FIPB to take up 2 aviation investment proposals on 6 March

New Delhi: The finance ministry will take up on 6 March for consideration an investment plan of Farnair Switzerland AG, an European cargo airline, along with 24 other proposals.

The investment application by Malaysia’s AirAsia, which plans to enter Indian airlines space through a joint venture with the Tata Group and another company, will also come up for consideration of the foreign investment promotion board (FIPB) headed by economic affairs secretary Arvind Mayaram.

Farnair Switzerland AG had bought a majority stake in Quikjet last February. Tata Capital Ltd is one of the key investors in Quikjet Cargo. Quikjet Cargo, which started operations in February 2012, carries out commercial operations within the country with a small ATR-72 turboprop plane and is in the process of expanding its fleet to have a pan-India network.

 The Bangalore-based firm offers its services in domestic destinations for global air cargo companies, while Farnair provides planes and operational expertise, sources said.

 Farnair will offer its aircraft for long-term lease, while also setting up a scheduled network. It plans to increase fleet as business grows. AirAsia has applied to FIPB to take 49% in a venture with Tata Sons and Arun Bhatia’s Telestra Tradeplace Pvt Ltd.

Other major foreign direct investment (FDI) proposals on the FIPB agenda are that of Yes Bank Ltd, ICICI Venture Funds Management Company and SIDBI Social Venture Trust. The board will again take up the application of the Bangalore based Bharat Electronics Ltd. Earlier also, the FIPB had taken up the case in November 2012 but had deferred decision.

 

http://www.livemint.com/Politics/1r9OVP2cdFO0m25nniSQRO/FIPB-to-take-up-2-aviation-investment-proposals-on-6-March.html

FIPB to take up 2 aviation investment proposals on March 6

The Finance Ministry will take up on March 6 for consideration an investment plan of Farnair Switzerland AG, an European cargo airline, along with 24 other proposals.

 The investment application by Malaysia's AirAsia, which plans to enter Indian airlines space through a joint venture with the Tata Group and another company, will also come up for consideration of the Foreign Investment Promotion Board (FIPB) headed by Economic Affairs Secretary Arvind Mayaram.

 Farnair Switzerland AG had bought a majority stake in Quikjet last February. Tata Capital Ltd is one of the key investors in Quikjet Cargo.

 Quikjet Cargo, which started operations in February 2012, carries out commercial operations within the country with a small ATR-72 turboprop plane and is in the process of expanding its fleet to have a pan-India network.The Bangalore-based firm offers its services in domestic destinations for global air cargo companies, while Farnair provides planes and operational expertise, sources said.

 Farnair will offer its aircraft for long-term lease, while also setting up a scheduled network. It plans to increase fleet as business grows.

 AirAsia has applied to FIPB to take 49% in a venture with Tata Sons Ltd and Arun Bhatia's Telestra Tradeplace Pvt Ltd.

 Other major FDI proposals on the FIPB agenda are that of YES Bank Ltd, ICICI Venture Funds Management Company and SIDBI Social Venture Trust.

 The Board will again take up the application of the Bangalore based Bharat Electronics Limited. Earlier also, the FIPB had taken up the case in November 2012 but had deferred decision.

 

http://www.business-standard.com/article/companies/fipb-to-take-up-2-aviation-investment-proposals-on-march-6-113022400060_1.html

Govt may not allow detention of deregistered aircraft

New Delhi, Feb 23:  

In a move that could give an impetus to the Abu Dhabi-based Etihad Airways buying a stake in Jet Airways, the Government is planning to issue directions that an aircraft de-registered by the Indian aviation regulatory authority, the Directorate General of Civil Aviation (DGCA), can leave the country even if the company that has imported the aircraft has unpaid dues.

This move will also help companies that have leased aircraft to now-grounded Kingfisher Airlines and are having problems taking them back.

