Caution for govt’s regional connectivity scheme; fund cruch halts Air Pegasus’ ops for 2nd day
In October 2012, Kingfisher Airlines stopped operations because its engineers refused to certify aircraft fit for flying. This was a culmination of a long list of woes that the airline was facing. What happened over the next few months is well documented. Eventually, the airline’s flying permit expired and it never flew again. In December 2014, SpiceJet had to cease operations for a day because of unpaid dues to oil companies but then, with gradual help from the government, it got back on its feet under a new promoter who presented a comprehensive turnaround plan. The return was in a smaller avatar but operations have continued uninterrupted since. Cut to 2016, and another airline has been unable to conduct its operations for two days running. Only this time, it is a regional carrier called Air Pegasus which was operating just three aircraft, connecting Bengaluru to smaller cities across South India. The suspension of operations of Air Pegasus is a cautionary tale, specially since the Centre has been emphasising enhanced regional connectivity through a draft scheme which caps fares on regional routes in return for some viability gap funding to airlines. The scheme is not yet finalised but essentially encourages airlines with smaller aircraft to launch flights to India’s hinterland while getting some help from the Central and state governments in the form of VGF. The severe fund crunch which crippled the operations of Air Pegasus in the last two days should serve as warning against pitfalls of this ambitious scheme. A source confirmed that operations of Air Pegasus remain suspended today as well, as the promoters continue to hold negotiations for getting back aircraft and infusing some urgently needed funds into the airline. This person confirmed that the “cash burn” at the airline is Rs 5 crore a month and that there is an immediate need of up to Rs 100 crore to fund operations. What could not be ascertained is whether the three ATR aircraft which Air Pegasus was operating till day before yesterday have been possessed by lessors or not. Steve McNair Womens Jersey
Air India to recruit 500 pilots, 1,500 cabin crew in next 2-3 years
Air India may recruit about 500 pilots and over 1,500 cabin crew in next two to three years to meet the requirement as the fleet size is expected to increase considerably, a senior official has said. “We are planning to have 700 more pilots in the next two to three years keeping in view the fleet expansion. From last August till now, we have already recruited 250 pilots. So about 500 more pilots we are going to recruit. Advertisement for 400 pilots has already been floated,” AI’s General Manager (Operations) N Sivaramakirshnan said. Last year, Air India had sought to recruit 200 trainee pilots (senior trainee pilot license holders who come with A320 endorsement). However, it could select only 78. Now all those pilots are flying on various routes, he said. Nearly 150 pilots are expected to complete their training by December this year. According to him, the present strength of pilots is 858 and the beleaguered airlines lost about 100 pilots during the last two years. “We have plans to have cabin crew of 3,000 personnel. Besides the existing number, we are planning to take 1,500 more in the next two to three years,” he said. The official said Air India envisaged fleet expansion of another 100 aircraft in the next four years’ time. On training facilities for pilots, the official said currently they have three simulators in Hyderabad and four in Mumbai. The simulators in Hyderabad belong to A320 while the four in Mumbai belong to Boeing family. “We are planning to order one more simulator for training on ATR aircraft in Hyderabad. RFI (Request for Information) has already been floated. By January next year we hope that it would be operational,” he said, adding that the cost of the simulator would be about Rs 65 crore and an additional Rs 6 crore is needed for construction of building and other facilities for the ATR simulator. Though Air India does not have any ATRs in its fleet, services will be provided to its wholly-owned subsidiary ‘Alliance Air’. Malcolm Smith Jersey
AERA exempts small aircrafts from landing fee, will boost regional connectivity
