almost all the banks concerned. If banks press for recovery, then they may be able to recover just about 20 per cent of their loans.
 The airline’s management has held several parleys with banks in the last one year or so to get banks to loosen their purse strings. However, banks first want the promoters to pump in fundsinto the airline as it will serve as an assurance that they are serious about its revival, said a banker.
 Power supply cut
Meanwhile, spelling fresh trouble for KFA, the power supply to the airline’s Mumbai office, The Qube, was snapped last week for non-payments, according to sources.
While the amount of unpaid electricity bills could not be ascertained, the airline employees’ were reportedly asked not to attend office till further orders. The once second-biggest airline of the country has been grounded since October 1 last year and lost its flying licence on December 31.
 KFA promoter Vijay Mallya on Thursday met Law Minister Ashwani Kumar in Delhi to reportedly discuss ways/alternate solutions to deal with the situation.
 The grounded Kingfisher Airlines reported a loss of Rs 755 crore in October-December 2012.
Apart from salaries to employees, the airline has outstanding service tax dues and payments to oil companies . Besides, the airline has huge debts to the lessors of its aircraft and to Airports Authority of India (AAI). The airline owes Rs 290 crore to AAI towards landing and parking fees.
 AAI has insisted on dues being cleared before the airline is allowed to fly again by aviation regulator DGCA.

Boeing permitted to conduct flight tests of Dreamliner

The US Federal Aviation Authority (FAA) has allowed Boeing to carry out flight tests of its 787 Dreamliner in order to help it check its troubled electrical system and batteries which is suspected to be the root cause of battery fire in one of its planes last month.The entire Dreamliner fleet had been grounded ever since the January 7 incident.
In a statement late yesterday, the FAA said these flight tests will allow Boeing to gather additional data.
 “These test flights will be an important part of our efforts to ensure the safety of passengers and return these aircraft to service,” Transportation Secretary Ray Lahood and FAA Administrator Michael Huerta said in a joint statement.
 They said the primary purpose of the test flights will be to collect data about the battery and electrical system performance while the plane is air-borne.
 These test flights, however, will be subject to a number of restrictions including extensive pre-flight testing and inspections and in-flight monitoring in order to ensure the highest levels of safety.
 The flights will be conducted in defined airspace over unpopulated areas, they said.
 NTSB zeroed down on root cause
Earlier in the day the National Transportation Safety Board (NTSB), which is carrying out probe into incident, said it has zeroed down on the root cause.
 NTSB Chairman Deborah Hersman said the flight data recorder data showed the battery voltage had unexpectedly dropped from a full charge of approximately 32 volts to approximately 28 volts.
 This drop is consistent with the charge voltage of a single cell, she said. “Based upon findings from the examinations and identifying thermal and mechanical damage, we believe that the evidence points to a single cell as the initiating event,” she said.
 Hersman said short-circuit was caused in cell number six of the battery which was the root cause of the fire.
 “At this time, we’ve been able to rule out two possible causes. We have ruled out the mechanical impact damage to the battery. All mechanical damage to the cells and the battery case occurred after initiating the short-circuiting in cell number six,” she said.
 The board, in its probe, has also ruled out external short-circuiting of the cells or battery, she said, adding several potential causes for the short-circuiting in cell number six are being examined.
 “We are looking for evidence of contamination, electro folds, wrinkles and pinches in the assembly of cells and the battery. And because the 787 battery is really a collection of eight individual cells packaged together in a box, we’re looking at the total design of the battery”, she said.
 NTSB blames FAA’s certification process
The NTSB also blamed the FAA certification process for having given approval for the battery.
“Because the 787 incorporated a number of what the FAA calls ‘novel or unusual design features’, the applicable airworthiness regulations at the time did not address those new features.”
“So as a result, in 2007, the FAA issued nine special conditions for the 787 with regard to the use of lithium ion batteries. These special conditions contained additional safety requirements that the FAA deemed necessary to ensure an equivalent level of safety,” Hersman said.
 “Our investigators found that during the certification process, Boeing studied possible failures that could occur within the battery.
 “They, number one, assessed the likelihood of the failure occurring, and two, they assessed the effects that failure would have on the battery,” she said.
 “To do this, various tests were performed on battery cells. One test was characterised as abusive, and it was intended to short-circuit the induce short-circuiting and cell venting,” she said.
 “Boeing has indicated that these tests that were conducted prior to certification showed no evidence of cell-to-cell propagation or fire in the battery. However, our investigative findings with respect to the event battery show that when a short circuit did occur, it resulted in cell-to-cell propagation in a cascading manner and a fire,” Hersman said.
Another condition considered by Boeing during certification was whether a failure that resulted in a single cell venting through its ruptured disk would create smoke emission from the battery, she said.
 Boeing assessed that the likelihood of a smoke emission event from a 787 battery will occur less than once in every 10 million flight hours.
 The 787 fleet has accumulated less than 1,00,000 flight hours, yet there have now been two battery events resulting in smoke less than two weeks apart on two different aircraft, Hersman observed.
 She said the investigation has demonstrated that a short circuit in a single cell can propagate to adjacent cells and result in smoke and fire.
 “The assumptions used to certify the battery must be reconsidered. As we move forward, we will begin testing of some of the batteries that have been removed from the 787 fleet from the field,” she said.
 Meanwhile in a separate joint statement, Lahood and Huerta said the FAA is looking at the certification process and specifically at the required tests and design of the aircraft’s lithium ion battery.
 The FAA invited the NTSB to observe this FAA-led process,” they said.
Welcoming the progress reported by the NTSB, Boeing said the findings will provide the public with a better understanding of the nature of the investigation. http://www.thehindubusinessline.com/industry-and-economy/logistics/boeing-permitted-to-conduct-flight-tests-of-dreamliner/article4392575.ece