 

Cape town convention

“Till now, the Government was not interfering as we looked at it as a commercial issue between various parties. But now, it has become a burning issue. So a meeting was held with the DGCA and the considered opinion was that India will be in violation of the Cape Town Convention on leasing of aircraft if it does not allow a de-registered aircraft to leave the country because of unpaid dues,” a senior Government official said.

This is said to be one of the issues on which Etihad wants clarity before it takes a decision on whether to pick up a stake in Jet Airways.

The Union Cabinet acceded to the Cape Town Convention in November 2007, which offers benefits to lessors and those in the business of mortgaging aircraft, including providing additional security for repossession of aircraft in case of default especially when payment obligations have not been met.

The rethink in the Government comes in the backdrop of various agencies, including state-owned Airports Authority of India and the service tax department, seeking monies from various companies to take back aircraft that they had leased to the now-grounded Kingfisher Airlines.

AAI, which is owed around Rs 390 crore by Kingfisher, was allowing the aircraft to be taken back only after the state-owned airport operator had been paid an average of about a $1 million for each Airbus A-320 or ATR aircraft.

Kingfisher aircraft

When the row erupted in August last year, three ATR aircraft that Kingfisher had leased were parked at Chennai airport. AAI had then argued that since Kingfisher had curtailed its flights allowing these leased aircraft to go back would affect the AAI’s chances of getting its dues from Kingfisher.

 Senior Government officials now maintain that airport operators need to seek bank guarantees from airlines at the time of giving them permission to operate to their airports. In case of default in payments by airlines, airports can then look at encashing these guarantees rather than holding back aircraft. http://www.thehindubusinessline.com/industry-and-economy/logistics/govt-may-not-allow-detention-of-deregistered-aircraft/article4446726.ece?homepage=true

 

FIPB to take up AirAsia plan soon

 Finance ministry sources said that AirAsia’s proposal to enter the Indian skies may be considered by the Foreign Investment and Promotion Board (FIPB) on March 6. The Malaysian budget carrier is planning to enter India through a joint-venture with the Tata group company, Tata Sons Ltd and Arun Bhatia’s Telestra Tradeplace Pvt Ltd.

AirAsia Investment Ltd’s (AAIL) proposal has been listed in the agenda of the FIPB meeting to be held on March 6, sources said. The Malaysian carrier has applied to acquire 49 per cent in a joint venture with Tata Sons and Telestra Tradeplace. AirAsia, the Tatas and Bhatia’s Hindustan Aviation have already inked a pact for the joint venture.

AirAsia is looking to take advantage of the government easing the Foreign Direct Investment (FDI) policy in aviation.

Once the FIPB gives its nod, AirAsia would be the first foreign airline to enter the domestic aviation market. The airline is looking to start operations from the end of 2013 and AirAsia is likely to initially pump in $50 million. With around three to four aircraft, the joint venture will operate from Chennai and connect tier 2 and tier 3 cities.

Tata Sons will have a stake of 30 per cent in the joint venture but will not be involved in the operational side. This also marks the return of the Tata group to aviation; government-owned Air India had been started by the Tata Group in 1932.

 

http://newindianexpress.com/business/news/article1475340.ece

 

FIPB to consider AirAsia FDI proposal on March 6

NEW DELHI: The Foreign Investment Promotion Board will take up on March 6 the investment proposal of Malaysian budget carrier AirAsia which seeks to enter India through a joint venture with the Tata Group and another company.

The investment proposal of AirAsia Investment Ltd, Malaysia, has been listed in the agenda of the FIPB meeting scheduled on March 6.

The FIPB is the apex inter-ministerial body headed by the finance minister that clears foreign investment proposals.

AirAsia has applied to FIPB to pick up 49% in a venture with Tata Sons Ltd and Arun Bhatia's Telestra Tradeplace Pvt Ltd, the Malaysian company had said earlier this week.

If cleared by FIPB, this will be the first entry of an foreign carrier in the domestic airlines after the government liberalised the aviation FDI policy in September. The new policy allows foreign carriers to invest in Indian airlines.

