Air Fares show sharp dip in November
The average fares on some of the busiest domestic air routes fell sharply in November as compared to the same period last year thanks to low fuel prices and airlines adding planes to their fleet. According to an analysis done by a leading travel portal, the average airfare in November was down by 4% to 30% as compared to November last year. Industry experts attribute the fall in ticket prices to low jet fuel prices and schedule airlines ramping up their fleets to corner a larger pie of the domestic market share. The Hyderabad-Bangalore sector witnessed the sharpest fall in fares of 29.9% while fares on the Pune-Bangalore sector fell by 17.7%. Delhi-Pune fares fell by 10.3% while Kolkata-Delhi fares were down by 13.8%. Fares on the Mumbai-Delhi, Goa- Mumbai and Chennai- Mumbai sectors also witnessed sharp decline. “Those who book in advance will travel cheap whether it’s the lean season or the peak season,” said aviation expert Rajji Rai. Average Fare – Top 11 Sector Sector Nov’16 Nov’15 % of change BOMBAY-DELHI 4,484 4,666 -3.9% DELHI-BANGALORE 4,689 5,401 -13.2% BOMBAY-BANGALORE 3,555 3,376 5.3% DELHI-PUNE 4,571 5,096 -10.3% HYDERABAD-BANGALORE 2,408 3,435 -29.9% GOA-BOMBAY 3,493 3,697 -5.5% DELHI-HYDERABAD 4,307 3,929 9.6% KOLKATA-DELHI 4,502 5,224 -13.8% CHENNAI-BOMBAY 4,209 4,451 -5.4% DELHI-CHENNAI 5,042 4,944 2.0% PUNE-BANGALORE 2,807 3,412 -17.7% Linval Joseph Womens Jersey
Pedro Heilbron elected new chairman of Star Alliance CEB
Pedro Heilbron, CEO of Copa Holdings and of Copa Airlines, has been elected as the new Chairman of the Star Alliance Chief Executive Board (CEB). He succeeds Calin Rovinescu, President and Chief Executive Officer of Air Canada, who held the post for the last four years. Speaking on behalf of all Star Alliance CEOs, Heilbron said: “I would like to thank Calin for the time he invested and his dedication to the role of CEB Chairman. His four year tenure came at a crucial time in the Alliance’s development, during which the organisation moved from a strategy of membership growth to one of greater cohesion and the delivery of more integrated, modern products.” In his role as CEB Chairman, Heilbron will conduct the two annual board meetings and act as the designated spokesperson for the board. Bill Bates Womens Jersey
Seven reasons why SpiceJet is a mispriced opportunity
Note these points about SpiceJet. One, the company reported a 146 per cent increase in profit after tax for the second quarter of the current financial year, compared to a year before. Based on relevant annualisation, the company is possibly selling at a single-digit discounting. Two, the air carrier reported its best-ever second quarter, an index of how it transformed costs into surpluses, maintained a high operating efficiency and raised average fares five per cent, even as others were discounting. Three, SpiceJet represents superior bottom line quality, no sale of assets subsequently leased back, which could have replaced high interest and depreciation with moderate lease rentals. When you comb IndiGo’s fine print for the quarter, an evidently handsome profit before tax of Rs 176 crore transforms into a staggering operating loss after you deduct Rs 133 crore on account of sale and lease back (engineering credit) and Rs 160 crore for ‘other income’. Four, IndiGo is four times SpiceJet by fleet, and eight times by market capitalisation, though the latter reported Rs 176 crore more in adjusted pre-tax profit. Five, IndiGo reported a relatively modest 82 per cent load factor for the second quarter, compared to SpiceJet’s 92.3 per cent, a case of a smaller airline working harder. SpiceJet has been a consistent outlier; it has recorded load factor of 90 per cent-plus every single month since April 2015. Load factor of 92.3 per cent during the second quarter was the highest in 19 months. Even in the high-ness, SpiceJet’s story is getting incrementally better (cancellation rate 0.5 per cent, against an industry average that is possibly twice this number), with every incremental percentage translating into an attractive bottom line increase. Six, SpiceJet is a mid-sized company run like an insecure start-up that has been motivated into sustained aggression by the spectre of a larger competitor. Result: Shrinking ground times, enhanced aircraft availability, declining cost per available seat km and aggressive contract renegotiations, the value of which are not reflecting faithfully in the market cap. Seven, once debt-heavy, it has repaid Rs 1,800 crore of its total debt of Rs 2,300 crore in less than two years, a clear glimpse of how profitable this business truly is. SpiceJet now possesses a net liability of only Rs 200 crore and should turn net worth-positive this financial year. So, why is SpiceJet extensively discounted? Could be because