Air India to select jets for regional connectivity
Air India is planning to launch flights to more regional destinations across India, and has initiated the process of identifying the aircraft to be used. The Economic Times reported the national carrier’s chairman & managing direction, Ashwin Lohani, as saying that he is planning to introduce several smaller jet aircraft to facilitate the expansion. “Our prime focus is to increase regional connectivity. We will try to connect as many places as possible,” Lohani was quoted saying. “We are looking at various [aircraft] options, but smaller jets seem to fit the bill. They would be faster, cost less and, perhaps, even be cheaper to operate,” he added. Currently, the airline operates three Bombardier CRJ-700 regional jets, along with a fleet of ATR turboprop aircraft. The new aircraft are likely to be Bombardiers. Jack Ham Womens Jersey
Passenger Centric Amendments proposed for Airline Industry
The Minister for Civil Aviation Mr. Ashok Gajapathi Raju said that his Ministry was committed not only to the growth of the Airline industry but also to ensure that flying for most Indians becomes a pleasant experience. In keeping with this commitment he along with MOS Dr. Mahesh Sharma, presided over a presentation made by DGCA with regard to Passenger Centric Initiatives. The first category of amendments have been made in CARs related to “Refund of Air Tickets”. The Ministry has proposed that the refund process should be completed within 15 working days in case of domestic travel and 30 working days in case of international travel. It also proposed that in case of cancellation of tickets, statutory taxes and user development fee or airport development fee or passenger service fee should be refunded. The Ministry has also proposed in this category that under no circumstances cancellation shall be more than the basic fair. In the second category of CARs related to “Denied Boarding, flight cancellation and flight delays”, the Ministry has proposed that an amount equal to 200% of booked one-way basic fair plus airline fuel charge subject to maximum of INR 10,000/- would be paid to passengers in case airline arranges alternate flight that is to depart after one hour but within 24 hours of the booked scheduled departure. Josh LeRibeus Authentic Jersey
Chinks in the new aviation policy’s armour
India’s first-ever National Civil Aviation Policy (NCAP) formulated by the NDA governmentis no doubt well-intentioned and aimed at achieving overall growth of the sector in a structured manner. However, several shortcomings, as pointed out by analysts, could derail the projected growth and objective. The policy has touched almost every aspect of civil aviation, but gives no direction for professionalising the Directorate General of Civil Aviation (DGCA) and Bureau of Civil Aviation Security (BACS), crucial entities that govern aviation safety and security in the country. Though measures have been announced to strengthen both these entities and bridge the deficit, the policy is silent on how to radically transform these organisations to meet modern-day challenges and to be process-driven to deliver world-class service. With around 20 per cent growth in the number of air passengers, what India needs is strong air safety and security regulators. The expected upside in helicopter operations, private flying and regional airlines will add to the pressure. Kapil Kaul, Chief Executive Officer, South Asia, Centre for Asia Pacific Aviation (CAPA), says: “India’s safety and security dynamics are structurally changing, NCAP is not focused on managing these challenges.” Mark Barberio Authentic Jersey
Civil aviation policy potential gamechanger
The Modi government’s integrated Civil Aviation Policy has the potential to be a gamechanger not just for the airline industry’s revival and growth but also for the government in terms of policy-making process and orientation. Sustained engagement with stakeholders and a win-win policy orientation can be adopted for other sectors too. The crux of the policy is the dove-tailing of industry growth with passenger benefits. The government wants more members of the 30-crore strong middle class to fly which would help the troubled airline industry by boosting revenues and possibly profitability too. Though the low-cost airlines played a major role in making flying affordable for the upper middle and middle classes, the growth and expansion in number of tickets sold has not been substantial and sustained. One such initiative is the Regional Connectivity Scheme with a cap of Rs 2500 for an hour-long flight of about 500-600 kms which it hopes would lure more people to fly. Similarly, diluting the norms for airline companies to fly on international routes — the 5/20 rule — would mean more frequent flights and possibly at competitive prices. The integrated policy covers 22 areas and most of them would be acceptable to all. But industry analysts and observers are critical of aspects the policy is silent about, be it privatisation of loss-making Air India or the roadmap for setting up an independent and autonomous Civil Aviation Authority. Rod Langway Womens Jersey