Dogfights over cheap fares

Globally, it’s been a simple model. Price your fares at least 30 per cent below full service carriers and draw in the price-conscious customer. To do so, you have to pare costs by operating from smaller airports, using aircraft for longer hours and saving on meals and other peripheral services.
This was the typical low-cost carrier (LCC) model that G R Gopinath, promoter of Air Deccan, replicated in India. By offering fares at half the cost of Jet Airways or Air India, he made it possible for millions of Indians to fly for the first time.
At that time, it certainly shook up the market, forcing all the full service carriers to launch low-fare offerings and attracting a host of low-cost competitors such as IndiGo and SpiceJet. (Click here for chart)
Now, as the chart shows, that LCC model is dead in India. Air India is hawking seats on most of its bread-and- butter routes at fares that are virtually on a par with those of IndiGo or SpiceJet. And Jet Airways, which revamped its business model last year, is now offering over 60 per cent of its flights as Jet Konnect, its low-fare brand.
Not surprisingly, this “convergence" is worrying LCCs who accuse the full service carriers of predatory pricing to gain market share since their operating costs are much higher. Such practices, they aver, are not sustainable and could cause the industry another phase of instability.
Equally unsurprisingly, full service carriers don’t see it that way. They have been steadily losing share to LCCs, which now enjoy 65 per cent of the market and, given that service standards are equally good on both varieties of airlines, the sole differentiator is cost. At their peak, the cost differential between full service and LCCs is over 50 per cent.
A dwindling market share, in turn, is impacting the economics of their operations. Passenger load factor (PLF) for LCCs is 80 per cent compared to full service airlines’ 70 per cent. So, it makes sense for the latter to focus on filling unsold seats with low-cost fare-paying passengers and increasing revenue per flight rather than worrying about increasing revenue yield per passenger.
But that changes the game for LCCs. Since they will have to push PLFs beyond their current rates, the focus will, willy-nilly, shift to increasing yield per passenger — that is, cut costs. They have reasons to worry because they already operate on a bare-bones costing and lack the flexibility to lower them any further. And the space to increase yields is being crimped as well by copycat full service airlines.
Despite the significant operational efficiencies – especially in turnaround times and maximising employee productivity – LCCs have to contend with fuel and airport charges that constitute fully 60 per cent of their costs, the same as their full service competitors. They can do nothing about this either since, unlike the US, the United Kingdom or Malaysia, Indian LCCs do not enjoy cheaper airport charges in specially-designated LCC terminals.
Those differential charges determine the existence of two models elsewhere in the world — and, importantly, there is space for both. So, Jet Blue’s fares between, say, London and Glasgow, are over 30 per cent lower than British Airways’. Spirit Airlines in the US offers fares 40 per cent cheaper than Delta Airlines on the New York to Chicago route. In Malaysia, Air Asia sells tickets as much as 80 per cent below Malaysian Airlines on the Kuala Lumpur-Johor Bahru route.
