Prepare to land at the aerotropolis
BIAL plans to create a mini-city centred around the Kempegowda airport to let visitors indulge in leisure as well as work during transit An Airport City on the lines of the one at New Delhi, which will have hotels, restaurants business parks, shopping malls and other amenities, has been planned near the Kempegowda International Airport (KIA). KIA is the third-busiest domestic and the fourth-busiest aviation market, attracting a mix of long-haul, high-yield international passengers. It is this that has prompted the airport authorities (Bangalore International Airport Ltd) to plan the Aerotropolis. “Envisaging a seamless expansion in size and capacity of the airport facilities over the next 10 years, based on the passenger and cargo growth, the airport is ambitiously being developed as an Aerotropolis, which means an airport city where layout, infrastructure and economy are centred on a major airport. BIAL aims to be the engine of economic growth for the region by connecting Bengaluru to the world and evolving into a Central Business District (CBD),” BIAL officials told BM. The idea behind conceptualising an Airport City is to enable passengers and visitors to indulge in leisure and business without having to leave the airport premises during transit. Rashaan Gaulden Jersey
Airports Authority expects to monetise 7,000 acres of land
The Airports Authority of India (AAI) expects to monetise nearly 7,000 acres out of its total land bank of about 1.36 lakh acres and use this land for building shopping centres, commercial offices and conference centres, among others. The civil aviation ministry has started inter-ministerial consultations on amending the Airports Authority of India Act, 1994, to expand the scope of usage for land owned by the Authority. After the consultations and the Cabinet approval, the government will introduce a Bill in Parliament to amend the law. “Currently, there are restrictions on the purposes for which we can use the Authority’s land. The amendment (in the AAI Act) will allow us to use nearly five per cent of our total land bank of around 55,000 hectares for other purposes. Some of the land will be used for cargo purposes as well,” AAI chairman Guruprasad Mohapatra told The Indian Express. The earnings from the monetisation of the land will be used for developing airports across the country. Chapter 3, Section 12 of the AAI Act lays down what is possible for the Airports Authority to do with its land. It allows the Authority to establish and maintain hotels, restaurants and restrooms at or near the airports, establish warehouses and cargo complexes at the airports for the storage or processing of goods. Jared Spurgeon Authentic Jersey
SpiceJet completes turnaround with Rs4.3b net profit in FY2016
SpiceJet recorded an operating profit of Rs3.88 billion ($60.3 million) for the year ended 31 March 2017, a marginal increase of 0.7% against the previous corresponding period. Total revenue for the 12 months came in at Rs63 billion, a 20.3% increase from the previous financial year. Expenses was also up by 21.8% to Rs59.1 billion. Net profit for the year was at Rs4.27 billion, down 5% from Rs4.5 billion for the same period last year. SpiceJet notes that “demonetisation resulted in significant decline in yield in Q3 and Q4 2017”. During the fiscal fourth quarter, SpiceJet recorded an operating profit of Rs416 million, down 5.8% in the same period last year. Revenue came in at Rs16.7 billion, up 10.3% from the Q4 2016. Net profit for the three-month period came in at Rs416 million, down from Rs1.07 billion against the previous corresponding period. The results also sees SpiceJet recording a ninth consecutive quarterly net profit. SpiceJet completes turnaround with Rs4.3b net profit in FY2016. John Matuszak Authentic Jersey
Privatisation of aviation infra in India failed to deliver results: IATA chief Alexandre de Juniac
Privatisation of airports and aviation infrastructure in India and some other countries has “failed to deliver” the benefits and the passengers and the economy have continued to suffer high costs, global airlines’ body IATA said today. As the World Airport Summit of the International Air Transport Association (IATA) began here, IATA Director General and CEO Alexandre de Juniac pointed to the burgeoning growth in air traffic demand and said a crisis in aviation infrastructure was looming. The summit was attended by over 1,000 industry leaders from across the world. “Many cash-strapped governments see privatisation as the solution for infrastructure funding. They should be cautious. “Many cash-strapped governments see privatisation as the solution for infrastructure funding. They should be cautious. “Privatisation has failed to deliver promised benefits in many countries–India, Brazil, France, and Australia to name just a few. The concessionaire makes money. The government gets its cut. The airlines pay the bill–usually a big one. And passengers and the local economy suffer the results of higher costs,” de Juniac said in his opening address here. He said when the governments privatise critical infrastructure, economic regulation is essential. “To date I cannot name a single success story. Finding the solution is an important piece of work that needs government and industry collaboration. It’s the only way to balance the investor’s need for