The new airline is looking to start flying from this year-end with 3-4 planes and an initial investment of about $50 million by the Malaysian budget carrier. It will operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, a statement by the Malaysian carrier from its headquarters in Sepang had said earlier this week.

As per current rules, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.

Tata Sons, the holding company of the $100-billion salt-to-software conglomerate, will hold 30% in the joint venture but will not have any operating role in the airline.

This will mark the return of the Tatas to aviation. State- owned Air India had grown out of Tata Airlines, which began flights in 1932.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/fipb-to-consider-airasia-fdi-proposal-on-march-6/articleshow/18637087.cms

FIPB to take up Air Asia’s proposal on March 6 New Delhi, Feb 22:

The Finance Ministry will take up Malaysian airline AirAsia’s proposal to operate in India jointly with the Tata Group and Telestra Tradeplace early next month.

The Foreign Investment Promotion Board, scheduled to meet on March 6, will consider 18 proposals which also includes one by European airline Farnair Switzerland which entered the cargo segment in India last year.

AirAsia has sought FIPB approval for taking 49 per cent stake – the maximum allowed in the existing FDI policy – in a joint venture with Tata Sons Ltd, the pioneer of airline services in India, and Arun Bhatia’s Telestra Tradeplace Pvt Ltd.

Tata Sons is likely to hold 30 per cent stake in the company while the remaining 21 per cent share will be Telestra’s. The venture will mark Tata Group’s return to the aviation sector almost 60 years after it exited the business following nationalisation of Air India in 1953.

AirAsia will initially invest about $30-55 million in the proposed venture and would start operations with three to four Airbus A-320 aircraft, AirAsia CEO Tony Fernandes had said on Thursday.

The proposed joint venture will operate from Chennai and will focus on providing domestic connectivity to Tier-II and Tier-III cities, a statement by the Malaysian carrier from its headquarters in Sepang had said earlier this week. It will give both Delhi and Mumbai a miss in the initial phase.

In India, a carrier must complete five years of domestic operations before becoming eligible for starting overseas flights.

The FIPB will also consider a proposal from European airline Farnair Switzerland which bought a substantial stake in Quikjet Cargo Airlines Pvt. Ltd last February. Tata Capital Ltd is one of the key investors in Quikjet Cargo.

The airlines operates both cargo and passenger airlines in Europe but did not have the option to apply for the passenger segment last year as the FDI rules at that time did not permit it.

Other cases to be considered by the Board include proposals by Highdell Investment Ltd from Mauritius, Yes Bank, ICICI Venture Funds, SIDBI Social Venture Trust and Barefoot Resorts and Leisure.

 

http://www.thehindubusinessline.com/industry-and-economy/government-and-policy/fipb-to-take-up-air-asias-proposal-on-march-6/article4442588.ece

 

AirAsia's aggressive fares to hit domestic carriers

 AirAsia’s plans for a joint venture airline in India would impact the pricing and yields of domestic carriers. It would also be a wake-up call for Singapore Airlines, said a JP Morgan research report.

 

“We think it (the alliance) is negative for Indian carriers, especially SpiceJet, given its major presence in Tier II/III cities. With traffic under pressure, it would be a challenge to sustain higher yields. The entry of new players could put pressure on pricing,” JP Morgan analyst Corrine Ping said.

 

Expanding sales network

 AirAsia is expanding its distribution network and increasing its offline travel partners. It has tied up with various online portals, including MakeMyTrip and Yatra.com. Currently, its distribution network is small — it sells tickets through its own website, 20-25 travel agents and online portal Expedia, with which it has a joint venture.

 

“AirAsia has become aggressive in distribution and is signing more trade partners across India,” said an aviation source.

 

A few months earlier, the airline had hired Malaysian Airlines marketing manager Devinder Singh Bindra to head its sales in India.