But the Indian story is different. Five out of six passengers in India buy a ticket based on price rather than the brand or the service it provides, and there is no longer a difference.
So, that leaves the question of operating costs where differences range from over 16 to 35 per cent. For instance, LCCs have a cost per available seat kilometre (CASK) of around Rs 3.52. For India, it is Rs 6 (estimated by analysts, the state-owned airline does not reveal this figure). For Jet Airways, the CASK is Rs 4.96 to Jet Konnect’s Rs 4.11.
So, are full service airlines headed for suicide by lowering their fares so sharply? Well, they too are focusing on costs. Air India is reducing its large surplus workforce, shifting 19,000 of its 31,000 employees to the two new subsidiaries in maintenance and engineering, which will be converted into joint ventures. This will give the company a cost saving of over Rs 1,500 crore annually in the wage bill. But opposition from unions is already creating problems in the grand plan. Full service carriers are also expanding their international operations where costs are much lower (owing to lower fuel costs at international airports), which offers scope to reduce the overall CASK, though there is a limit beyond which they can expand abroad.
But for the over 53 million passengers who travel by air in India every year, one thing can be guaranteed. A new kind of competition will emerge and it will not be fought on differential pricing.
http://smartinvestor.business-standard.com/market/Features-156079-Featuresdet-IRB_amp_ITNL_Strong_execution_drives_third_quarter_performance.htm

Andal airport project: 'Satisfactory progress', despite a year's delay

It is rare for the Trinamool Congress government in West Bengal to boast of an industrial project in public. With most major projects such as JSW Steel’s steel and power project at Salboni and NTPC’s power project at Katwa hitting roadblocks under the current regime, government officials steer clear of listing these projects at public meetings.

Perhaps, the only exception is the Bengal Aerotropolis Projects Limited (BAPL)’s airport city project at Andal in Bardhaman district, in which Singapore’s Changi Airport holds 26 per cent stake. In recent times, Chief Minister Mamata Banerjee, state finance minister Amit Mitra and industries minister Partha Chatterjee have cited the example of the greenfield airport project at Andal to counter what the government terms a “media-created anti-industry image”.

Not that the Aerotropolis project hasn’t had its run-ins with the government. After coming to power, the Trinamool Congress government had unexpectedly announced another airport at Asansol (in the same district), questioning the viability and technical feasibility of the Aerotropolis project. Fortunately for BAPL, as with many other plans, the government didn’t take this forward. (NEW AIRPORTS THAT FAILED TO TAKE OFF)

“Changi officials have closely worked with us. Promoters should show adequate interest for the project, as it has been in this case,” state minister for commerce and industries Partha Chatterjee said, adding the project had seen “satisfactory progress”.

As the project is running almost a year behind schedule, “satisfactory progress” perhaps refers to the fact that work at the project site hasn’t seen any major interruption. Earlier, the first phase of the project, which includes setting up the airport and related infrastructure with an investment of Rs 600 crore, was expected to be completed by the second half of 2012.