profit with the community’s need for cost efficient connectivity,” he said. Referring to the threatening security situation, the IATA chief said “the freedom that is at core of aviation remains a target for terrorists”. Observing that the UN Security Council Resolution 2309 confirms that states would have to do more in fulfilling their responsibility to keep their citizens secure when travelling by plane, de Juniac said this was vital to the airlines which have a natural partnership with the governments. However, “the relationship is showing cracks”. On the US and UK ban on carriage of electronic devices on board, he said “there was no consultation with the industry and little time to implement. The action caught everybody by surprise. “And it was a big challenge for airlines to comply, and a huge inconvenience to our customers. It should not be that way.” The IATA chief summed up some of the major challenges – the mounting security threats, a “looming” infrastructure crisis and high taxes and “onerous” regulations. David Andrews Womens Jersey
SpiceJet reports 43% fall in Q4 net profit
Budget carrier SpiceJet reported 43 per cent fall in net profit at Rs. 41.6 crore for the fourth quarter ended March 31, 2017 due to higher fuel cost and lower yield on account of demonetisation. The Gurgaon-based carrier had reported a net profit of Rs. 73 crore during the January-March quarter of the 2015-16 fiscal. However, for the full fiscal 2016-17, the airline posted a net profit of Rs. 430 crore as compared to Rs. 407 crore reported in the fiscal year ended March 2016. SpiceJet reported a quarterly profit of Rs. 41.6 crore for the three months ended March 31, 2017, making it the ninth successive profitable quarter for the airline, SpiceJet said in a release today. The net profit for FY2017 stood at Rs. 430.7 crore, making this the second successive year of profitable growth, it said. According to the airline, the operating revenues were at Rs. 1,625.7 crore for Q4 FY17 and Rs. 6,191.3 crore for the fiscal 2017. SpiceJet’s strong operational performance comes despite significant headwinds, it said adding that demonetisation resulted in significant decline in yield in Q3 and Q4. Increase in fuel cost was at 46 per cent in Q4 eroding approximately Rs. 160 crore of profit, it said. These headwinds have subsided and SpiceJet is bullish about its future prospects, the airline said. “Two successive profitable years, a record aircraft order and emerging as India’s largest regional operator are testament of the fact that SpiceJet remains firmly on track on its long-term growth strategy,” SpiceJet Chairman and managing Director Ajay Singh said in the release. SpiceJet had in January this year announced that it will buy up to 205 new aircraft from Boeing for Rs. 1,50,000 crore, in one of the largest deals in the fast-growing Indian aviation sector. The order of 205 aircraft signifies the strategic direction in which SpiceJet is now committed upon, the airline said. “The historic order ends the turnaround phase for SpiceJet and marks the beginning of a growth story, which will see the airline expand its wings — both within and outside the country,” the airline said. “During this fiscal, SpiceJet completed its turnaround successfully by discharging all its obligations to its business partners, implemented cost savings measures by restructuring contracts and its business processes,” it said. According to the airline, besides adding capacity on existing routes, it was awarded six proposals and 11 routes under the UDAN regional connectivity scheme of the Central government. With three-year exclusivity on the routes under the UDAN scheme, SpiceJet will be the only airline to operate on those sectors, it said. The airline is also set to benefit from the reduced cost on account of low jet fuel taxes and exemption from landing and parking charges at regional airports under UDAN, the release said. It also said that this summer the airline increased its regional capacity by 25 per cent and will further augment capacity in this segment. James Conner Authentic Jersey
Government looks at three options for disinvestment of Air India
The government is looking at three options for Air India disinvestment, including holding up to 49% in the national carrier, even as it is almost certain to take over a large part of the debt burden to make the airline more attractive for buyers. Sources said while there has been a recommendation to completely exit the perpetually loss-making airline, another possible route to follow is the Maruti model, where the government handed over majority control to Suzuki, for which it received a premium. Later the government reduced its stake further through a public issue. A chunk of government shares were also sold to Indian banks and financial institutions through a bidding process, which was more like warehousing them before being offloaded in the markets. Several global airlines, where governments have exited, have offered large chunks of the holdings to the public. The Air India divestment has gathered momentum in recent weeks with NITI Aayog recommending up to 100% stake sale, along with writing off debt. Finance minister Arun Jaitley too has backed the idea and he has held at least one round of consultations with civil aviation minister A Gajapathi Raju, with sources indicating that the entire process will be