Delhi airport authority collected Rs 9,450 crore extra charges from IGI flyers since 2014
Are passengers flying in and out of Delhi paying much more than they should? And will the extra charges collected by airlines from the passengers and paid to Indira Gandhi International Airport — a total of around Rs 9,450 crore in just over three years — ever be refunded to flyers? These questions have been raised by the Airports Economic Regulatory Authority (AERA) in a petition filed before the AERA Appellate Tribunal (AERAAT) over Delhi International Airport Pvt Ltd (DIAL) continuing to charge the higher charges pertaining to the first control period, or a stipulated five-year term, from April 1, 2009 to March 31, 2014. AERA had lowered the airport’s charges by a steep 96% for the second control period that came into force from April 1, 2014 and will go through to March 31, 2019. While this should have meant cheaper flights to and from Delhi, DIAL opposed the implementation of the lowering of charges at various legal forums and continued with the higher earlier rates. The case is yet to be decided. A concerned AERA recently moved AERAAT, saying, “The appellant is charging aeronautical tariffs as per the first tariff order, which has higher tariff than the second tariff order. Under the second tariff order, the target revenue to be recovered by the appellant is Rs 7,709.61 crore (approximately) and the aeronautical tariff has been fixed on that basis. However, from April 1, 2014 to June 30, 2016, the appellant has already earned revenue of Rs 7,257.15 crore (approx) which is about 94.13% of the target revenue for the second control period.” The petition added that DIAL which was currently recovering an estimated Rs 300 crore per month, would have accumulated around Rs 17,157.15 crore by the end of the second control period in March 2019. This would represent an excess of Rs 9,447.54 crore against the target revenue of Rs 7,709.61 crore. AERA warned that it would not be possible to have this excess amount refunded to passengers from whom it was collected, thereby creating an “irreversible and uncontrollable situation”. DIAL is recovering monies in excess of the projected revenue, thus defeating the whole purpose of fixing the aeronautical tariffs, the regulatory authority charged. In response, a DIAL spokesman said, “The tariff determination for the first control period was done in 2012 based on various principles adopted by AERA. Being aggrieved with certain principles adopted by AERA, DIAL filed an appeal in AERAAT in 2012. The decision on the aforesaid issue is still pending adjudication. This has led to recovery of tariff much lower than the rightful entitlement under the concession. In the meantime, AERA has used the same principles to determine the tariff for the second control period. We are awaiting judgement of AERAAT on the issues. Once these are resolved, DIAL expects material recalculation of target revenue of first and second control periods and as a consequence does not expect significant over-recovery accruing to DIAL.” For the second control period, DIAL had sought a 42.6% hike in aero charges, but AERA had brought them down by 96.08% in December 2015, leading DIAL to challenge the decision in multiple legal forums. While requesting the tribunal to decide on the issue expeditiously, AERA reasoned that the large amounts involved in airport projects are public money and every attempt should be made to safeguard such funds. AERA determines airport charges for major airports for five-year terms called control periods. Based on these, airlines have to pay airports and accordingly set passenger fares. Scott Harrington Womens Jersey
Relaxed airline FDI norms to have security implications: FIA
Raising red flags over dilution of FDI norms for local carriers, the Federation of Indian Airlines (FIA) has said the decision would place domestic players at a disadvantage as well as have serious implications on national security. FIA, whose members are IndiGo, SpiceJet, Jet Airways and GoAir, have been vociferous in their opposition against relaxation of foreign direct investment norms for airlines. In a strongly-worded letter to the Civil Aviation Ministry, the grouping has suggested that any dilution in substantial ownership criteria for domestic carriers should be done only on a reciprocal basis. Emphasising that dilution in the substantial ownership criteria should be applied strictly on reciprocal basis, FIA said any unilateral concession by India would place the local carriers at a serious competitive disadvantage vis-a-vis their foreign counterparts. As part of liberalising norms to overseas investments, foreign non-airline players can own up to 100 per cent stake in local carriers. According to FIA, once foreign controlled airlines are established as Indian carriers, they would gain automatic access to defence airfields. Since an unfriendly foreign country can easily route its investment through other countries or through shell