it almost closed shop two years ago and could be because of the uncertainty related to the previous promoter’s warrants pending conversion into equity (unlikely to transpire but the market needs certainty). Let me leave you with a thought. After SpiceJet has cleared its liabilities, what will it do with the cash? Buy aircraft, of course. So, let us assume it places an order for 100 aircraft, puts these to field and then does a sale and lease back (with only a marginal reduction in load factor). It might, then, be interesting to look at its numbers (everything else remaining the same). And, then, the mother of all arguments: If the two per cent of India’s population that flies adds 100 basis points, established brands like SpiceJet could be laughing all the way to their digital wallets. Adrian Peterson Womens Jersey
Qatar to merge LNG producers Qatargas and RasGas creating global operator
Qatar, the world’s largest liquified natural gas producer, announced on Sunday it is to merge state-owned Qatargas and RasGas to create a “truly unique global energy operator”. Saad Sherida al-Kaabi, president and chief executive of state-owned Qatar Petroleum, said the move to the merger would begin right away and the companies would begin operating under a single entity, named Qatargas, within 12 months. He said the move would save “hundreds of millions of dollars”. “The integration aims to create a truly unique global energy operator in terms of size, service and reliability,” he told reporters at a news conference. Kaabi added that there would be no job losses on the “operating side”, but it was unclear if there would be cuts elsewhere. Qatargas, in its present form, is the largest LNG producer in the world, according to its website. RasGas, holds no assets but oversees and manages all LNG operations in the energy-rich emirate. Both companies have joint ventures with oil companies including ExxonMobil, Total and Shell. Kemal Ishmael Jersey
Lucknow, Jaipur airports upgraded to CAT IIIB
In a big boost ahead of the fog season when flight disruptions peak, the Jaipur and Lucknow airports have been upgraded to CAT IIIB, which enables aircraft to land when the visibility is down to 50 metres. Delhi is only other airport in the country that is CAT III B compliant. “The task to upgrade Jaipur and Lucknow airport to ILS CAT-IIIB operations is accomplished by Airports Authority of India (AAI) on the assigned target date. With effect from December 8, Jaipur and Lucknow airports have become CAT-IIIB compliant airports,” AAI said in a statement. Earlier Jaipur Airport was equipped with ILS, precision approach CAT-I and with this procedures aircraft were able to land when Runway Visual Range of 550m or more. Lucknow airport was equipped with ILS precision approach CAT-II and under this procedure aircraft were only able to land with Runway Visual Range is 300M or more. “With the implementation of ILS CAT-IIIB operations from Jaipur and Lucknow airports, aircraft will face less delay or cancellation of flight during the winter fog season. The problem faced by passengers during fog period would be reduced with the new upgraded CAT-IIIB system which fully supports continued flight operations and ground movement of aircraft during periods of low visibility (when RVR is as low as 50m),” AAI said. “By upgrading the Jaipur and Lucknow airports to CAT-IIIB level, the traffic bound for IGI airport can now be diverted to Jaipur and Lucknow during the peak foggy season which, in turn, will lessen the burden at IGI airport as well,” it said. Salvador Perez Womens Jersey
Airline industry to post record $35.6 billion in 2016
The global airline industry will post a record profit of $35.6 billion in 2016, the International Air Transport Association (IATA) has said. This will be the highest absolute profit generated by the airline industry. IATA, which represents some 265 airlines comprising 83% of global air traffic, expects the airline industry to make a net profit in 2017 of $29.8 billion. “Airlines continue to deliver strong results. This year we expect a record net profit of $35.6 billion. Even though conditions in 2017 will be more difficult with rising oil prices, we see the industry earning $29.8 billion. That’s a very soft landing and safely in profitable territory. These three years are the best performance in the industry’s history—irrespective of the many uncertainties we face. Indeed, risks are abundant— political, economic and security among them. And controlling costs is still a constant battle in our hyper-competitive industry,” said Alexandre de Juniac, IATA’s Director General and CEO. “We need to put this into perspective. Record profits for airlines means earning more than our cost of capital. For most other businesses that would be considered a normal level of return to investors. But three years of sustainable profits is a first for the airline industry. And after many years of hard work in restructuring and re-engineering the business the industry is also more resilient. We should also recognize that profits are not evenly spread with the strongest performance concentrated in North America,” said de Juniac. Haason Reddick Authentic Jersey
