New Delhi: Cash-strapped Air India is grappling with what appears to be an inability to pay for fuel and airport usage charges at a time when it is trying to tide over several debts coupled with a huge revenue loss due to a recent strike by its pilots. But India’s government has stepped in to broker a deal to pay the bills.
Airport operator GMR, which has a controlling stake in both Delhi International Airport Ltd. (DIAL) and GMR Hyderabad Rajiv Gandhi International Airport Ltd. (HIAL), gave an ultimatum to Air India last week to pay airport charges for each individual flight if it wanted to carry on flight operations.
A similar notice has also been sent to Kingfisher Airlines, the country’s second-largest private carrier.
GMR’s tough stance comes against the backdrop of nonpayment of airport fees by Air India and Kingfisher since October and December, respectively.
“The managements of both these airports have had to take this decision after continued consultations with these companies failed to yield payments of outstanding dues,” GMR says. “It is expected that the two airlines will clear major outstanding payments owed by the airlines to the Delhi and Hyderabad airports.”
While state-run Air India owes 2.17 billion rupees ($48 million) to New Delhi’s Indira Gandhi International Airport and 358.9 million rupees ($8 million) to Hyderabad’s Rajiv Gandhi International Airport, Kingfisher owes 679.8 million rupees ($15 million) to Delhi’s airport and 219.8 million rupees ($5 million) to Hyderabad’s airport.
01/06/11 Jay Menon/Aviation Week
Wednesday, June 01, 2011
Air India In Near-Term Financial Distress
AI debt to airports rises to Rs 1,144 cr
New Delhi: National carrier Air India (AI) and Vijay Mallya’s Kingfisher Airlines can breathe easy. The private airport operator GMR has deferred the cash and carry notice to both the airlines.
The relief has come after ministry of civil aviation’s intervention, which has asked AI to prepare comprehensive payment plan for the airport developer. “We have asked AI to clear May dues by the next week. For other arrears, the airline will make a comprehensive plan,” an aviation ministry official said.
Air India owes Rs 1,143.78 crore to all airport operators including Airports Authority of India (AAI), GMR, GVK. While private carrier Kingfisher has to pay Rs 514.73 crore to these companies. To GMR alone, the airlines owe about Rs 355.83 crore.
The ministry official said that the national carrier should be able to clear its dues by June-end as it would receive Rs 1,100 crore from the government for its VIP, Haj and special flights to Libya. “AI will get around Rs 300-400 crore for its VIP flights, while another Rs 800 crore will come from the payment of Haj and Libya flights. This should settle the dues with airport developers,” the official said.
GMR in an official release said that Kingfisher Airlines too have paid its dues to Delhi International Airport (DIAL) and Hyderabad International Airport (HIAL) for April and May 2011 and therefore, the cash and carry notice to it was deferred too.
“In case of Air India, a comprehensive payment plan has been worked out with its management, which covers repayment of all outstanding dues..Kingfisher Airlines has also put in place a structured payment plan to clear dues up to March 2011,” GMR said on Tuesday.
31/05/11 Paul Chhaparia/Mydigitalfc.com
Penalty likely on airlines for defaulting on ADF payment
New Delhi: The government plans to impose penalty interest on airlines defaulting on payment of airport development fees. The move aims at easing the cash crunch of airport developers , at least two of whom had approached the ministry recently over delay in payments. The proposal features in the new draft rules framed by the ministry of civil aviation and reviewed by ET. "In the event of any delay by the airline to deposit any development fee by the due date....the airline shall, in addition , deposit interest at the rate of State Bank of India Prime Lending Rate plus 300 basis points per annum ," the draft says. The interest "would be calculated proportionately on the period of delay," it says.
This means airlines will have to pay 3% more than the prevailing rate of interest as penalty in case of delay in payments, a senior civil aviation ministry official said on condition of anonymity . The ministry plans to release the new rules in a month from now. GMR and GVK groups, developers of Delhi and Mumbai airports, respectively , had recently sought the ministry's intervention in expediting payment of airport development fees.