 

Unlike full-service airlines, AirAsia doesn’t use global distribution systems to sell tickets and doesn’t pay regular commission to agents. As an incentive, it allows agents to sell tickets at prices higher than the agreed purchase costs, the source said.

 Sharat Dhall, chief operating officer of Yatra.com, said the airline was integrating its booking system with the portal. Soon, passengers would be able to book tickets on their site, he added.

 

“It is evident if AirAsia has to succeed in India and achieve a scale similar to that of SpiceJet or IndiGo, it would have to expand its distribution. It has tied up with us and is looking for other partners, too,” said Keyur Joshi, chief commercial officer of MakeMyTrip. He added distribution costs in India were declining, with agency commissions falling to one per cent. “Paramount Airways had begun operations with a select distribution network, comprising few agents. But that didn’t yield results,” Joshi said.

 

http://www.business-standard.com/article/companies/airasia-s-aggressive-fares-to-hit-domestic-carriers-113022300034_1.html

SpiceJet, Jet Airways shares plunge

Air Asia’s possible entry into India’s domestic civil aviation market on Thursday caused selling pressure on SpiceJet and Jet Airways stocks as these airlines along with others are expected to face pricing pressure going ahead, said an analyst. The SpiceJet stock lost the most as the airline is believed to be bearing the maximum brunt as it had already laid out an elaborate regional network in the southern part of India where Air Asia would be concentrating to begin with. Air Asia has said that Chennai would be the base of its domestic airline.

 

As investors turned negative, SpiceJet shares plunged to close with a loss of 6.55 per cent at Rs.37.80.

 

Jet Airways, India’s second biggest airline group by market share, also witnessed erosion of its market cap as its stock plunged 4 per cent to close at Rs.559.90 on the Bombay Stock Exchange.

 

“These shares will correct further. Today the trigger was the Air Asia news. Air Asia’s imminent entry with the Tatas will enhance the price war as they have deep pockets. The delay in the Etihad deal is also affecting the Jet Airways stock,” said Ambareesh Baliga, an independent stock analyst.

 

The entry of Air Asia may be beneficial for air passengers as it would keep airfares low, but it does not auger well for the financial health of India’s loss-making airlines which recently turned into profit by jacking up airfares following the exit of Kingfisher. On Tuesday, Jet Airways had announced the sale of two million cheap tickets indicating desperation by airlines to fill its seats. Any further pricing pressure on the yield has been viewed as negative.

 

On the other hand, the Kingfisher Airlines stock gained 4.98 per cent to close at Rs.11.60 on a day when the BSE Sensex plunged 317.39 points (-1.62 per cent) to close at 19325.36. Kingfisher stock has been gaining with the hope that it would be revived shortly despite banks raising a red flag. http://www.thehindu.com/business/Industry/spicejet-jet-airways-shares-plunge/article4439607.ece

 

IndiGo allowed to import aircraft New Delhi, Feb 21:  

 

The proposal of the Delhi-based low cost airline, IndiGo to import 11 aircraft has been approved by the Government.

 

Sources indicated that while IndiGo has been given a No Objection Certificate to import 11 Airbus A-320 aircraft.

 

The import of aircraft is first approved by the Aircraft Acquisition Committee (ACC) in the Ministry of Civil Aviation first after which the proposal is cleared by the approving authority, the Minister for Civil Aviation before actual import is allowed. The ACC is headed by the Additional Secretary and Financial Advisor in the Ministry.

 

The decision comes even as there have been reports that the Government has been delaying import of aircraft of various airlines.

http://www.thehindubusinessline.com/industry-and-economy/logistics/indigo-allowed-to-import-aircraft/article4438826.ece?ref=wl_banking

AirAsia to invest $50 m in JV with

 TatasStating that AirAsia and Tata group joint venture (JV), along with an Indian investor, could take wings by the end of this year with 3 to 4 planes, AirAsia CEO, Tony Fernandes, on Thursday, said the no-frills Malaysian airline would make an initial investment of about $50 million.