Now, work related to key aspects such as the runway, passenger buildings and the air traffic control building is on the verge of completion. The company expects to complete the physical work by mid-February. To track the project’s progress, Changi representatives are flying in every fortnight. The government says Changi is keen to increase its stake in the project.

BAPL officials don’t seem very confident about the April deadline announced by the government. “The date when operations are started depends on the time it would take DGCA (Directorate General of Civil Aviation) to complete its inspection and the final approval process. This period may vary from project to project. Usually, it takes two to six months. All clearances required at this juncture have been obtained,” said a BAPL spokesperson.

Now, the company has to rope in airlines. After discussions with domestic airlines, Changi Airport Planners and Engineers, a subsidiary of Changi Airport International (which has been at the forefront of route planning), has zeroed in on the Delhi-Durgapur-Delhi and the Kolkata-Durgapur-Kolkata routes.

“This will be followed by route development for destinations like Mumbai, Bengaluru and Chennai. We are in talks with all major domestic airline operators, including Air India, Jet Airways, Indigo and GoAir. By convention, airline contracts are finalised around three months before the scheduled start of airport operations,” said a company official.

To attract airlines, BAPL chief executive Subrata Paul has pitched for tax incentives on aviation turbine fuel (ATF) from the state government. The company has formally sought concessionary sales tax of four per cent for ATF, akin to the policy followed by the Maharashtra government for non-metro airports. Officials from BAPL and the state government indicated discussions in this regard were underway.

Convincing the government of the need for additional land for the second phase of the project, however, may be more difficult. This phase would involve an information technology park, hospitals and a residential complex. It is expected this stage would require investment of Rs 10,000 crore.

BAPL has 1,818 acres for the entire project. According to the original plan, it needs another 338 acres.

Since the Trinamool government took charge, Paul has maintained the additional land was “under the process of acquisition”.

Only 30 acres have been assigned for industrial use. Companies that have been assigned land are Joy Global (mining equipment manufacturing), Ardex Endura (specialised construction material), Shri Shyam Agro Foods & Confectioners (food processing). For institutional use, two acres have been assigned to The Mission Hospital.

Partha Chatterjee said, “We have asked them (BAPL) to concentrate on the airport part first. For that, they have enough land. Let them instill some confidence in making the airport operational. The rest can be addressed later.”

BAPL seems to be obliging. “For the time being, we are developing the project on the land we have in our possession, even as we’re engaged with the state government on the land earmarked under the original plan,” said the company spokesperson. http://www.business-standard.com/article/economy-policy/andal-airport-project-satisfactory-progress-despite-a-year-s-delay-113020700277_1.html

Customs Dept notifies Mangalore air cargo complexMangalore, Feb. 7:

Steps to establish an air cargo complex at Mangalore airport is gathering momentum with a Government notification in this regard.
In a notification dated January 31, the Department of Customs has notified the air cargo complex at Mangalore airport.
Mohammed Ameen, President of the Kanara Chamber of Commerce and Industry, said KCCI has been demanding this facility at Mangalore airport for a long time.
With this notification, flow of air cargo despatches from Mangalore airport to various overseas destinations will begin. This will encourage exporters and manufacturers of consumable items. The notification will help export agricultural, horticultural and fisheries products from Mangalore and strengthen the economy, he said.
M. R. Vasudeva, co-ordinator of Karnataka NRI Forum in Mangalore, said this notification will permit the import and export from Mangalore airport. Till now, it was not allowed at the airport.
Now, the Customs Department has to bestow custodianship of cargo on some agency, he said.