The Airports Economic Regulatory Authority (AERA) has corrected the anomaly in its earlier tariff orders and has exempted aircraft with 80 seats or less from being charged a landing fee, a move that’s going to give a fillip to the regional connectivity plan. According to an earlier tariff order, which is still in force, AERA had allowed airport operators of Delhi and Mumbai to charge landing fee to aircraft with seating capacity of 80 or less. Norms exempt smaller aircraft from landing charges at all airports and no other operator charges them. The order will help boost the regional connectivity plan that pegs on making operations by smaller aircraft cost effective. The order is likely to benefit airlines that operate 70-seater aircraft and includes SpiceJetBSE 5.32 %, Air India and Jet AirwaysBSE 2.63 %. Airlines such as Air India and SpiceJet had made several representation to AERA on the issue. “In the new tariff order for Delhi, we have ordered that these smaller aircraft will be exempted from paying landing charges. We have also informed Mumbai airport about the same,” said a top AERA official, who did not wish to be named. The official said the matter would have been addressed in the first tariff period itself if proper representation would have been made by these airlines. “We received a lot of representations from airlines later and the exemption was put in place,” said the official. AERA’s order will not be implemented immediately because tariff order for Delhi airport is in the courts. Delhi International Airport Ltd (DIAL) in an email response to a query said the charge is on the basis of directions given by AERA under the AERA Act 2008. “Exemption from landing charges for aircraft with maximum 80 seats capacity was given by Airports Authority of India …dated February 11, 2004, which was applicable to only AAI airports at that point of time. The AERA Act 2008, came into force on January 1, 2009, according to which tariff for major airports has to be determined by AERA,” the airport company said in an email response. Airlines, however, complain that the exemption helps in running viable operations with smaller aircraft in the country and should not have been removed. “Since their aircraft are used for shorthaul flights, the cost of operations are very high. It is also becoming increasingly difficult to continue operations with such high landing charges,” said an Air India official, who did not want to be identified. He said the airline already had to pay a lot of money as landing charges in the past. “The government plans to provide regional connectivity but at the same time smaller aircraft are being charged landing fee. How can it implement its plan when such charges are only going to make operations by smaller aircraft unviable?” asked the official. Justin Braun Womens Jersey
Not liable to repay Rs 6,000 crore debt due to breach of terms: Kingfisher Airlines
The Kingfisher Airlines Limited, a holding company of Vijay Mallya, said it is not liable to repay over Rs 6,000 crore debt to the consortium of banks as the lenders have breached terms and conditions of Master Debt Restructuring Agreement between both parties, which caused needless damages to the firm’s business. Resuming the hearing on the Original Application filed by bankers, seeking recovery of over Rs 6,000 crore from Mallya and his companies, KFA Counsel pleaded that the Debt Recovery Tribunal should reject the plea as the lenders have breached MDRA terms and conditions. Making submissions before DRT Presiding Officer C R Benakanahalli, KFA Counsel submitted that since section 54 of MDRA was breached by lenders, the company is not liable to pay the loans for damages caused by them. According to MDRA terms and conditions, KFA was to get the working capital fund from the lenders to continue their airline business, which the lenders violated and eventually the company faced further financial problems. “The lenders breached the agreement by not providing working capital fund to KFA, and due to which the company faced financial difficulties. Rafael Bush Womens Jersey
Domestic air passenger traffic grows 21% in June
The domestic airlines carried 79.75 lakh passengers in June, a jump of 20.81 per cent over the 66.01 lakh passengers flown during the same period in the previous year. The latest data released by the Directorate General of Civil Aviation shows that IndiGo has retained its number one position having flown 30.23 lakh passengers with Jet Airways at the second position having flown 12.96 lakh passengers. The state-owned airline Air India carried 12.37 lakh passengers In addition, SpiceJet carried 10.10 lakh passengers in June this year while Vistara flew 2.27 lakh passengers. Vistara is a joint venture between Singapore Airlines and Tata Sons. AirAsia India flew 1.73 lakh passengers. Stephen Gostkowski Womens Jersey
Intervening to reduce overseas airfares will violate law: Government