companies, allowing effective control to lie outside the country has “huge implications”, it added. FIA also noted that the amendment would enable a foreign airline, through its group companies to be able to own a domestic airline in India. As per the grouping, changing from SOEC (Substantial Ownership and Effective Control) to Principal Place Business (PPB) in Air Service Agreements (ASAs) would impact capacity entitlements. “Accepting PPB will also open the back door for entry by foreign airlines into India’s lucrative domestic market at a time when the Indian carriers are still at a fairly nascent stage of their growth. The grouping, which has legally challenged granting of Air Operator’s Permit (AOP) to AirAsia and Vistara, cited that even the US and Canada, allow only 25 per cent of voting rights to foreign nationals and entities in their airlines. “Foreign governments, including those of Singapore and Malaysia, do not allow airlines in India to set up subsidiaries in their countries. Therefore, it is not understood why India should extend them this courtesy,” the letter, dated December 30, said. Mike Singletary Authentic Jersey
IndiGo, SpiceJet raise red flag over FDI norms in aviation
IndiGo and SpiceJet have raised “security” concerns over the government’s decision to allow 100 per cent foreign ownership by non-airline players in the Indian carriers. Spicejet CMD Ajay Singh and IndiGo President Aditya Ghosh have recently raised this issue during their meeting with Commerce and Industry Minister Nirmala Sitharaman. During the meeting, the two airlines said aviation is a “sensitive sector” and the FDI policy relaxation would have “security implications”, according to sources. Spokespersons of IndiGo and SpiceJet could not be immediately reached for comments. The meeting also assumes significance as the government is considering removal of an anomaly restricting foreign direct investment (FDI) in the civil aviation sector. The sector is faced with a Catch-22 situation where a foreign investor, excluding overseas airlines, can acquire up to 100 per cent stake in a local carrier. However, at present they cannot seek a scheduled operator’s permit since it can only be given to a company where substantial ownership and effective control is in the hands of Indian nationals. As this condition restricts and prevents foreign investors from acquiring a domestic airline, there is a need to amend Aircraft Rules, 1937, to facilitate FDI in the sector. Due to this anomaly, the moment foreign investors buy 51 per cent or a controlling stake in a domestic airline, the scheduled air operator permit gets withdrawn. “So, this sectoral norm needs to be amended,” sources added. As per the current policy, 100 per cent foreign investment is allowed in scheduled air transport service, domestic scheduled passenger airlines and regional air transport. Only non-airline players will be allowed to bring in 100 per cent FDI in local carriers. Under the new set-up, 49 per cent will be through the automatic route and for anything beyond, government nod will be required. At present, up to 49 per cent FDI is permitted in scheduled airlines. The government is working to remove all anomalies which are restricting FDI into the country. FDI in 2015-16 grew 29 per cent to USD 40 billion. Morgan Burnett Jersey
New airport terminal to be opened on Jan. 12
Chief Minister N. Chandrababu Naidu and Union Minister for Civil Aviation Ashok Gajapathi Raju will inaugurate the new terminal of the Vijayawada airport on January 12. Vijayawada MP Kesineni Srinivas (Nani) along with Airport Director G. Madhusudhan Rao on Monday visited the airport premises and inspected works that were nearing completion. To cater to the increasing passenger traffic, the construction of the new airport terminal—which will act as an interim terminal before the International terminal is built—began on October 8 last year. The works are expected to be completed by January 7. Bo Jackson Womens Jersey
GST may impact air ticket prices by 9-12%, says report
“Given the price sensitivity of Indian passengers, this could have a significant negative impact on demand. The implementation of GST may also result in higher upfront costs for aircraft and leases, spares and parts, and distribution costs, increasing cash flow requirements, although airlines will receive input tax credits later,” it added. The government is pushing for a new tax regime this year. The report also pitched for an “urgent review” of the country’s civil aviation policy, warning that it could “prove to be a hindrance” to the development of the sector. The India Aviation Outlook 2017-18 report said that “design flaws” in the policy, particularly with respect to regional connectivity, ground handling and bilateral policy, mean that it will be “difficult to implement in practice”. It could “inadvertently act as an obstacle” to achieving desired objectives, the report warned. Nikita Zadorov Womens Jersey
Local simulator training facilities must: DGCA tells airlines