GVK says Kingfisher Airlines owes it Rs 105 crore in development fees, while GMR says Air India has to pay Rs 100 crore and Kingfisher Rs 48 crore. Airport developers are allowed to charge user development fee (UDF) from airlines, which contribute to an airport's revenue, and airport development fee (ADF) that contributes to the funding of the project.
01/06/11 Anindya Upadhyay/Economic Times
Jet fuel is cheaper than petrol now
New Delhi: It's now cheaper to refuel an aircraft than tank up your petrol-powered car. As you brace for another hike in petrol prices close on the heels of a steep Rs 5 hike just a fortnight back, aviation turbine fuel (ATF) or jet fuel will be cheaper for airlines from Wednesday.
While a litre of ATF will cost Rs 56.5 per litre in Delhi from Wednesday (down from Rs 58.8), petrol is already selling for Rs 63.37 per litre. IndianOil Corp has announced its intention to make petrol dearer by about Rs 1.4 per litre. ATF prices have fallen twice in the last one month.
The other big aviation base, Mumbai, will also see ATF at Rs 57.1 per litre from Wednesday, down from Rs 59.6. Delhi and Mumbai account for over 70% of fuelling for domestic airlines. So the high prices at non-hubs like Kolkata, where the price will fall from Rs 66.9 per litre to Rs 64.5 per litre won't affect airlines' bottomlines much.
01/06/11 Times of India
Aviation fuel prices cut by 4%; airlines still to decide on fares
New Delhi: For the second fortnight in a row, state-owned oil companies on Tuesday cut jet fuel prices by about 4 per cent after international oil rates cooled off from a two-year high.
Oil companies reduced aviation turbine fuel (ATF) price by Rs. 2,327.89 per kilolitre or 3.95 per cent, to Rs. 56466.11 per kl in Delhi with effect from Tuesday midnight, an official of Indian Oil Corp, the nation's largest fuel retailer, said.
Jet fuel rates had for the first time in eight months been cut on May 16 when prices were reduced by 2.9 per cent. In two reductions, ATF price have come down by Rs. 4094 per kl this month.
The official said the basket of crude oil India buys has averaged less than $110 per barrel in the second fortnight of May which was taken into account for calculating the desired selling price of ATF from June 1. The average of Indian basket of crude oil was over $114 per barrel in the first fortnight and $118 per barrel in April.
31/05/11 Press Trust of India/NDTV.com
Jet Airways to add 7 new aircraft this fiscal, fly new routes
New Delhi: With air traffic growing at a healthy pace, Indian carriers are once again looking to add capacities. Jet Airways, India’s biggest airline, plans to acquire 6-7 new narrow body aircraft this fiscal.
These aircraft would be deployed on domestic and select international routes in such a way that the domestic leg is completed during day time and international destinations (nearby countries) can be serviced at night.
In the next three years the airline plans to add as many as 24 aircraft but some of these additions would be through replacements under sale and leaseback. Airline officials said that the 6-7 narrow bodies for this year would be completely new additions. With new aircraft coming in, can new destinations be far behind? Jet has already received traffic rights for a daily service between Mumbai and Manila in the Philippines and is expected to launch this during the upcoming winter schedule. Besides, a daily Delhi-Amsterdam service is also on the agenda from this winter.
Officials said the Manila flight will also offer enhanced connectivity to Gulf countries and so Jet plans to simultaneously increase frequencies of its flights to the Gulf region, too.
01/06/11 Sindhu Bhattacharya/Daily News & Analysis
Another air crash averted
New Delhi: Nearly 150 passengers of a Mumbai-Delhi flight had a close shave at the Delhi airport on Monday after the aircraft had to abort landing at the last moment because another aircraft was present on the runway. The incident occurred around 11pm on Monday when a private full cost operator’s flight from Mumbai was preparing to land at the Indira Gandhi International Airport.
The pilot found that another aircraft was present on the runway and the air traffic control asked the pilot to abort landing and make a ‘go around’. The aircraft finally landed in its second attempt after nearly half-an-hour.
“Go around is a standard operating procedure (SOP) in order to maintain safety,” said an AAI spokesperson.
On May 18, a Jet Airways flight from Mumbai (9W 309) was descending to land at the runway when it found another aircraft already present on the runway. The aircraft aborted landing at the last moment and had to make a go around, delaying the flight by 45 minutes. The next day, an international flight had to abort landing due to the same reason.