100% FDI in airlines: Air India will have to shape up or ship out
The opening up of Indian Airlines to 100 percent foreign direct investment (FDI) came today after a lot of hesitation and dire warnings of compromising – what else – the nation’s security by allowing foreigners control in a sensitive sector. For years we have been paranoid about security implications of allowing foreigners in the cockpit as far as our airlines are concerned, so much so that the first such step in 2012, when FDI by foreign carriers was allowed but capped at 49 percent, was also widely seen as a government bowing to the wishes of some powerful global airlines. Today’s announcement, which allows up to 100% FDI in schedule airlines and regional carriers subject to government approval, has the potential to bring remarkable changes to India’s aviation sector in the near future. As per a government release, foreign airlines can still pick up only up to 49% equity in Indian carriers. This should not be a problem since the remaining can be bought by an entity like a sovereign fund of the country the purchasing carrier belongs to, taking effective control to 100%. That India needs FDI is a no brainer. That it will help almost all sectors including civil aviation is also obvious. So the downside to this decision of allowing up to 100% FDI in Indian airlines seems to be limited. Perhaps Air India may now find that the virtual monopoly it had over overseas routes gradually recedes as stronger, deep-pocketed foreign players may set up ventures in India (or buy out existing ones) and take over lucrative foreign routes. Air India may need to pull up its socks but for private airlines, there should be little cause for concern. Matt Duchene Jersey
Andal airport operator blames AI for ‘unilaterally’ stopping flights
Bengal Aerotropolis Projects Ltd (BAPL), promoter of the country’s first greenfield private airport at Andal near Durgapur, on Friday accused Air India of step-motherly attitude. BAPL is a joint venture with Singapore-based Changi Airports International. AI has withdrawn its thrice-a-week flight on the Kolkata-Durgapur-Delhi sector from June 16, allegedly for non-payment of viability gap funding (VGS) dues. The airport opened in December 2015. On Friday, the national carrier invoked BAPL’s ?2.25-crore bank guarantee. BAPL managing director Partha Ghosh termed the AI decision “unilateral”. The airport received the notice on June 16, a day after AI confirmed the decision to media citing “operational reasons”. Even the West Bengal government was in the dark. Load factor “AI stopped flights to Andal that offered as good a passenger load as their national average, if not better. At the same time, they are operating flights to sectors offering negligible load,” he said. According to Ghosh, in February AI operated Delhi-Tirupati flights at 19 per cent load. The Delhi-Kullu load factor was 33 per cent; Delhi-Khajuraho and Delhi-Varanasi 47 per cent each; Mumbai-Guwalior 61 per cent, and Delhi-Rajkot 67 per cent. In comparison, Durgapur offered 73 per cent capacity utilisation. Between January and April, the Kolkata-Durgapur-Delhi sector ran at 75.09 per cent load against AI’s national average of 79.05 per cent. Most passengers boarded from Durgapur. The load was not one way and, on many days the flight was full. Ghosh said: “Ticket sale maximisation depends on the pricing mechanism. Initially, AI was earning ?11-13 lakh a day against the declared ?22.5 lakh operating cost, for VGF funding. While we have no control over AI’s ticketing operations, we did our best to improve the revenue to ?18 lakh a day. “Six months is too short a time for a new route to establish. Due to flight timing, (placed between two direct Kolkata-Delhi flights), there was low traffic from Kolkata. That the flight still attracted a reasonable load proves the potential of Andal airport.” High operation cost But why was AI not paid the VGF money? BAPL says that while AI raised a demand of ?8.5 crore (?13 crore, according to AI sources), the company sought reconciliation of accounts against airport’s spending on ground handling (on behalf of AI), promotion, cost borne on passengers due to “average three to four hour daily flight delay in January-February”. BAPL alleges AI didn’t respond to its plea. “AI services (?22.5 lakh a day) are exorbitantly costly, when compared to private airlines (like GoAir, IndiGo, SpiceJet) proposing to operate flights at ?13.5-14.5 lakh a day. However, due to aircraft availability issues, most such offers were scheduled for later part of 2016,” the private airport said elaborating reasons behind choosing AI. AI responds An AI spokesperson said that as a national carrier the company is committed to the cause of regional connectivity and is open to discussion with BAPL. On the cost of AI operations, he said the airline is at par with other full-service airlines like Jet. Xavien Howard Womens Jersey