speeded up. The sources added that various options are being looked into and a final decision will be taken by the Union cabinet. But before moving the cabinet the civil aviation ministry has to decide if foreign airlines will be permitted to hold a majority stake in the airline. Qatar Airways has already said it wants to have a domestic airline in India and is yet to make an application for a startup. Last June, the Modi government had allowed Indian carriers to be fully-owned by foreign entities. While foreign carriers are still required to cap their stake at 49% in airlines here, they can get a foreign partner — like a sovereign wealth fund or an institutional investor — and not look for an Indian partner for the remaining 51%. It is also looking to tackle some key issues including how to structure the deal financially and if the government should retain some shares. How to monetise AI’s assets and its two subsidiaries — aircraft maintenance and ground handling and the fate of employees are other crucial issues. AI, which is weighed down by loans of over Rs 50,000 crore, has been trying to restructure a part of debt but banks refused to play ball, saying it would open the floodgates for similar requests from other stressed PSUs. This also helped firm up the decision for privatising AI. “India is a huge market and it needs three-to-four strong airlines to be able to cater to the growing travel needs of its people. At the moment, big airports in Gulf and Southeast Asia have are transit hubs for flying people between India and rest of the world. Unless we have strong Indian airlines, foreign carriers will continue to get stronger thanks to us,” said an official. India is now the world’s third largest domestic air travel market, as last year it pushed Japan to number four spot. On the international-cum-domestic air travel front, India saw a combined traffic similar to the UK in 2016 and they are both at number four spot now. Ray-Ray Armstrong Jersey
Jet Airways in talks to buy 50 single-aisle jets
Jet Airways India Ltd, the country’s biggest full-service carrier, is in talks to buy 50 narrowbody jets on top of a pending order for Boeing Co 737 Max aircraft, a person with direct knowledge of the plan said. The most likely model the airline is considering is the 737 Max, though it is also looking at Airbus SE’s A321neo jets as well as the 737 Max 10, a stretched version Boeing may introduce in Paris this month, the person said, asking not to be identified as the discussions are confidential. Jet Airways could sign the deal in the next two months for deliveries starting 2024, the person said. The order may be worth at least $5.6 billion. Jet Airways continuously reviews its fleet in response to demand, but won’t comment on speculation, a spokesman said in an email. A representative for Boeing said in an email that the planemaker is in constant communications with airlines in India about their needs but doesn’t discuss specific conversations publicly. An Airbus spokesman declined to comment. Jet Airways, in which Abu Dhabi’s Etihad Airways PJSC owns a 24 per cent stake, is expanding its fleet as competition intensifies in India, one of the world’s fastest-growing aviation markets, where carriers offer cut-throat, below-cost fares to attract passengers. The Indian carrier made its first annual profit in seven years in the 12 months ended March 2016, mainly due to a drop in oil prices — the biggest cost for an airline. Airlines in Asia are ordering hundreds of new planes to meet surging demand as an emerging middle class spends more of its disposable income on air travel. In India, market leader IndiGo has ordered 430 A320neo jets and is in talks to buy 50 ATR turboprop aircraft, while budget carrier SpiceJet Ltd. has ordered as many as 205 Boeing jets. Pending Order The 737 Max is the fastest selling aircraft in Boeing’s history, with 3,700 orders from 87 customers from around the world, according to the Chicago-based company’s website. In 2015, Boeing said Jet Airways had an order for 75 Max 8 variants due for delivery starting 2018. The current list price of the Max 8 is $112.4 million before customary discounts for large orders. Jet Airways, which has 10 Boeing 787s on order, is also in talks with the planemaker to defer deliveries of the Dreamliners by two to three years, as the airline can use its existing relatively new 777 jets for a few more years, the person said. The carrier disclosed the 787 order in 2007 and has repeatedly delayed taking deliveries of the aircraft since 2011. In about three years, Jet’s A330s will exit its fleet, the person said. Kevin Byard Authentic Jersey
Russia overtakes India in domestic air travel growth: IATA
India is no longer the world’s fastest growing domestic air travel market. Russia overtook India by witnessing 16.7% growth in April 2017, over the same month last year, while India grew in this period at 15.3%, according to International Air Transport Association (IATA). The global average domestic air travel growth rate this April (over the same month last year) was 7.7% and in the new pecking order, India is at number two followed by China at 12.7%, Japan at 6.7% and the US at 4.7% .. India’s domestic air travel has been booming due to low crude prices, which in turn allowed airlines here to offer cheap airfares. But in the past two months as crude firmed up, airfares also rose and the domestic skies started becoming a tad less crowded in terms of growth slowing down. Exactly two months ago, in March, IATA had said that India had been the world’s fastest growing domestic air market for 22 months in a row. This meant that till March, India saw the highest growth in domestic air travel over the same month in the previous year for almost two years. Dave Cash Womens Jersey