Government intervening to reduce airfare charged by domestic airlines on international routes will not only violate Indian law but will also be anti competitive, Union Minister Jayant Sinha said today. Emphasising that airfares are driven by market forces, he said as the demand goes up, the seats on lower fare levels get filled. “An intervention by the government in the matter of airfare reduction of domestic airlines operating on international sector to protect the interest of NRIs (Non Resident Indians) would not only be in contravention of Indian law but also anti-competitive,” he told Rajya Sabha in a written reply. The Minister of State for Civil Aviation was responding to a query on whether the government is aware that in certain seasons airlines charge higher than norms in the case of Kerala-Gulf flights and whether the government would intervene. Sinha also said airlines are free to fix reasonable tariffs under the Aircraft Rules, 1937 after taking into consideration all relevant factors including the cost of operationa, characteristics of service, reasonable profit and generally prevailing .. Airlines remain compliant with regulatory provisions as long as the fare charged by them does not exceed the fare established and displayed on their website, he added. Fernando Rodney Authentic Jersey
PMO unimpressed with Air India’s improved financial performance, sets new targets
Air India may have improved its financial performance on the back of low fuel prices, but the Prime Minister’s Office (PMO) doesn’t seem convinced about the flag carrier’s revival story. The PMO has asked the airline to improve its performance on all fronts. It wants on-time performance improved to at least 85 per cent, revenues increased by 10 per cent and industry standards met on load factor, or capacity utilisation, and has also asked the airline to carry out a proper survey before inducting new aircraft. The targets were given at the PMO’s first official review of the airline, convened by the Prime Minister’s principal secretary, Nripendra Misra, on July 6. Loss-making Air India is set to report an operational profit for FY16, helped by Rs 2,700 crore of savings on account of lower fuel prices and a one-time gain of Rs 1,200 crore from the sale and lease back of Boeing 787 Dreamliners. But its revenue for the year is estimated to have increased only marginally even after accounting for the proceeds from the aircraft sale, which points to the risks faced by the state-owned carrier in an increasingly crowded market. The airline’s operational parameters have fallen short of industry standards: its on-time performance was the lowest in the industry at 74.3 per cent for May 2016, when its passenger load factor was 84.7 per cent. SpiceJet reported the highest load factor for the month, utilising 93.5 per cent of its capacity. A government official, who is aware of the discussions at the review meeting, said the PMO wanted Air India to improve performance. “There is no doubt that Air India’s performance has improved but that is on the back of lower oil price. The PMO has said that the airline needs to improve its revenue, which has remained flat during the last fiscal (year). The industry, during the same time, saw revenue increase by about 10 per cent,” said the official, who didn’t want to be named. The PMO also noted that the “benefits of reduced ATF was outweighed by the reduction in revenue”, the official added. During the meeting, Air India chairman Ashwani Lohani said the airline needs more manpower and the government should allow it to hire. Lohani also wanted the retirement age at Air India to be increased to 60 from the current 58. The PMO didn’t approve these, but asked the aviation ministry to look into the demands. “They said that the aviation ministry should examine both the proposals before taking a final decision,” said the official. Analysts said a solution to Air India’s problems could only be found after a detailed analysis by professionals. Stephen Curry Authentic Jersey
Airlines’ costs set to soar over pilots’ crisis; here’s why
A fairly big shortage of pilots two years down the line — estimated at around 2,000 — could drive up costs for airlines. While employee costs constitute around10% of an airline’s overall revenues, the need to pay pilots more may push up expenses on this front. Although the country has over 5,000 commercial pilots currently, data from KPMG-Ficci reveal the sector could need close to 9,000 pilots in another two years. The planned expansion apart, carriers would also be looking to add aircraft now that they can fly overseas even before they have completed five years of operations provided they have a fleet size of 20. The civil aviation regulator DGCA typically issues about 800-1,000 commercial pilot licences (CPL) every year, which would mean the country would have around 7,000 pilots by 2018. However, the growth in the number of pilots doesn’t appear to have matched the growth in the fleet size. The current fleet size — commercial as well as chartered — is 850 and going by the orders placed, this should go up to around 1,000 by 2018. This would imply that against a requirement of 9,000 pilots for 1,000 planes, the supply will be closer to 7,000. Carriers are ideally required to have 10 pilots for each aircraft they operate. According to sector experts, the shortage will be higher because even after a pilot graduates from a flying school and gets a licence, he needs further training and cannot fly immediately. “Pilots as well as engineers will be a major problem in the future. One reason