Low-cost carriers to remain profitable, but domestic industry may go in the red: report
Indian Airlines are expected to report combined losses to the tune of USD 250-300 million as against an estimated profit of USD 122 billion in the previous financial year, according to an industry report. The downward pressure on yields, combined with cost creep, is expected to push the consolidated industry back into the red for the 12 months ending March 2017, the Sydney-based aviation think-tank, Centre for Asia Pacific Aviation (CAPA), said in a report released here on Wednesday. “IndiGo, Jet Airways, SpiceJet, GoAir and Air India Express are all expected to remain profitable for the full year (FY17), but at levels lower than in FY2016, while losses are projected to increase at Air India, AirAsia India and Vistara. At a total industry level, losses could reach USD 250-300 million,” the CAPA India Aviation outlook FY2018 report said. IT has also projected higher losses for the next fiscal at USD 380-450 million. Ramik Wilson Authentic Jersey
Over 6000 violations by aviation companies in 2016: DGCA
Aviation watchdog DGCA has come across over 6,000 violations related to compliance by aviation companies last year, the government said today. Another 233 such violations were detected during the random survey (surprise checks) by the Directorate General of Civil Aviation (DGCA) as part of its annual surveillance programme, Minister of State for Civil Aviation Jayant Sinha said in a written reply to a question in the Rajya Sabha. “During 2016, violations observed under planned and non- planned surveillance by DGCA were 6,310 and 233 respectively,” he said. In case of violations observed under planned surveillance during 2017, the requisite data was not available at present, but, “in case of violations observed under non-plan surveillance during 2017, the number is 30,” Sinha said. As part of its aviation safety mechanism, DGCA conducts frequent surveillance checks on airlines, non-scheduled operators as well as airport and Maintenance, Repair and Overhaul (MRO) operators to ensure that the standard demonstrated at the time of issuance of aviation documents such as approval certificate, license, rating, among others is maintained on a continuous basis. Ereck Flowers Authentic Jersey
‘Profitability Is More Important Than Market Share’
After a great turnaround, SpiceJet is now entering a new growth era, SpiceJet chairman and managing director Ajay Singh tells Ashish Sinha. Seven continuous quarters of profits and best passenger load factor; how are things now for SpiceJet? So far, so good. Given the place from where we came — when the airline was shutting down — we have come a long way. Today, we have one of the best on-time performances (OTP) and the highest load factor of 92 per cent for 19 months in a row. We are in a good position. What did you do to make things right? The very first thing was to instil confidence in everybody that the airline will continue to fly and not shut down. We had to give the confidence to our business partners, travel agents, employees and everybody connected with the business that the airline will stay and prosper. That is how we started restoring confidence. We decided that there won’t be any more cancellations going forward. We made it a point to tell everyone which flights were flying and which were not. I wanted to be honest with everybody. I wanted to put operations back in order. We had to ensure that the planes were not going to be taken away by the lessors. We took aircraft on wet lease. How bad was the financial situation in those days? It was very bad. We were in a situation where immediate payables of around Rs 2,200-2.300 crore were hanging on our head. It was clear that the money could not have been paid right away. So, I asked everybody to give me some time before I could start paying back. We had to make a timetable. I got tremendous support from lenders as many felt that since I had done this before, I would be able to do it again. I told everyone that I will not be asking for more. But I also told them that I will freeze the current payments and pay on a day-to-day basis. The very first task was to keep all the aircraft flying. For that we needed money, for aviation turbine fuel (ATF), and salaries of employees. The basics had to be done. So, we started doing those things right. Omri Casspi Womens Jersey
Listing possible as Air India looks to restructure ownership
The government is considering a new ownership structure at Air India in an attempt to turn around the fortunes of the loss-making national carrier, according to a report in Livemint. The report quotes two people familiar with the matter as saying that the proposed restructuring stops short of privatisation. The first step involves recasting almost Rs 28,000 crore of working capital debt that Air India owes to banks, by trading it with equity.The next step would involve inducting professionals equipped with proven financial and management skills. The final phase might include listing the company. State Bank of India leads the consortium of public sector banks, which have given these loans to Air India. Air India chairman Ashwani Lohani and SBI chairman Arundhati Bhattacharya have already met twice to discuss the plan. However, the banks, already saddled with bad debts, are proceeding with caution. The report quoted an official as saying that the banks would like Air India to undertake a clear roadmap to keep the airline “sustainable” as a business, where value can be unlocked along the way. A.J. Klein Jersey