J. T. Radhakrishna, Airport Director, Airports Authority of India (AAI), Mangalore, told Business Line that infrastructure is ready at the airport for the establishment of an air cargo complex.
Stating that a month’s time has been given to apply for the custodianship of cargo, he said AAI will apply for the same in a day or two.
It may be mentioned here that in an exporters’ convention of Federation of Indian Export Organisations in Mangalore last year, exporters had stressed the need for an air cargo complex at Mangalore airport with cold storage facilities for agro products.
Mangalore airport was given the status of Customs Aerodrome to handle passengers on May 3, 2006. After getting Customs Aerodrome status, the airport began international operations in October 2006.
Now after six years, the airport has been allowed to handle cargo by the Customs Departmenthttp://www.thehindubusinessline.com/industry-and-economy/logistics/customs-dept-notifies-mangalore-air-cargo-complex/article4390045.ece

India could rank among top 3 aviation markets by 2020Mumbai, Feb. 7:

A strong market growth rate, coupled with infrastructure expansion, will help the Indian civil aviation sector get back on its wings as the economy recovers, according to a FICCI-PwC report.

Indian civil aviation sector has continued to experience high passenger growth (domestic traffic CAGR is 17 per cent from 2009 to 2011), and if the trend continues, it could rank among the top three aviation markets in the world by 2020, the report added.
Foreign Investment
However, volatility in fuel prices, combined with high tax on aviation turbine fuel and other national policy-related issues, continue to challenge the sector’s growth, the report said. The recent increase of FDI up to 49 per cent in civil aviation might also not result in substantial increase in investment, since it has been imposed on the aggregate of FDI and FII.
The report also recommends a hike to the 26 per cent cap on FDI in defence, as it has failed to attract foreign investment. India has received only $ 4 million in the past 10 years since FDI was allowed in the defence sector, while the entire economy has received over $180 billion.

According to the FICCI-PwC report, India’s military aviation sector needs better access to technology, funding, and the Government needs to rationalise the tax and regulatory framework to keep pace with their global counterparts. The report stated that the medium and long-term perspective plans should be shared with industry in a transparent manner, without compromising on national security. This will provide the industry information and confidence to invest in a production process that is measured in decades than years.

Dhiraj Mathur, Leader, Aerospace and Defence, PwC India, said, “In the last five years, there have been significant investments by large and small domestic companies that has entered the aerospace and defence industry. However, the FDI inflow has been very low. India’s acquisition programme and its offset policy can potentially generate investments in excess of $20 billion along with creating massive employment for skilled and professional manpower. The Government should strive to make the Indian industry an integral part of the global aerospace and defence supply chain.” http://www.thehindubusinessline.com/industry-and-economy/logistics/india-could-rank-among-top-3-aviation-markets-by-2020/article4390044.ece

India needs 1,450 new aircraft worth $175 b in 20 years: BoeingBangalore, Feb. 7:

Boeing sees signs of an improving commercial aviation market place in India. Over the next 20 years, the Boeing Current Market Outlook projects that the airlines in India will need 1,450 new airplanes worth $175 billion.

Addressing reporters at Aero India 2013, Dinesh Keskar, Senior VicePresident of Asia-Pacific and India Sales for Boeing Commercial Airplanes, said, “In India while traffic is dropping due to reduced capacity, yields are improving and fuel prices are stabilising in the market.”

“These are all positive signs for the airlines in India,” he added. “There is now a balance between supply and demand helping airlines get reasonable yields to make a profit.”
Boeing continues to be the choice supplier of long-haul, twin-aisle airplanes, with the 777 and 787 Dreamliner playing key roles in the fleets of major airlines in India.
Keskar, giving the 20-year forecast of airplane deliveries by the airplane type, said for India, new airplane deliveries (2012-2031) will be as follows: Single-aisle airline - 1,201 valued at $114 billion; Twin-aisle – 234 worth $61 billion; regional jets – 15 worth $0.5 billion.
Single-aisle airplanes such as 737 and new 737 MAX continue to be in high demand with airlines in India, making up the bulk of new deliveries in the next 20 year period.
“Because fuel prices are higher in India, our newest products such as the 737 MAX will help airlines in India save fuel and lower their costs,” Keskar explained.