Airline operators having more than 20 aircraft of one type should compulsorily have simulator training facility within India, aviation watchdog DGCA has said months after detecting lapses at an overseas simulator training facility used by IndiGo . Issuing a Civil Aviation Requirement (CAR), the regulator today also said domestic operators should “progressively” reduce the use of overseas simulator training facilities. “Operators with more than 20 aeroplanes of one type shall have owned/leased simulator capacity within India for that type by December 31, 2018,” Directorate General of Civil Aviation (DGCA) said. In June last year, DGCA had ordered budget carrier IndiGo not to train its pilots on one of the two simulators at a training centre in the UK following an inspection of the facility and the subsequent detection of the malfunctioning in one of the two such machines. At present, airlines shell out a significant amount towards training of pilots overseas and having enough number of simulators in the country itself would help in reducing the overall costs for the carriers. Alexei Kovalev Womens Jersey
PMO seeks detailed report of Air India’s performance
With the NDA government set to present its third Budget next month, the Prime Minister’s Office has sought a detailed performance report from flag carrier Air India, which is surviving on a ?30,000-crore bailout package from the exchequer. Top Air India management is expected to make a presentation in this regard during a review meeting at South Block later this week, sources said on Monday. The government-run carrier reported operating profit of ?105 crore, the first time since the merger of erstwhile Air India and Indian Airlines, in the previous fiscal mainly on account of low fuel prices and discounted ticket sales, among others. “These review meetings are a part of the monitoring mechanism since the government is infusing funds in the carrier,” an airline official said on condition of anonymity. According to the official, besides giving a presentation on the current financial position of the airline, the proposal to increase retirement age in Air India from the current 58 years to 60 years and its request for more funds for the current fiscal are also expected to come up for discussions. Air India is surviving on a ?30,231-crore bailout package extended by the previous UPA government in 2012 for a 10-year period and also equity support for payment of principal/interest of the non-convertible debentures. William Hayes Authentic Jersey
DGCA asks aircraft leasing companies to pay more tax on imported planes
In what could be a blow to the regional connectivity scheme, the aviation regulator has stalled the entry of aircraft leasing companies into India by asking them to pay higher duties on imported planes. The civil aviation ministry, which has been actively pushing for air connectivity to small cities and towns, now plans to take up the matter with the finance ministry to find a solution. According to government rules, any company importing an aircraft has to inform the regulator whether it is bringing the plane for non-scheduled operations or personal use. The rule does not mandate that the company importing the aircraft has to operate it —so, a leasing company can import aircraft in its name and lease to airlines involved in commercial operations. The duty on aircraft imported for nonscheduled operation is just 2.5 to 3 per cent, but it is steeper at 19-21 per cent for those brought in for personal use. Leasing companies, which plan to import aircraft and lease them out to local operators, have sought approval to pay duties at the lower rate. But the Directorate General of Civil Aviation (DGCA) has blocked it by arguing that these companies may avail of the lower rates but use the aircraft for personal use, as there is a precedent. “In the past, we had come across violations by operators, who import aircraft on the pretext of non-scheduled operations but use it for personal use. This way, they save a lot of money by paying less duty on it,” said a DGCA official, who did not want to be named. One cannot guarantee that these aircraft would not be used for personal flights, added the official. Barring aircraft leasing companies from entering India could hamper prospects of the regional connectivity scheme, whereby the government aims to connect unserved and underserved airports. It has decided to fix fares at Rs 2,500 per hour of flight and compensate the airlines through a subsidy for operating flight which may not be commercially viable. “We had discussions on the issue. We are writing to the revenue department and get the issue addressed,” Aviation Secretary RN Choubey told ET. He said there was a need to address the tax rule for leasing companies to shift base to India. “No leasing company would come if they are asked to pay higher duties,” Choubey said. To make the regional connectivity plan a success, the government is working to make aircraft available for scheduled commercial operators — regional operators who will launch regional flights. The government has also allowed foreign-registered aircraft to be operated in India, on the request of aircraft leasing companies. The government will open the bids to operate regional flights next week and expects the flights to start in February. Till last Thursday, the aviation ministry received bids from 60 companies to operate flights on 600 regional routes. Demetrius Harris Jersey