Delays dog infra projects, cost overrun at Rs 1.47 lakh cr
A combination of factors including delay in regulatory approval, lack of funds and land acquisition issues are taking a toll on 115 mega infrastructure projects, which face a cost overrun of Rs 1.47 lakh crore. The projects in question, each worth Rs 1,000 crore or more, are part of a total 339 across sectors such as power, railway and roads that were examined by the Statistics Ministry in August 2016. “The total original cost of 339 projects was about Rs 10,91,090.86 crore and the latest reported anticipated completion cost is 12,38,844.26 crore, which reflects an overall cost overrun of 1,47,753.40 crore (13.54 per cent of the original cost),” said the Flash Report on Mega Projects for August 2016. “During the last month (July 2016), the overall cost overrun for 329 projects was Rs 1,47,339.86 crore (14.19 per cent of the original cost).” As per the report, the expenditure incurred on these till August 2016 stood at Rs 5,17,080.79 crore. Of the 339 infra works, 115 have seen a cost bump-up, which worked out to 114.13 per cent, while in July, it was 108.50 per cent. However, the number of projects reporting inflated cost fell to 33.92 per cent in August, from 34.95 per cent in July, it added. According to the report, the factors at work as reported by implementing agencies are delay in land acquisition, forest clearance, supply of equipment, funds constraints, geological surprises, problems in setting up equipment, geo-mining conditions, slow progress in civil works, shortage of labour, inadequate mobilisation by the contractor, Maoist issues, legal cases and contractual hurdle and law and order, among others. During the month under review, of 339 projects, 122 are delayed with respect to the original schedule and 7 have reported additional delay. In August 2016, there are 116 projects that overshot schedule by more than 6 months and 113 with a higher cost of more than Rs 100 crore, and 45 projects have both time and cost overruns of more than 6 months and over Rs 100 crore, respectively. The report further stated that out of the 339, 3 projects are ahead of schedule, 74 on schedule and 122 delayed. A total of 115 projects reported a cost spike and 46 saw both time and cost overrun with respect to their original project schedule. It has been observed that the project agencies shy away from reporting revised cost estimate and commissioning schedule for many projects, which suggests that the time and cost overrun figures may have been under-reported. Jonathan Quick Womens Jersey
NHAI’s compensation for toll revenue loss insufficient: ICRA
Road regulator NHAI’s decision to give relief on interest cost and operational expenses is a welcome step but the compensation is insufficient as it does not cover debt repayment obligation, ratings agency ICRABSE -0.33 % said. Post demonetisation of currency notes of Rs 500 and Rs 1000, government suspended user fee collection on National Highways with effect from November 9 which went on till December 2 (midnight). “NHAI’s plan to provide immediate relief by covering 90 per cent of interest cost and O&M expenses (lower of actual and projected at the time of bidding) for the period during which tolling is suspended is a welcome move, however, the compensation does not cover the debt repayment obligation,” ICRA said. The proposed compensation mechanism based on Operations and Maintenance (O&M) and interest costs, could lead to disputes with developers given the huge revenue loss for them, it added. “Given that the revenue loss is greater than Rs 1 crore in most of the BOT (Toll) projects and even in terms of the net realisable fee, it is around 6.6 per cent (24/365*100), some of the developers want Clause 41 to be invoked in this case,” ICRA Vice President Shubham Jain said. Under this, NHAI is obligated to place the concessionaire in the same financial position as it would have enjoyed had there been no such change in law. In which case, the clause also provides for cash compensation for revenue loss in order to protect the net present value of the cash flows to the developers, he added. Classifying the temporary suspension of toll collection as a political event under force majeure, the NHAI plans to provide compensation to the extent of 90 per cent of interest cost for the 24-day period, only to the extent of the interest accrued on principal amount of debt provided by senior lenders for financing the total project cost (or the NHAI-approved refinancing package as the case may be), Jain said. Interest on any top-up loan availed by the developers will not be considered, he added. Unlike annuity road projects, where principal repayment falls due on semi-annual basis (in sync with semi-annuity payments from authority), majority of the toll road projects have monthly debt-repayment frequencies, he said. “With only interest cost and O&M expenses getting compensated, the compensation will be inadequate from the debt servicing point of view, unless the project has debt service reserve account or other cash reserves to fall back on,” Jain added. National Highway Authority of India (NHA) has suffered an income loss of around Rs 1,238 crore due to suspension of toll collection on highways till December 2 post demonetisation. Average toll collection per day is Rs 51.59 crore from fee plazas under NHAI, and taking into account the exemption till December 2, the income loss to NHAI due to suspension of toll collection on highways is around Rs 1,238 crore. P.K Subban Jersey
Road transport and highways ministry seeks 50 per cent more funds for next year
The road transport and highways ministry is seeking a budgetary allocation of Rs 86,000 crore for the next fiscal year to fund its highway expansion plan in line with the government’s plans to boost public spending and create more construction sector jobs. The amount sought from the finance ministry is almost Rs 29,000 crore, or about 50%, higher than what the roads ministry had received in the last budget. Most of this grant would be used for the government’s programme to construct greenfield economic corridors mostly as expressways, a ministry official said. Almost 44 such economic corridors have been lined up to connect ports, backward areas and several district headquarters to existing highway networks. “The target for the next financial year would be to construct around 15,000 km of roads,” the official said. “This year we could do around 9,000 km, which is a little less the target for current fiscal.” The roads ministry has a target of constructing 10,000 km of highways this fiscal. Road construction pace has picked up this year to reach an all-time high of 27 km per day, which the ministry expects could be raised to over 30 km a day in the next couple of months as construction clearances for several new projects have already been received. The official also said the ministry would raise money through National Highways Authority of India (NHAI) bonds as well. However, the amount is yet to be finalised. Chris Conte Jersey
Airlines seek clarity on pilot certification while leasing foreign-registered aircraft
India’s airlines have asked the Directorate General of Civil Aviation (DGCA) to provide clarity as per new guidelines on pilot certification requirements when foreign-registered aircraft are leased and operated in India. “Currently, the only way to operate foreign-registered aircraft in India is to wet lease them, which means the pilots and crew come with the aircraft. Also, wet leases can only be done for a limited period,” said an executive who heads aircraft purchase and financing at an Indian low-fare carrier. Wet lease entails the hiring of an airline crew along with a plane. In dry lease, which is more prevalent, crew are not part of the contract. The new rules proposed by the regulator will enable operators to import foreign-registered aircraft and operate them on foreign registration with Indian crew. This will make the aircraft leasing environment user friendly, the civil aviation ministry said in November. “The DGCA’s new guidelines pave the way for us to also bring in foreign aircraft on dry leases which me ans only planes and no foreign crew need to be leased.It’s a great step, but there is no clarity on what certification the pilot flying these planes should have. Should he or she have certification of the aviation authority from the country where the aircraft is registered,” the executive said. Currently , any aircraft that is being brought to India has to be first registered with the local regulator. The rule has been seen as a hurdle in taking planes on lease by airlines at a time when India is pushing for increased regional air connectivity . Exemption from this rule will make it easier for lessors to take back their aircraft in case of a dispute with the airline operating the aircraft. Hence, the step may encourage them to formulate easier leasing contracts with lower rentals. The proposed guidelines are to help carriers under the new regional aviation policy aimed at connecting small cities and towns. “Operation of foreign registered aircraft are ideal and convenient for startup airlines, when exploring new routes or during seasonal fluctuations and sudden peaks in demand,” the new rule says. Jaleel Scott Authentic Jersey