“In addition, the capabilities of the 737 MAX will allow airlines to fly passengers farther and in more comfort with the Boeing Sky Interior,” he added.
 http://www.thehindubusinessline.com/industry-and-economy/logistics/india-needs-1450-new-aircraft-worth-175-b-in-20-years-boeing/article4390154.ece?homepage=true&ref=wl_home

The new aircraft acquisition licence raj

Recent reports that the Ministry of Civil Aviation is going slow in allowing private airlines to import more aircraft have raised questions about the role of the Government in the investment and financial decisions of companies not owned by it in the first place.
Take the Delhi-based low-cost private airline, IndiGo, which had sought permission from the Aircraft Acquisition Committee in the Civil Aviation Ministry for import of 16 aircraft during this current calendar to add to its fleet.
According to reports, the airline has instead been permitted to import only five aircraft.
The Aircraft Acquisition Committee is the nodal agency, which clears all requests by airlines or even private individuals wanting to import aircraft. Earlier, this panel was headed by a Joint Secretary-level official, but recently it got ‘upgraded’ and is now headed by none other than the Minister for Civil Aviation.
And this, at a time when private players, in keeping with the spirit of liberalisation, are supposed to not be told by the Government how to run their business. And that should presumably apply to airlines as well.
Acquisition Committee for what?
An Aircraft Acquisition Committee may well have been needed in the days when there were only two airlines in the country —Indian Airlines and Air India — both of which were state-owned and are still so even after their merger into a single entity.
If these two airlines wanted to import aircraft, one could understand why they had to approach the Government for permission. After all, it is the Government that had invested in the equity of these airlines. Therefore, all their investment decisions had to be cleared by a Public Investment Board, which included representatives from the Ministries of Finance, Environment and Civil Aviation.
Even after 1994, when the winds of liberalisation swept the country, the Committee may still have had a role to play. One reason for that was there was not enough infrastructure at airports to accommodate the fast-expanding fleet of the private airlines. It was then, perhaps rightly, felt that the limited infrastructure should be evenly distributed among all the airlines so as to create an orderly environment for the industry to grow.
But much has changed since then. To start with, the private sector has entered the airport space as well. Today, the busiest airports, including those in Delhi, Mumbai, Hyderabad and Bangalore, are managed by private operators, who have actually created infrastructure in excess of demand. Probably, the only exception is Mumbai, which is still constrained due to lack of physical space.
Private airlines, on their part, have vastly expanded their operations. Apart from adding to their routes within India, they are also now flying to destinations abroad. That obviously means they need more aircraft. In these circumstances, if the Government decides to go slow in giving them permission to import more aircraft – for what reason nobody knows – it would simply affect both their business and expansion plans. And in this case, it is the Minister upon whom the responsibility has been thrust for deciding which airline can import how many aircraft and when!
An airline like IndiGo uses every aircraft for running 6 or more flights a day. For each of these, it starts making bookings well in advance. Not having the requisite aircraft even for increasing the frequency of flights on existing routes ultimately means the entire growth plans going haywire. If could even translate into cancelling flights — and thus inconveniencing passengers who have already booked with the airline — that were based on deployment of additional aircraft.
Controlling capacity
It goes without saying that in today’s business environment, the Government’s business in the civil aviation sector, other than owning Air India, should be confined largely to safety issues. Why should it at all be concerned with controlling the number of aircraft that an airline wants to import? Every Airbus-320 or Boeing-737 has a list price of $ 65-80 million, which can go as high as $ 150-200 million for the larger aircraft. If the private airlines have the money to pay for expanding their fleets, shouldn’t it be at their risk? Why should the Government be so concerned?
In any case, there is still logic for having a Committee for Acquiring Aircraft for a country, where there is just one commercial aircraft for every 3.2 million Indians. The corresponding figure is one for every 900,000 in The Philippines, one for every 1.14 million in China and one for every 600,000 in Brazil.
The other consequence of trying to control capacity — which the Government used to do for steel or polyester filament yarn in the days of the Licence Raj — is, of course, fares going up. The Government putting a break on airlines’ importing aircraft means is nothing but controlling capacity. Surely, this will not help passengers, while opening up avenues for favouring one airline over the other.
So what is the way out? Well, the Government has to clearly rethink the role that it ought to and needs to play in a purely market-driven industry. When it does not interfere in the automobile, steel or cement businesses, why should it play a role in the way in which private companies run their airlines? Let them spread their wings as they see it.
 http://www.thehindubusinessline.com/opinion/the-new-aircraft-acquisition-licence-raj/article4389908.ece