31/05/11 Hindustan Times
How many airports does it take state to get flying?
Bengaluru: While there is no argument that the state needs better air connectivity, there is growing concern about whether the government is going about it the right way. Despite the huge investment in the Mysore airport, it sees one landing and one take-off a day as people prefer to travel by road to it. Now that more airports are being planned at Gulbarga, Shimoga, Bijapur, Hassan and Bellary, the time has come to ask whether the government has done its homework.
The Mysore airport was planned because it was thought it would be commercially viable as the city draws over 25 lakh tourists annually and Infosys has a workforce of 15,000 drawn from different parts of the country in Mysore. When the airport came up it had to lie idle for months before a commercial operator agreed to operate from it. Most operators were reluctant as they felt there was very poor traffic in the sector.
The Chief Minister had to announce a subsidy of Rs 25 crore to get airlines interested. Now Kingfisher flies a 55-seater ATR between Chennai and Mysore via Bengaluru. And though the once-a-day flight has good occupancy and Spicejet too is said to be contemplating flying on the Bengaluru-Mysore route, experts in the field say tourism and business activity in Mysore is not reflected in the number of air travellers from the city.
The question now is whether other airports planned around the state will attract air traffic, when there are so few takers for flights to and from from Mysore. Has the government thought things through carefully when selecting locations for airports considering the huge cost involved?
31/05/11 Deccan Chronicle
In-line baggage screening starts at airport
Chennai: International passengers no longer need queue up to scan their bags before check in as the airport has introduced in-line x-ray baggage scanning at the international terminal from Monday.
The Airports Authority of India (AAI) is implementing the system at Kolkata, Ahmedabad, Calicut and Srinagar. Chennai is the second airport to have in-line baggage scanning after Ahmedabad. The system has been introduced at a cost of Rs 12 crore.
The airport's scanning system has two in-line x-ray machines. Each line can handle 1,200 bags per hour, said a press release.
The bags will pass through four levels of detection and the screener will get five images of the same bag from different angles. Staff will monitor the bags from six workstations and another for supervisor will oversee the operations.
In-line baggage scanning was implemented after a month's trial and the screeners are trained and certified by the Bureau of Civil Aviation Security.
01/06/11 Times of India
AI, Kingfisher agree to pay GMR dues
New Delhi: Air India and Kingfisher Airlines have agreed to pay their dues to Bangalore-based GMR, which runs the Delhi and Hyderabad airports, through a repayment plan, helping them to tide over the cash-and-carry arrangement from June 1. GMR, which had threatened to put the two air carriers on a cash-and-carry arrangement, will not do so as the agreement envisages a plan to settle the dues, said senior officials close to GMR.
Under a cash-and-carry arrangement , AI and Kingfisher would have had to make daily payments to the Delhi and Hyderabad airports or risk having their flights cancelled from June 1. While Kingfisher has now paid its dues for April and May this year to Delhi International Airport (DIAL) and GMR Hyderabad International Airport (GHIAL), national carrier has worked out a repayment plan to clear pending dues, said a release from GMR.
Air India will make daily payments of all the aeronautical charges to DIAL and GHIAL from June 1, 2011, the release added. Air India owes GMR Rs 263 crore, while Kingfisher Airlines owes Rs 90 crore upwards . The airport developer has been asking Air India and Kingfisher to pay up for the past 10 and six months, respectively. "Air India has paid Rs 10-15 crore as of now and will also present a plan on making payments to GMR over the next week," a senior civil aviation ministry official said.
"The government is supposed to release Rs 400 crore to Air India for Haj operations and Libya evacuation, expected over the next week. Payments can then be made to the airport operator."
01/06/11 Anindya Upadhyay/Economic Times
GMR Infra may infuse Rs 3,000 cr to part fund projects
Hyderabad: GMR Infrastructure may pump in Rs 3,000 crore equity investments to part fund it's road and power projects in the next two years, according to a senior official of GMR Group.
The investments will be made into three road and four power projects, the official said.