Jet Air to recapture lost ground with 11 Boeing 737s
Jet Airways, which has seen a dip in its market share in recent times, will now lease 11 old Boeing 737s in an incremental manner by the end of this year, before phasing them out with the arrival of 75 Boeing 737 Max aircraft from 2018 onwards. “The 11 Boeing 737s are older planes and will be used for temporary basis till the induction of Boeing 737 Max,” said a Jet Airways source aware of the development. It is pertinent to note that Boeing 737 Max will mainly come as replacement for the existing leased aircraft which will be returned on the expiry of their lease. However, a Jet Airways spokesperson refused to comment on the story, calling it speculative. The airline, at present, has a fleet of 114 aircraft which includes a mix of wide-body Airbus A330s and Boeing 777s, narrow-body 737s and ATRs. It has 75 Boeing 737s Max on order which are due for delivery in 2018. Also, the airline is said to have deferred the induction of Boeing 787 aircraft which was scheduled to get delivered by the end of 2017. Jet Airways claims that it does not want to rush into expensive asset purchase game but would rather develop market by way of leasing aircraft, code-shares and strategic partnerships. The airline, in order to back its strategy, said that its code-share traffic has surged from 650,000 passengers in FY14 to 1.22 million in FY15. Gaurang Shetty, whole time director of Jet Airways, during an interaction last year with DNA Money had said, “It’s not that only if you place large plane orders that you are expanding. We keep scanning for all kind of opportunities like leasing of planes to increase our capacity. End of the day, it’s the bottom-line which matters.” M.J. Stewart Jersey
Kempegowda airport posts 22.5% traffic growth
Bangalore International Airport Ltd’s (BIAL) Kempegowda International Airport Bengaluru (BLR Airport) has posted an impressive traffic growth by clocking 22.18 million passengers, marking an overall traffic growth of 22.5 per cent. Air traffic movement witnessed an increase of 19.9 per cent, with the airport now connecting 45 airlines to 66 destinations in India and globally. On an average 60,000 passengers travel through the airport every day. The year also saw the achievement of many new milestones. The airport had a record-breaking two million passengers travelling in November 2016 and an all-time monthly high of 2.15 million passengers in December 2016, the single highest traffic month for any airport in South India. BLR Airport had also reached the landmark milestone of welcoming its 100 millionth passenger in 2016. G V Sanjay Reddy, Managing Director, BIAL, said: “2016 saw another strong year for us at BLR Airport. Despite the many challenges, we have grown exponentially in terms of passenger traffic. Our cargo business has also seen an incremental growth which reaffirms our growth strategy to develop our airport as the cargo hub of South India.” “The recent statistics continue to establish BLR as an airport of choice not only for travellers but also our business partners. We are grateful to all our customers that helped contribute to our success and retain our position as the No 1 airport in South India. We are optimistic about the year ahead and we will continue in our efforts to offer excellent customer service. The new year will see us focusing strongly on introducing innovative and interactive digital solutions that will create value for our customers,” he added. Eddie Robinson Jersey
Low-cost carriers to remain profitable: Aviation report
Indian airlines are expected to report combined losses to the tune of USD 250-300 million as against an estimated profit of USD 122 billion in the previous financial year, according to an industry report. The downward pressure on yields combined with cost creep, is expected to push the consolidated industry back into the red for the 12 months ending March 2017, the Sydney—based aviation think tank, Centre for Asia Pacific Aviation (CAPA), said in a report released here today. “IndiGo, Jet Airways, SpiceJet, GoAir and Air India Express are all expected to remain profitable for the full year (FY17), but at levels lower than in FY2016, while losses are projected to increase at Air India, AirAsia India and Vistara. At a total industry level, losses could reach USD 250—300 million,” the CAPA India Aviation outlook FY2018 report said. IT has also projected higher losses for the next fiscal at USD 380—450 million. Cautioning that the profitless growth is expected to increase viability risks, starting from the next fiscal, CAPA noted that if the Indian carriers continue to expand without sufficient capitalisation, they could face significant challenges when the next external oil price shock hits. According to CAPA, Indian airlines reported a combined profit of USD 122 million in the year ended March 2016, “but this era of profitability is likely to be short—lived. Traffic growth is being stimulated above its underlying demand as a result of excess capacity and competitive fares,” the report observed. Noting that the industry cost dynamics are changing with the operating environment likely to become more challenging, CAPA in its report said, “with expected cost creep of 10 per cent , a close to 10 per cent decline in yields, oil at USD 55—60 per barrel and on exchange rate of USD 1=INR 73—75 , industry losses could widen further to USD 380—450 million in FY 2018. It also said though the low cost carriers are expected to remain profitable, yields could potentially decline further than assumed, given the capacity induction planned. Paul Coffey Jersey
