Wednesday, January 26, 2011

India okays airline expansion

India's airlines are optimistic they will be able to capture a larger share of international travel now the country's aviation ministry has granted fresh flight rights to a number of overseas destinations.

The biggest winner is tipped to be Jet Airways India, which has been okayed for new services to Europe, including flights to Rome and Amsterdam from Mumbai. Jet also has been given additional rights for flights Mumbai-Kuala Lumpur, Bangalore-Bangkok, Delhi-Bangkok, Mumbai-Abu Dhabi, Mumbai-Dubai, Mumbai-Male and Thiruvananthapuram-Sharjah.

Another carrier, SpiceJet, will now be able to fly to Colombo from Mumbai and add flights on the Chennai-Colombo route, while Kingfisher can fly to the Sri Lankan capital from Mumbai and Trichy.

And IndiGo has been okayed for daily services to Bangkok, Singapore and Dubai from New Delhi and Mumbai.

2. Air India reaches deal on fuel dues

Air India Ltd has agreed to partially pay off its dues to oil marketing companies and negotiated a daily payment system for the next 45 days, after which it hopes to repay in full.

The national flag carrier owed Rs. 2,300 crore to state-owned Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd in early December, when the oil firms discontinued credit to the airline on a directive from the oil ministry, as Mint reported on 10 December.

Air India has now agreed to pay a lump sum of Rs. 475 crore, or a little more than one-third of the Rs. 1,200 crore it received as equity infusion from the government this month.

The agreement was reached in a meeting of Air India chairman Arvind Jadhav, oil ministry’s additional secretary and financial adviser P.K. Sinha and officials from oil companies and the aviation ministry, said two officials present at the meeting, asking not to be named.

“They have got a relief,” one of these officials said. “They have also promised to pay some more money from receivables as and when they get it from other government departments.”

Air India also agreed to pay Rs. 13.5 crore daily for the next 45 days.

The oil companies sought a daily payment of Rs. 17.5 crore, but the airline refused. “It’s a national carrier and one of the oldest customers of the oil companies. They can’t just abandon the airline when it is going through a bad phase,” said the second official.

“The airline gets Rs. 22 crore a day from internal accruals, it can’t be asked to pay Rs. 17.5 crore straightaway.”

An Air India official said the payments will be made from the equity infusion.

“The equity is mainly to be used for repaying aircraft loans and interest, besides oil companies and aircraft vendors,” said the official, requesting anonymity.

The carrier hopes to make the rest of the payment to oil companies from the money it is due to receive from some government departments.

For example, it is yet to receive Rs. 335 crore for providing a dedicated fleet to fly the President, vice-president and Prime Minister over the past three years.

The fleet, led by Air India One, includes five jumbo jets parked in the capital for exclusive VVIP travel.

A proposal to raise the payment for this service to Rs. 800 crore a year is awaiting the finance ministry’s clearance.

The government has made a total equity infusion of Rs. 2,000 crore in the debt-laden carrier and promised another Rs. 2,000 crore for the next fiscal.

Like the national carrier, large private carriers such as Kingfisher Airlines Ltd and Jet Airways (India) Ltd have also defaulted on fuel payments in the last two calendar years, when the aviation industry was hit by the global economic slump and a steep hike in fuel prices.

 3. Aviation Newsletter - January 17 to January 21, 2011

The report stated that board has approved delivery financing of three B-777-300ER aircraft and one GE-90 spare engines with US Exim support worth US$475-million
Top Stories

IndiGo rises to joint No. 2 with Kingfisher
IndiGo Airline has become the India's No. 2 airline equaling Kingfisher Airlines in December, and Air India-domestic to take the No. 3 spot, according to a report. The report stated that Kingfisher and IndiGo had a market share of 18.6%, the Jet-JetLite combine was ahead with 25.4%. Indigo flew 9.71 lakh passengers in December 2010 compared with Kingfisher’s 9.72 lakh, adds report.

Air India mandates ICICI to refinance loans for buying A-320 aircraft: report
National Carrier Air India Board has given a mandate to ICICI Bank to refinance Rs55bn loans to purchase 21 A-320 aircraft, according to a report. The report stated that board has approved delivery financing of three B-777-300ER aircraft and one GE-90 spare engines with US Exim support worth US$475-million

The board also gave its nod to Air India to dispose off four A 310 passenger aircraft along with the simulator, adds report. There are reports that the most important decision of Pawan Arora as CEO of Air India Express in the company, did not come up for discussion.

In Focus Stories

Indian airlines break 5mn barrier in December
Indian airlines carried more than 50 lakh domestic passengers in December, setting a new landmark in the aviation industry, the latest data released by the Directorate General of Civil Aviation (DGCA) showed.Airlines carried 52.13 lakh passengers in December, up from 44.87 lakh passengers carried in the same period of the previous year, reporting a growth of almost 16%.

The total domestic passengers carried by the Scheduled Airlines of India in November were 48.75 lakhs as against 46.17 lakhs in October 2010. During January-December 2010, domestic airlines carried 520.21 lakh passengers compared to 438.40 lakhs in 2009.

The total domestic passengers carried by the Scheduled Airlines in the fourth quarter of 2010 (October to December) were 147.05 lakhs.The total domestic passengers carried by the Scheduled Airlines in the third quarter of 2010 (July to September) were 119.84 lakhs.

The total domestic passengers carried by the Scheduled Airlines in the second quarter of 2010 (April to June 2010) were 134.78 lakhs.The total domestic passengers carried by the Scheduled Airlines in the first quarter of 2010 (January to March 2010) were 118.54 lakhs.