"The company will have to invest around Rs 2,800 crore as its equity contribution for the four power projects, including 768 Mw project at Vemagiri with an investment of Rs 3,250 crore, 600 Mw Emco project with Rs 3,480 crore, 1,400 Mw project at Kamalanga in Orissa of Rs 6,460 crore and 1,370Mw project in Chattisgarh with an estimated investment of Rs 8,290 crore," the official said.
The three road projects required Rs 650 crore of equity investment and the company has already invested around Rs 450 crore. The Group recently raised funds from QIP and private equity and is expecting $150 million of private equity funds by June-end.
The Group received around $200 million on recently concluded divesting of InterGen stake and got another $200 million of private equity for aviation business recently.
31/05/11 Press Trust of India/Business Standard
Lenders may ask for Air India's partial divestment
New Delhi: The lenders of Air India may ask the government for partial divestment of the national carrier. The lenders will take a final call on this issue when the core committee of lenders meets next week according to two bankers involved in the negotiations.
'The airline needs consistent operational stability and that can be ensured if a private player is brought in' said a senior Central bank official who did not want to be named. The source added that there is no need for a huge divestment. The quantum can be decided by the government based on its comfort level.
According to FDI rules, foreign airlines are not allowed to pick up stakes in Indian carrier. The lenders are not happy with the debt restructuring proposal of Air India.
The total debt on Air India's books stands at over Rs 40000 crore, of which around Rs 20000 crore is for working capital and the remaining for aircraft purchase.
31/05/11 Sameer Hashmi/Economic Times
Cloud on Air India lease plan
New Delhi: Debt-laden Air India might not be able to lease planes for its domestic arm Alliance Air.
According to sources, the civil aviation ministry has asked the national carrier to rethink its plans to induct CRJ-700 jets and turbo-prop ATRs for Alliance Air.
“Air India owes a total of Rs 2,250 crore to the three oil PSUs. GMR-led Delhi International Airport and GMR Hyderabad International Airport have already stopped their credit line and asked them to pay the landing, parking and navigation charges upfront from June 1. They are still to figure out a plan to make all these payments. So, inducting more planes on a lease hold basis is next to impossible,” said a senior AI official.
31/05/11 Karan Choudhury/The Telegraph
In-line baggage screening starts at airport
Chennai: International passengers no longer need queue up to scan their bags before check in as the airport has introduced in-line x-ray baggage scanning at the international terminal from Monday.
The Airports Authority of India (AAI) is implementing the system at Kolkata, Ahmedabad, Calicut and Srinagar. Chennai is the second airport to have in-line baggage scanning after Ahmedabad. The system has been introduced at a cost of Rs 12 crore.
The airport's scanning system has two in-line x-ray machines. Each line can handle 1,200 bags per hour, said a press release.
01/06/11 Times of India
Air India to look ‘within’ for senior level appointments
New Delhi: The government is treading very cautiously on the issue of senior level appointments at Air India.
The last time seasoned outside professionals had been inducted to ensure the airline stages a turnaround, the move had backfired.
Catfights had broken out in board meetings between independent directors, functional directors and government nominees over these appointments and ultimately, three of the four such officials were made to resign.
Since then, several top level positions across Air India have been vacant. So, to save itself the blushes this time, the government has decided not to look for outside people to man these key posts.
Air India needs a director personnel and a director commercial. Also, positions are vacant for chief operating officers of low-cost subsidiary Air India Express as well as for Alliance Air. The post of director finance is also expected to fall vacant soon.
Airline officials said that the thinking this time around is to hire “from within”. Now whether this means eligible internal airline candidates would be promoted or qualified bureaucrats will be hired from other PSUs - this remains to be seen. The issue of salary for these posts is also under review, since there was all-round grumbling about “exorbitant” salaries offered to the professionals who had been brought in earlier. Pawan Arora had been appointed COO of AI Express, Stefan Sukumar as chief of training and Gustav Baldauf as COO of Air India.
31/05/11 Sindhu Bhattacharya/Daily News & Analysis
GMR Infra works out amicable solution with AI, Kingfisher
Air India and Kingfisher today heaved a sigh of relief after they were allowed to carry on their operations without cash-and-carry basis at GMR-led Delhi and Hyderabad airports from tomorrow.