Bangalore International Airport: State seeks security nod
Karnataka has advised the Ministry of Civil Aviation (MoCA) to issue “security clearance“ to billionaire Prem Watsa’s proposed investment in Bangalore International Airport (BIAL) in an effort to speed up an FDI proposal that has been flying back and forth between Bengaluru and New Delhi. The traffic volumes at BIAL have surpassed the projections, calling for speedy addition of a second terminal.But the delay by the Centre could be holding up key capital investment decisions at the BIAL due to the uncertainty the indecision has created, people aware of the development said. Watsa’s Toronto-based Fairfax Group had, in March last year, announced its decision to buy a 33% stake in BIAL from GVK Group for Rs 2,182 crore ($321 million), valuing the eight-year-old airport at about Rs 6,600 crore. A month later, Fairfax signed another deal to buy 5% stake held by Flughafen Zurich AG in BIAL. The investment proposal, however, has been hanging fire with MoCA seeking one clarification after another from the state, conveying an impression that decisions over FDI proposals consumed their usual time despite the Centre’s claims of speedy clearance. Technically, a state government has no say in matters relating to security clearance to a foreign investor as it depends more on the relationship between two countries. Karnataka had declined to of fer an opinion on the grounds that the subject fell completely in the domain of the Ministry of Home Affairs. The BIAL had, on May 11, 2016, wrote to MoCA requesting that “security clearance“ be given to new investors. The MHA, for its part, communicated its nod to MoCA sometime ago, which chose to vet the FDI proposal further, and insisting on an opinion from Karnataka on security as well as other issues. The state had declined an opinion in the past, but has now chosen to advise the MoCA to communicate the MHA nod to BIAL. The MoCA ‘s delay on Watsa’s investments in airport sector has raised eyebrows because his Toronto-based group is an existing investor in India with stakes in Thomas Cook and Quess Corp. Just a few days ago, the RBI approved another investment proposal from Fairfax to pick up 51% in the Kerala-based Catholic Syrian Bank. “I don’t understand why the MoCA should drag the subject so much because Watsa is person of Indian origin who is running successful businesses in Canada and other countries,“ said R.Ramakrishnan, a practising chartered accountant. The Bengaluru airport recorded the largest growth at 22.4% in passenger and cargo traffic in the January-September period compared to other large airports by handling 11million passengers. Nevertheless, the BIAL is yet to take a call on award of contracts like airport operations, management and services possibly awaiting clarity on the fate of the FDI proposal. Randall Cunningham Womens Jersey
New Rules For On-Time Performance
Aviation regulator DGCA is preparing fresh guidelines for block hours, a yardstick for on-time performance, to remove disparity among various airlines. Block hours refer to the time taken by an aircraft to travel between cities. An airline’s on-time performance as well as facilities and financial compensation to a flyer in case of a delay are determined by block hours. The Directorate General of Civil Aviation (DGCA), which has been studying block hours from February 2016, has noted that the block hours differ from route to route, and from airline to airline. “Some airlines reported good on-time performance by showing additional block hours for a particular flight compared to same flights of competing airlines,” sources said. The ministry of civil aviation has tasked the DGCA with standardising the existing block hours for different routes. “We have been studying various routes for this purpose. The idea is to ensure that all airlines use the same block hours for the same route,” DGCA chief B S Bhullar said. Officials on the job said that traffic data of various airlines of the past five years has been collected, and is being analysed as part of the standardisation exercise. According to the sources, while the flying time between Delhi and Mumbai is approximately 1.28 hours, the block hours for the route stood at a maximum of 2.10 hours. “Some airlines show additional block hours, and because of this, they report before time, or on-time arrival despite departing late. That anomaly is being addressed by DGCA now,” said Air Passengers Association of India (APAI) president Sudhakara Reddy. Brian Dawkins Jersey