Air India selloff: Government should exit completely, national carrier tag redundant now
Should the government retain a minority stake in Air India to preserve the ‘national carrier’ tag, even after it agrees on the modalities to sell off this loss-making airline? If retaining a minority stake would be the consensus among the wise men in New Delhi tasked with Air India’s future, it would indeed be a travesty. The national carrier tag was important in the decades when India was a closed economy, when Air India was the sole airline operating on the domestic as well as on international skies and when it was thought to represent Indian hospitality. But today, when private airlines own a majority of the domestic market by passengers and when overseas routes too are no longer a monopoly of the Maharaja, what sense does it make for the government to retain any control whatsoever in Air India? The airline needs to be handed over in entirety to a private bidder, as and when the selloff process begins. Not only will this intent of complete exit provide assurance about government’s sincerity regarding the selloff, it would also signal complete freedom for the new owner to take critical decisions – even with a minority equity share, the government may otherwise well interfere in decision making. Speaking at an interaction with media today, Niti Aayog Vice Chairman Arvind Panagariya said that though his organisation has already given its recommendations on Air India selloff, the government has to take a call on several crucial aspects of the proposed sale: 1) Whether the airline should be sold off at all 2) If the decision is in favour of a selloff, then should the universe of buyers include foreign buyers or should the sale be restricted to Indians? 3) Should the government retain some stake in the airline to retain its ‘national carrier’ tag 4) Should the entire Rs 52,000 crore debt on Air India’s books be written off or should only a part of this be written off by the government. Panagariya said that Niti’s recommendations have been submitted to the Prime Minister’s Office, and now the PMO along with the Ministry of Civil Aviation will have to take a call on the selloff. While declining to divulge details of his recommendations on Air India disinvestment, Panagariya was quite clear that the current debt on the airline’s books was “very very large and selling it with this (debt) will be very very difficult. Even if the sale were to be open to both, domestic and foreign buyers, will the government write off the entire debt or only a part of it – that decision needs to be taken”. An official close to developments had told Firstpost earlier that it is possible to break up Air India into two distinct parts: 1) The airline itself with aircraft and related assets and 2) Air India’s subsidiaries and the real estate. This official had said that the sensible way to get maximum value in any selloff would be to offload just the airline to a prospective buyer. The government could then simultaneously dispose off the subsidiaries and real estate for a total consideration of close to Rs 20,000-21,000 crore. In fact, an inter-ministerial group has already begun deliberations in the second part, specifically on monetising land assets. The same person had further said “All this is known to people involved in the selloff process. Now, the ball is in DIPAM’s (Department of Investment and Public Asset Management) court. Once DIPAM accepts the proposal drafted by Niti Aayog, things will move forward. DIPAM will take the proposal to the Cabinet Committee on Disinvestment. If this committee approves the proposal, then ads will be put out for transaction advisors and valuers.” DIPAM is expected to form several committees to examine and fine tune the selloff process, comprising top officials of the ministry of civil aviation, Air India, Finance Ministry and DIPAM itself – the entire selloff process of Air India could take at least 8-12 months. Mark Recchi Authentic Jersey
Privatising Air India: Tatas eyeing state-run carrier?
Air India is all in the news and buzzing on the social media big time though much to the discomfort of its approximately 19,000 employees, since the Modi government strongly favours the carrier’s privatisation. Who, in the words of civil aviation minister Gajapathy Raju, will be the “bakra” (scapegoat)? Tatas, as the rumours say, given that no business group knows Air India better than them. A purported meeting between Tata Sons chairman N Chandrasekaran and Arun Jaitley in New Delhi on Thursday set the media tongues wagging amid the finance minister publicly stating that the government needs to get out of loss-making Air India and the official think-tank Niti Aayog also advocating complete privatisation of the carrier. If the impossible (handing over of Air India) happens, it would mark a milestone not only for Indian civil aviation sector, but also for the Tata Group who owned the carrier before nationalisation.