Airport plan threatens paddy cluster

Kozhikode: With the Airport Authority of India zeroing in on around 300 acres of paddy fields and wetlands around Panamaram and Kaniampatta villages in Wayanad for the proposed feeder airport,the largest remaining paddy cluster in Wayanad is under threat of getting devoured by the project.
The move has drawn the ire of farmers and environmentalists alike,who warn that filling up the paddy fields,would worsen the already grave agrarian crisis in the district and would wreak havoc on the biodiversity-rich spot.
KSIDC has recently invited expression of interest for techno economic feasibility study and environmental impact assessment for the airport.The tender document states that as per preliminary feasibility study by Airports Authority of India the site identified at Panamaram was found suitable for the project.
Apart from being the rice granary of the agrarian district,the area also houses the largest heronry in the district and is a breeding ground of migratory birds.
The adjoining panchayats of Panamaram and Kaniyambatta on the banks of Cherupuzha river have been the rice bowl areas of the district,accounting for the major share of the paddy cultivation.In 2012,the area had contributed 526 tonnes of a total of 2,000 tonnes paddy procured by the government from the district.
The farmers in the region are planning to launch an agitation against setting up the airport on prime agriculture land.The area is home to the largest paddy cluster in Wayanad and plays a crucial role in the water security of Wayanad.Even as farmers across the state and elsewhere in the district migrated to cash crops,we kept the fields intact.Not even a single cent of land is left fallow in the area, said E N Gopalakrishnan,president of the forum forum formed to protect agricultural land at Cheekkalloor.
Meanwhile,district collector K Gopalakrishna Bhat said that it was impossible to get non- agricultural land in Wayanad for such a project.We had suggested three locations to AAI for setting up the project and they have identified the site at Panamaram as the appropriate one after a pre-feasibility study, he said. http://mobiletoi.timesofindia.com/mobile.aspx?article=yes&pageid=6&sectid=edid=&edlabel=TOIKRKO&mydateHid=08-02-2013&pubname=Times+of+India+-+Kochi&edname=&articleid=Ar00602&publabel=TOI

UBHL auditors raise concern over exposure to ailing Kingfisher

MUMBAI: Auditors of UBHL, the holding company of Vijay Mallya-led UB Group, have raised concerns over its significant financial exposure of Rs 13,500 crore to the grounded carrier Kingfisher Airlines In their 'limited review report' for the October-December quarter financial results of UBHL, the auditors have said the entity has financial exposures to the tune of Rs 13,538.12 crore to Kingfisher, which is "under severe financial constraints and its operating licence stands suspended".

The auditors, Vishnu Ram & Co, said that certain aircraft lessors and bankers have invoked corporate guarantees given by the company on behalf of KFA. The total amount invoked and outstanding as on December 31, 2012, is Rs 964.79 crore.

UBHL's financial exposure on account of Kingfisher Airlines as on December 31, 2012, include investment in equity of Rs 2,109.31 crore, guarantees given to banks Rs 6,631.35 crore, guarantees to aircraft lessors Rs 2,135.6 crore, advances given Rs 2,271.64 crore, and interest, commission, logo fees receivable Rs 390.22 crore.