the projected fleet growth for this year is only 110 aircraft is because of pilots. There are lots of people in India who have CPL and PPL (private pilot licence) but in spite of that they are out of jobs as training on any one specific aircraft can be unaffordable to a lot of pilots with valid CPLs,” Dinesh Keskar, senior vice-president of sales in India for Boeing, told FE. He added that it takes $48,000 to train a pair of pilots. Currently, the DGCA recognises 30 flying schools across the country. It takes nearly two years for a trainee pilot to obtain a CPL but the pilot still needs to be trained on specific aircraft by an airline for a few months before being cleared for flying commercial jets. However, some flying schools like CAE Oxford in Gondia and Raebareli have tailor-made courses in partnership with airlines that expedite the induction of pilots into cockpits, making it easier for such carriers to fulfil the quota of pilots needed for their fleet. While such tie-ups cushion scheduled commercial airlines from a pilot shortage to a large extent, it makes it even more difficult for chartered operators to find trained pilots at an affordable cost. “Scheduled airlines alone would require about 2,000 pilots in the next two years and this poses a massive challenge for chartered operator to find trained pilots,” Bhupesh Joshi, CEO of the largest chartered operator Club One Air, told FE. He added that chartered operators end up spending more on pilots due to lack of training facilities in the country. “There was a similar projection regarding shortage of trained pilots in 2008 when the sector was expanding rapidly. However, due to the global recession, some airlines went belly up while others adopted cautious expansion plans thus avoiding pilot shortage situation,” said Abhay Krishna Agarwal, partner, infrastructure & PPP at Ernst & Young. Jeff Petry Womens Jersey
New terminal to be built at Leh airport for Rs 200 crore
A new terminal will be constructed at Leh airport with an investment of around Rs 200 crore which will increase the passenger handling capacity, Civil Aviation Minister Ashok Gajapathi Raju said today. With the new terminal, the peak hour passenger capacity is expected to go up to 800 from current level of 250. State-owned Airports Authority of India (AAI) is operating the Leh airport, which has been seeing increased flight movements in recent times. “Leh Airport – New terminal to be constructed @ Rs 200 cr to increase peak hour passenger capacity from 250 to 800,” Raju said in a tweet. Leh airport handled little over four lakh passengers in the last financial year ended March 2106. During the same period, there were 3,434 aircraft movements. Last month, the Jammu and Kashmir government had said it would take up with the Centre the issue of land for construction of a terminal building at Leh airport. “As per IAF, they will hand over 11.8 acres of land to Airport Authority of India for construction of Terminal Building (at Leh airport) only after getting No Objection Certificate for the state government’s land of 28 acres,” the government had said. Ka’imi Fairbairn Authentic Jersey
Consultation time on draft RCS extended till July end
Government today extended till July 31 the date for stakeholders to submit their suggestions and comments on the draft Regional Connectivity Scheme (RCS), a move which is likely to delay its implementation. All stakeholders, including airlines, state governments, among others, were earlier given time till today to send their suggestions and comments on the ambitious scheme, unveiled on July 1, which seeks to provide air connectivity to unserved and underserved areas of the country. “Draft Regional Connectivity Scheme (RCS) is placed in public domain for feedback from stakeholders … Date for sending the suggestion and comments in the prescribed format has been extended till July 31,” a Civil Aviation Ministry notification said. Mooted in the new civil aviation policy, RCS, which would target 90 aerodromes, was put up for consultations of stakeholders, including state governments, airlines and airport operators, on July 1 with a three weeks deadline. The draft was initially expected to be finalised by August. Under the proposed scheme, air ticket prices would be capped at Rs 2,500 for one-hour flights on unserved and under-served routes. There are 394 unserved and 16 underserved airports in the country. As part of the RCS, the government plans to provide a Viability Gap Funding, which would be financed through the Regional Connectivity Fund (RCF). While releasing the draft scheme, Civil Aviation Minister Ashok Gajapathi Raju had said that RCF would be created for funding RCS “through levy on certain flights”. The Ministry would contribute 80 per cent of the VGF, while respective state governments would chip in with the remaining 20 per cent to the fund, which will have a corpus of Rs 500 crore each year. Jon Weeks Womens Jersey