 

AirAsia had, on Wednesday, announced that it had filed an application with the Foreign Investment Promotion Board (FIPB) for forging a joint venture (JV) with Tata Sons and Arun Bhatia of Telestra Tradeplace for acquiring 49 per cent stake in the proposed airline company.

 

In a conference call, Mr. Fernandes announced that the proposed airlines would launch preliminary operations with three to four Airbus A-320 aircraft, and an investment of around $30-50 million. “We will scale up the size of the fleet quickly thereafter,” he said. Of the 51 per cent stake, Tata Sons is likely to pick up 30 per cent equity and one of Bhatia’s companies, Hindustan Aerosystems, the remaining 21 per cent. The airline would be headquartered in Chennai and would focus on South Indian routes where AirAsia already operates.

 

Asked when the airline would resume operations, Mr. Fernandes said all would depend on the Indian aviation regulator but added that most likely it would take wings by the fourth quarter.

 

He also said a new CEO would be named soon for the joint venture and the senior management soon thereafter. “Initially, we will have staff strength of about 300 people. But as we grow, we will add numbers. As a thumb rule, generally 20 people are employed with every new aircraft added to the fleet.

 

Mr. Fernandes said that the reason why Chennai was chosen as the base for the new joint venture was that AirAsia already operated there and knew the place very well. AirAsia, through its operations based in Thailand and Malaysia, flies to Chennai, Bangalore, Kochi, Tiruchirappalli and Kolkata from several destinations in the ASEAN region.

 

Replying to a question on the fare war, Mr. Fernandes said: “I think we can give a fair competition. Irrational competition has gone out of the Indian market. Now there are sensible businessmen running the aviation business sensibly.” However, he hinted that purchase price of tickets would be the number one differentiator from other airlines.

 

The strong brand image and network would also make a difference, he added.

 

On the high airport charges in India, he said that his company would work hard to try and convince the airport operators and the State governments to reduce the charges.

 

He said India was a large enough market for all. “Businesses put themselves out of business, not the competition. If an airline is rightly capitalised, follows the right business model and the right people are running it, there should be no problem. It is a question of finding the right structure and partners, and we have chosen excellent partners. We strongly believe that the current environment is perfect to introduce AirAsia’s low fares which stimulate travel and grow the market,” he added

 

http://www.thehindu.com/business/Industry/airasia-to-invest-50-m-in-jv-with-tatas/article4439606.ece

 

Aranmula airport project gets a clear signal

President Pranab Mukherjee, while addressing the joint sitting of Parliament on Thursday, said “the Centre has given in-principle clearance to set up greenfield airports at Aranmula in Kerala, Navi Mumbai, Mopa and Kannur.”

 

KGS Group, a Chennai-based company, had earlier announced its plan to set up the KGS Aranmula International Airport at an estimated cost of Rs.2,000 crore by 2012. The company had purchased 240 acres of land from a private company, Aranmula Aviation Ltd, to set up the airport.

 

KGS managing director Giji George said the runway length of the proposed airport would be 3100 X 45 metres and the terminal building would be designed to handle 1,000 passengers at a time. The proposed airport is expected to cater to the travel needs of Pathanamthitta, Kottayam, Idukki and Alappuzha districts, which have been identified as the “influential zone”, he said.

 

Mr. George said the company had obtained the approval for setting up the airport in Aranmula from the Union Ministry of Civil Aviation, Ministry of Defence, Ministry of Home Affairs and the Government of Kerala. A statement from the company said the Expert Appraisal Committee of the Union Ministry of Environment and Forests (MoEF) had given approval for the project and the company was awaiting clearance from the MoEF.

 

KGS Group is planning to develop an aeropolis attached to the airport along with a special economic zone, hospital, shopping mall, hotels and an international schoo

http://www.thehindu.com/news/national/kerala/aranmula-airport-project-gets-a-clear-signal/article4440055.ece