Low-cost carrier IndiGo became the third largest domestic passenger airline in the country for the fourth quarter of 2010.IndiGo carried 25.89 lakh passengers, followed by Air India's domestic arm at 25.42 lakh passengers. They were followed by Spice Jet (20.01 lakh), Jet Lite (10.85 lakh) and Go Air (9.79 lakh).

Kingfisher Airlines carried 27.81 lakh passengers, closely followed by Jet Airways with 27.28 lakh passengers

Domestic News

Air India plans to lease 40 Airbus, Bombardier Planes: report
Air India Ltd has sought bids to lease as many as 40 Airbus SAS and Bombardier Inc. aircraft, according to a report. The report stated that the airline wants to lease 10 Airbus A320s, 10 A330s and as many as 20 CRJ-700 planes. Air India has a fleet of 135 planes and is expecting 30 more aircraft deliveries in the next few years, adds report.

Kingfisher flight makes emergency landing in Bangalore: report
Kingfisher Airlijnes flight IT 4817 from Bangalore to Hyderabad returned to Bangalore International Airport within ten minutes of take-off after the right engine of the aircraft caught fire, according to a report. Kingfisher spokesperson Prakash Mirpuri has reportedly said the aircraft was forced back to the airport after the flight commander received a warning alert.

IndiGo to operate international flights from August: report
IndiGo has reportedly said that it was granted permission by the aviation watchdog to operate international flights from August this year. The report stated that permission came after the LCC fulfilled all the regulatory requirements of completing five years of operations and possessing a minimum of 20 aircraft.

Jet Airways registers 8.5% growth in domestic operations in December 2010
Jet Airways has posted passenger load factors for December 2010. The airline has registered a buoyant 15.3% growth in international revenue passenger traffic carrying 4.23 lakh guests in December 2010 as compared to 3.67 lakh in the same period last year.

Security scare for Kingfisher Mumbai-Bhubaneshwar flight
Shortly after Kingfisher Airlines flight IT 3141 took off from Mumbai for Bhubaneshwar, the commander received a cautionary alert from one of the on-board systems. In keeping with Kingfisher Airlines’ policy of placing guest safety and comfort above everything else, the commander decided to return to Mumbai and get the alert investigated before proceeding to the destination.

Pratt & Whitney, Air India showcases cutting edge Eco Power Engine Wash Technology
Air India announced it has performed 124 Pratt & Whitney EcoPower engine washes to date, saving more than 540,000 gallons of fuel worth $1.9 million USD while reducing its carbon dioxide (CO2) emissions by approximately 5,300 metric tons. Pratt & Whitney is a United Technologies Corp. (NYSE:UTX) company.

British Airways lists Top Five Indian destinations for 2011
To help travellers plan their visit to India well, British Airways has released its list of five must-visit Indian destinations for 2011.

With the landmark cricketing event, World Cup 2011, being held in India, Bangladesh and Sri Lanka is expected to influence the travel calendar this year.

International News

Meggitt buys Danaher unit for US$685mn
Meggitt Plc has agreed to buy Pacific Scientific Aerospace from Danaher Corp. for US$685mn to expand its range of fire-fighting products. According to reports, the purchase of PSA, which also makes generators, electric motors and other safety gear for aircraft, will be funded by selling as many as 69.8 mn shares, equal to about 9.09% of the company, to new and current institutional investors.

Adding the Danaher unit will allow Meggitt to bundle together more products for aircraft including Boeing’s 787 Dreamliner and the Airbus A380 superjumbo as production accelerates. Meggitt paid 8.7 times earnings before interest, tax, depreciation and amortization and it estimated savings of about $5 million in 2011, rising to about $18 million by 2014, said a financial daily.

Boeing 787s resume test Flights for Certification: report
Boeing Co has reportedly said that its delayed 787 aircraft had resumed the test flights required by government regulators before it can make its first customer delivery. The report stated that Boeing restarted 787 test flights a month ago after finding a "fix" for the problem that led to an onboard fire during a flight on Nov. 9. Another two planes would restart certification flights in a week or so, adds report.

Air New Zealand plans to acquire up to 14.99% of Virgin Blue: report
Air New Zealand Ltd. has reportedly said that it has received approval from the Australian Foreign Investment Bureau to buy up to 14.99% of Virgin Blue Holdings Ltd. The report stated that the company is  planning to buy between 10% and 14.99% of Virgin Blue but has no intention of making a full takeover offer for the firm

Embraer closes out 2010 with 246 jets delivered
Embraer delivered 92 jets during the fourth quarter of 2010 (4Q10), 30 of which to the commercial aviation market, 61 to executive aviation, and one to the defense segment. Thus, the Company closed out 2010 with 246 jets delivered.

Fly thru with AirAsia
AirAsia’s guest on multiple-flight travel from India can do so without having to apply for a transit visa with Fly-Thru – A service that enables guests on multiple flight travel to perform a single check-in for their original and connecting flights right through to their final airport of destination.

Fly-Thru is available to guests travelling on selected AirAsia (short-haul) and all AirAsia X (long-haul) flights transiting through Kuala Lumpur whose original and forward flights have a connecting time of between 90 minutes and six hours.

Delta swings to fourth-quarter profit

EasyJet shares sink 10% on interim statement: report

Air New Zealand plans to acquire up to 14.99% of Virgin Blue .


NEHA JAIN                                                                                                                


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