Following the intervention of Civil Aviation Ministry, the managements of GMR-led Delhi Airport International Limited (DIAL) and GMR Hyderabad International Airport Limited (GHIAL) have decided to defer the cash-and-carry notices for the national carrier and Kingfisher airlines from June 1.
According to sources, Air India, DIAL and GHIAL have worked a comprehensive payment plan for repayment of outstanding dues of Rs 217.08 crore to DIAL and Rs 35.89 crore
to GHIAL.Similarly, Kingfisher also had a due of Rs 67.98 crore at IGI and Rs 21.89 crore and they have also assured that they would clear their dues accrued in April and May.
The Civil Aviation Ministry is said to have told the GMR group that Air India has dues with the government, and as soon as the government pay back the dues, which are to the tune of Rs 1,200 crore, to the national carrier it would clear its dues from May 22.
31/05/11 PTI/Moneycontrol.com
Air India moves to T4
After more than four decades at Heathrow's Terminal 3, Air India has this week made the switch to the airport's newly refurbished Terminal 4.
To celebrate the move, Heathrow staff donned traditional Indian dress and greeted Air India customers with garlands and trays of luxury barfi sweets.
Staff members were even given lessons in welcoming passengers in Hindi to mark the first arrivals on Wednesday morning (May 25).
BAA chief executive Colin Matthews said: "I am delighted that Air India will be flying from the newly refurbished Terminal 4. It means easier journeys and a better airport experience for their passengers.
"Direct flights to India are very important for the UK, they create jobs and bring families together.
"That's why we are investing to modernise Heathrow and keep it Europe's number one airport for Indian flights."
Air India is one of T3's longest airline residents, starting its operation in the 1960s with Heathrow's first ever connection to Mumbai.
31/05/11 Jonathan Schofiled/Skyport
Passenger found carrying live cartridges at Ahmedabad airport
Ahmedabad: A passenger of SpiceJet flight was found carrying live cartridges in his baggage at the Sardar Vallabhai Patel Airport (SVPA) on Tuesday, a CISF official said.
"Ten rounds of live cartridges were detected from the baggage of a passenger of Ahmedabad-Chennai flight this morning during the routine X-ray screening. But the cartridges were found to be of a licensed weapon belonging to him," the official said.
"The weapon licence and related documents were examined which were found to be genuine," he said.
31/05/11 Press Trust of India/NDTV.com
Premiere Class service re-introduced on Jet Airways' Newark flights
India’s Jet Airways will re-deploy long-haul Boeing 777-300ER aircraft on its Mumbai-Newark route, beginning in September.
The wide-body Boeing 777-300ER features a three-class configuration, including Jet Airways’ renowned First Class service and private closed-door suites.
Operating twice a week (on Fridays and Sundays), Jet Airways’ Boeing 777-300ER aircraft will offer passengers the exclusive opportunity to travel in the comfort of the airline’s eight First Class suites, featuring beds, private closets, dining tables for two and 23-inch flat-screen TVs.
31/05/11 eTurboNews.com
Passengers left stranded after Guwahati-Delhi flight reaches Jaipur
Jaipur: The passengers of a Delhi-bound flight from Guwahati spent a harrowing time at Jaipur airport on Sunday night after the flight was diverted here and subsequently cancelled following bad weather at Delhi airport.
The SpiceJet plane carrying 190 passengers landed at Terminal 2 of Sanganer airport at 10.30 pm on Sunday. Soon, without giving any solid reasons, the passengers were told that the flight was cancelled.
"It was already 1 am on Monday when we were told about the cancellation of flight. This is not done. They neither refunded the money nor arranged for any vehicle to reach Delhi," said a passenger.
Finally, after four hours, the passengers and staff were sent to Delhi via cars and other vehicles.
"The plane was diverted to Jaipur due to bad weather in Delhi. It was scheduled to take off once weather gets cleared in Delhi, but it was cancelled," said R K Singh, director, Airports Authority of India, Jaipur, said.
"We have ordered an inquiry into the matter and the report would be sent to the Director General Civil Aviation's ( DGCA) office soon," said a senior officer with the AAI, Jaipur.
31/05/11 Times of India