EAC rejects GMR’s plan to convert aviation SEZ in multiproduct
A committee under the Minister of Environment, Forests and Climate Change has rejected GMR group’s request to convert its aviation SEZ at Rajiv Gandhi International Airport here into a multi-sector SEZ. GMR Hyderabad International Airport Limited (GHIAL) cited poor response from the aviation companies for setting up shops in aviation SEZ as the reason to convert it into a multi-product SEZ. However, the Expert Appraisal Committee under the Ministry felt conversion of the aviation SEZ, which is close to the runway, into the planned multi-product SEZ, may attract birds which may become hazardous to aircraft at airport. The infra major said the GMR Aerospace and Industrial Park, spread in the layout of 253.85 acres, has an occupancy rate of just 11 per cent over the last six years, and if allowed to convert into a multi-product SEZ, within 3-4 years it will be fully operational. “The committee also felt that bird hazard is a serious concern for aviation sector and comprehensive study must be done by a reputed institution such as SACON, not just for airport, but also for SEZ areas, especially due the fact that multi-sector SEZ can become heaven for birds and if not planned well, can have serious risks to aircraft. Mario Edwards Jr Jersey
AAI Act amendment unlikely to spell out purposes of land use
The proposed amendment to the Airports Authority of India Act to allow monetisation of land is unlikely to specify for what purpose the denotified land can be used. “The idea of the proposed amendment is to allow usage of land as is required at a particular point in time. It is unlikely to define what all the land can be used for as is the case at present,” said a senior AAI official. Current guidelines In his Budget speech, Arun Jaitley had said the Airports Authority of India Act would be amended to enable effective monetisation of land assets. He added that the money so raised would be used for airport upgradation. At present, the use to which land at AAI airports can be put is specified under Section 12 of the AAI Act 1994. The Act states that the land can be used for constructing residential buildings for its employees, establishing and maintaining hotels, restaurants and rest rooms at or near the airports or establish warehouses and cargo complexes at the airports for the storage or processing of goods or arrange for postal, money exchange, insurance and telephone facilities for the use of passengers and other persons at the airports and civil enclaves among others. Omnibus category Explaining the rationale behind not specifying the purpose for which the land can be used, a senior government official pointed out that at one time there was a lot of demand in various states for land to build malls but now that is on the wane. Wary of such a situation arising again, the government is keen that the proposed amendment to the AAI Act creates an ‘omnibus category’ which will try and take care of use of land in perpetuity. Meanwhile, the Ministry of Civil Aviation has already sent a note for inter-ministerial comments on amending the AAI Act. Once all the comments are received and reviewed, the ministry will move a note for consideration of the Union Cabinet, an official said, declining to specify a timeline for the proposal to be taken up by the Cabinet. AAI is the third largest land owner after the armed forces and the Indian Railways. At the end of March 2015, AAI had about 55,000 acres of land, including 12,500 acres in south India and close to 15,000 acres of land in western India.
Pawan Hans plans to provide Regional Air Connectivity through helicopters
The Government of India Enterprise Pawan Hans Limited is planning to provide Regional Air Connectivity through helicopters, connecting all the districts of the country. Talking to UNI, B P Sharma, Chairman & Managing Director of Pawan Hans said that Company has prepared a detailed plan of expansion. Under the plan, it has prepared a vision document 2020 and formulating the Business Plan 2027. After giving a detailed presentation to Civil Aviation Minister Ashok Gajapathi Raju and Minister of State for Civil Aviation Jayant Sinha last week in the presence of higher officials of the Ministry, Mr Sharma said, “We are already into the process to launch our helicopter services under RCS and may go for providing the connectivity between districts of the country by operating our helicopters as there is no need of developed airports for our operations. We can easily start our operations without much investment on related services. But it all depends how much response we will get from the passengers and the Authorities.” Isaac Yiadom Jersey