Oil-poor India needs to supersize its Rosneft order: Gadfly
Vladimir Putin is said to be looking to sell almost a fifth of Russian state oil champion Rosneft and wants China and India to team up to buy it. Narendra Modi should negotiate for a bigger share. The attractions for Putin of splitting a stake between the world’s No. 2 and No. 3 oil importers are obvious. Russia has been fighting Saudi Arabia for market share in China for years, and often bests the world’s biggest producer in terms of import volumes into the People’s Republic. With the globe awash in oil and an initial public offering of Saudi Aramco in the works, equity in oil companies might be a more valuable resource in cementing trade relationships than the black gold itself. Still, China’s oil consumption appears to be slowing, with apparent demand plateauing and even declining since August last year. While Chinese companies have been lavish with their overseas investments of late, there’s no particular need to buy a chunk of Rosneft to secure a new source of energy supply. Indeed, of China’s big three oil exploration and production companies, refinery-heavy Sinopec is cutting production and PetroChina is growing it in the low single-digits. Only Cnooc is making a serious attempt to raise output. India is a different beast, with a shortage of crude that’s only going to get more acute as incomes rise and automobile ownership grows. Its state-run explorer Oil & Natural Gas Corp. is getting ready for a $5 billion spending spree to boost production off the country’s east coast and has assets in Sudan, Colombia, Venezuela, Brazil, Vietnam, Syria and Russia. With a geological shortage of exploitable oil, it’s ultimately those overseas fields that will end up plugging India’s output gap. New Delhi has long looked to its Cold War ally for a solution to its energy handicap. About 32 per cent of the 5.5 million metric tons of oil production from ONGC’s overseas arm ONGC Videsh last year came from its 20 per cent stake in the Sakhalin-1 project in Russia, which the Indian company acquired from Rosneft in 2001. That’s not enough to sate its appetite, though. At the peak of the 2008 financial crisis, Videsh somehow found $2 billion to purchase Imperial Energy, a then U.K.-traded producer with fields in Siberia. Last month, it paid Rosneft $1.27 billion for a 15 per cent stake in Vankor, one of the largest Russian oil fields to go into production in the last quarter century. Taking a stake in Rosneft itself — the whole 19.5 per cent slice would go for about $11 billion, people familiar with the matter said — seems a good idea in the context of that scramble for fuel. If you look at an oil company as a claim on its underground reserves of crude, Rosneft is about the cheapest way to source supply right now among the giant 1 million-barrels-of-oil-a-day producers. Each barrel of Rosneft’s developed reserves is worth about $4.16 of enterprise value, according to Bloomberg calculations — well below ONGC’s $7.16, not to mention figures north of $20 for the likes of Exxon Mobil, Total and Shell, and $46.62 for Cnooc. ONGC isn’t short of cash for acquisitions, either. Ebit over the most recent 12-month period was equivalent to almost 11 years’ of interest payments, comfortable relative to a median 3.34 years for the 17 members of the 1 million-barrel-a-day club. For producers with strong balance sheets, the ongoing weakness in oil markets is creating an attractive environment in which to pick up assets. If Rosneft is selling a 19.5 per cent stake, ONGC should abandon its dormant alliance with PetroChina parent CNPC, elbow the Chinese aside, and ask for the lot. This column does not necessarily reflect the opinion of Bloomberg LP and its owners. Harrison Butker Jersey
Cheap Oil Prompts ONGC’s Biggest Crude Exploration Binge
Oil and Natural Gas Corp., India’s biggest explorer, is preparing to spend on its biggest ever crude binge as sub-$50 oil halves the cost of rigs and services. State-run ONGC is contracting as many as five deepwater drill ships and dozens of jack-up rigs as it launches a $5-billion development program in the Krishna-Godavari Basin off the east coast of India, Chairman Dinesh Kumar Sarraf said in an interview. The company wants to make use of the drop in hiring rates for vessels and oilfield services to lower costs and boost profit, he said. “This is the largest ever campaign undertaken by us,” Sarraf said. “Never in the past have we had five rigs in offshore deep-water at one time. We believe this is the right moment when we can increase our investment.” The company, which intends to spend 11 trillion rupees by 2030 to raise output, is key to Prime Minister Narendra Modi’s target of cutting import dependence by 10 percent in the next six years. That goal is crucial for a country that imports most of its oil. India will be the fastest-growing crude consumer in the world through 2040, according to the International Energy Agency. ‘Exceptional Strength’ “It makes immense sense for an oil explorer to undertake capex in the current times when oil field services costs and charter rates have dropped so sharply, especially if they have strong financial profile,” said K. Ravichandran, co-head, corporate ratings at assessor ICRA Ltd. “Lower debt in relation to reserves gives ONGC exceptional strength in comparison to others.” Offshore jack-up rigs which cost as much as $90,000 a day when oil was surging, now cost about half that, Sarraf said. ONGC shares rose 1.5 percent to 213.85 rupees, the most since June 9, in Mumbai. The benchmark index S&P BSE Sensex closed up 0.9 percent. The flagship explorer in Asia’s third-largest economy is betting its spending will pay off once oil prices revive. Production has declined in fields accounting for almost three-quarters of ONGC’s output, adding pressure to bring on stream new assets. “While the big investments are going to help ONGC in the long term, it can strain the profits in coming years if crude prices were to remain around $50 a barrel levels,” said Dhaval Joshi, a Mumbai-based analyst at Emkay Global Financial Services Ltd. ONGC is working on as many as six large projects on its western offshore fields and plans to spend about 300 billion rupees ($4.5 billion) during the fiscal year that started April 1. The company has awarded 36 major contracts across the country’s eastern and western coasts, worth a total 340 billion rupees, in the past year-and-a-half, including 13 offshore rigs. “We expect production would increase this year,” Sarraf said. “That’s why we need to add more and more fields.” The company expects to start gas output from the KG-basin block by mid-2019 with a peak production of 15 million standard cubic meters a day. Crude oil output will begin a year later and may go up to 77,000 barrels a day. Jeff Petry Jersey
Fox Petroleum Invites SHI to Bid for India’s FSRU LNG Terminal Project
Fox Petroleum Ltd., the Indian unit of Fox Petroleum Group of Companies, invited South Korean shipyard Samsung Heavy Industries Co. Ltd. (SHI) to participate in an engineering, procurement and construction (EPC) project for the floating storage regasification unit (FSRU) liquefied natural gas (LNG) terminal in Karwar, Karnataka on India’s west coast. “Initial negotiations is in progress,” the company said in a recent press release. The move follows a proposal made in September 2014 by Fox Petroleum to the Government of Karnataka for the development of the FSRU LNG Terminal project at Karwar. The firm said the volume of LNG to be gasified for the project is around 7.2 million metric tons (350.7 billion cubic feet) per annum. Fox Petroleum FSRU LNG Terminal (FP-FLNGT), the manager of the project, will design, finance, insure, construct, test, commission, complete, operate, manage and maintain the dedicated floating/offshore LNG Terminal. The FSRU LNG Terminal would be financed on build, operate and transfer (BOT) basis. The development of the project in Karnataka, costing approximately $1 billion (INR 70 billion), could create up to 3,000 jobs. Fox Petroleum indicated that 90 percent of these vacancies were expected to be set aside for local youths. The company added that the FSRU would be equipped to process 1 billion cubic feet (Bcf) of gas per day, while the onshore plant will have a storage capacity of 11.66 million cubic feet (330,000 cubic meters). Turning to the project’s financing needs, Fox Petroleum said the total cost for constructing the FSRU is estimated as $563 million, while the onshore plant is projected to cost $495 million. The firm intends to provide an update June 25 on the shortlist of EPC contractors for the FSRU LNG terminal project in Karwar. India’s energy demand has grown sharply in recent years, with the country surpassing Japan as Asia’s second largest consumer in 2008, according to data released earlier this month by BP Statistical Review of World Energy 2016. Enos Slaughter Jersey
Gail likely to realign Tamil Nadu pipeline to connect LNG terminal in Kochi with Bengaluru
Gail, India’s largest natural gas pipeline operator, will likely agree to Tamil Nadu’s demand of realigning the proposed pipeline to connect Petronet’s LNG terminal in Kochi with Bengaluru along the national highway, an issue that has held up Rs 3,300-crore project for years. The state wants to avoid damage to farms and the dispute has reached Supreme Court. Protests from thousands of farmers delayed the project that was to be completed by early 2013. This has hurt GAIL and Petronet. The Kochi LNG terminal is ready for almost three years but barely operational. Gail has now agreed to join a panel set up by the state to consider an alternative route. Top Gail executives recently met Tamil Nadu officials for discussion. Industry sources said if the new route is aligned along the highway, it would be 20% longer and more costly but Gail wants to complete the project quickly. It is reluctant as building the pipeline along a highway needs thicker pipes. Larry Murphy Womens Jersey