United Breweries Holdings Ltd) is the holding firm for Vijay Mallya-led UB group, whose companies include United Breweries Ltd (UBL), United Spirits Ltd, McDowell Holdings, Mangalore Chemicals and Fertilisers, UB Engineering and Kingfisher Airlines (KFA).

For the third quarter ended December 31, 2012, Kingfisher yesterday reported a loss of Rs 755.17 crore against a loss of Rs 444.26 crore in the year-ago quarter.

Certain beneficiaries of corporate guarantees issued on behalf of KFA have filed petition against the company under the Companies Act, auditors said.

The auditors have also drawn attention on the income for the year 2012, a sum of Rs 52.11 crore as guarantees or security commission due from Kingfisher Airlines in spite of the restrictions imposed on it against its payment.

UBHL in a filing to the BSE had yesterday said that guarantee commission arising out of corporate guarantee given and security commission from security pledged in favour of lenders of Kingfisher, has been reversed, not accounted for, in the current financial year, as the airline has been precluded from making payments by its bankers.

It further said certain corporate guarantees on behalf of KFA have been invoked. KFA is negotiating with the beneficiaries in this regard and has initiated steps to resume suspended commercial operations http://articles.economictimes.indiatimes.com/2013-02-06/news/36949743_1_corporate-guarantees-ubhl-kingfisher-airlines

GMR gets some relief as AI settles part of its dues

Received Rs 415 crore in outstanding dues                                                                                                                                                                                                                                                                                                                                                                             GMR Infrastructure, the Bangalore-based infrastructure developer, got some relief on Wednesday as Air India paid nearly half of its total outstanding of close to Rs 800 crore for having used the services of GMR Infrastructure at Hyderabad and New Delhi airports.

 

GMR Infrastructure said it has received Rs 415 crore in outstanding dues from Air India and this will help improve the cash-flow and profitability position for both airports. The sum paid includes landing and parking charges.

 

Out of the amount, Rs 75 crore has been received on account of operations at the Hyderabad airport (GHIAL) and the remainder Rs 340 crore is for Delhi airport (DIAL).  Post this, Air India owes around Rs 375 crore towards GMR Infrastructure. In addition to this,  it is understood Kingfisher Airlines has an outstanding close to Rs 60 crore.

 

A GMR spokesperson said: “The national carrier Air India is an important business partner for us. It is heartening for us to note that Air India has made large payments over the last two months to  clear the outstanding dues to the GMR group. We are hopeful that Air India will clear remaining dues in an expeditious manner to reach a regular payment status.”

 

For GMR, this comes as big relief after its major setback after having been forced give up the $500 million Male International Airport. The airport vertical with its boquet of three airports-Delhi, Hyderabad and at Istanbul, posted revenues of Rs 1,095 crore with a net profit of close to Rs 6 crore. The airport vertical during the end of the second quarter managed to come to post profits after it got the regulators nod to levy the airport development fee.        

Jet, Etihad deal in a fortnight

The proposed stake sale by Indian carrier, Jet Airways and Abu Dhabi-based international carrier, Etihad would be completed in the next 10-15 days.

 

Speaking to media on the sidelines of the ongoing Aero India 2013,Union Minister of Civil Aviation, Ajit Singh confirmed that the deal would be completed within 10-15 days. Etihad has been in talks with the Naresh Goyal-run carrier to acquire a 24% stake at an estimated value of $1.4 billion, according to aviation analyst firm, CAPA India.

 

On the controversy surrounding the national carrier Air India’s Dreamliner aircraft which was delivered by Boeing, he said.

 

“Our only concern on the Dreamliner is how soon it will be resolved. There will definitely be compensation to airlines until the FAA and DGCA certification.”

 

The aircraft had developed technical snags and has been grounded by aviation regulators on January 17. Air India was scheduled to get its seventh aircraft by January-end which could not be fulfilled until all technical issues were resolved.

 

The aircraft has been grounded in other countries including America by the US Federal Aviation Administration (FAA). http://newindianexpress.com/business/article1453038.ece