Already bleeding, airlines set to take another 6% hit in profits

New Delhi: Cash-strapped domestic airlines could see their margins eroding with the rupee weakening by 11% against the dollar since the beginning of August.

Indian carriers will take a hit of at least 6% in profitability as dollar-linked expenses, such as lease rentals, maintenance and expat salaries, would cost more now in rupee terms, say industry heads and experts. This burden comes at a time when most carriers are already incurring losses.

Low-cost airlines, such as IndiGo, SpiceJet and GoAir, which serve nearly half of the 50 million annual domestic traffic, have one-third of their quarterly cash outgo in foreign currency. “Weakening of the rupee has just begun. Its impact would be felt later,” said SpiceJet CEO Neil Mills.

“The high-cost aviation turbine fuel, coupled with a weakening rupee, is the biggest challenge that the aviation industry in India is currently dealing with and we are no exception,” Kingfisher Airlines chairman Vijay Mallya said.

01/10/11 Nirbhay Kumar, Vishakha Talreja/Financial Express

Mallya has done a good thing by having one brand: Gopinath

http://www.business-standard.com/india/news/mallya-has-donegood-thing-by-having-one-brand-gopinath/451116/

Bangalore: Captain Gopinath, the pioneer of low-cost aviation model in India, is known to be a straight talker. He is always to the point. And, he was in full swing when he spoke exclusively to Business Standard about Vijay Mallya’s recent decision to ground the low-cost service offering of Kingfisher Airlines.

Mallya, chairman and managing director, Kingfisher Airlines, entered the low-cost aviation business when he acquired Capt Gopinath’s Air Deccan during 2007 in a $300-million deal. Following this, Mallya merged the two airlines and then rebranded Air Deccan as Kingfisher Red to offer low-cost service in addition to the full service offering.

“It is probably a good decision by Mallya to have one brand now. But I would have probably said that he should have made all the domestic service as low-cost offering and all international as full service,” said Gopinath, late on Saturday evening at his sprawling bungalow, just yards away from Mallya’s home in Bangalore.

According to Gopinath, having almost a similar looking brand and then when the offerings are just a little bit different there are bound to have been problems. “And that is what happened. You just cannibilise your existing customer base. When companies were merged and almost a single branding came in to existence, it was sort of a double whammy for Kingfisher. First, the economy passengers of Kingfisher started to look at Kingfisher Red as the offerings were almost same while the price was cost effective. And when Mallya decided to raise the fares of Kingfisher Red, customers switched over to other LCCs such as Indigo or Spicejet,” Gopinath said.

01/10/11 Raghuvir Badrinath/Business Standard

Grounded: plan to unclog airport

Calcutta: Turn up hours in advance to catch a domestic flight during Puja 2011 as the festive rush is set to make the terminal (even) more chaotic.

A plan to decongest the domestic terminal is yet to take off as two private airlines have been refusing for over two months to shift part of their operations to a makeshift terminal in order to curb costs.

The authorities had planned to relocate ATR (small aircraft) operations to the makeshift or secondary terminal, set up in a discarded arrival lounge and opened on July 25, in an attempt to decongest the domestic terminal.

But of the three airlines that operate ATRs from Calcutta, only Air India has shifted to the new terminal. Jet Airways and Kingfisher are still using the old one. Air India operates four and the two private airlines around 20 ATR flights daily on an average.

Thanks to the refusal of the two airlines to shift, the domestic terminal is as congested and chaotic as it was, with fliers suffering long queues, shortage of trolleys and unclean toilets.

Metro has repeatedly highlighted the plight of the passengers, who have to stand at least 30 minutes in a queue at the security check-in counter. The queues at the check-in and security-check counters often merge, triggering confusion and forcing airlines to delay departures.

01/10/11 Sanjay Mandal/The Telegraph

Maran to up stake in SpiceJet

SpiceJet, the low-cost air carrier, on Thursday got its shareholders' approval to issue additional equity shares to promoter Kalanithi Maran, who in turn will infuse Rs 130 crore (Rs 1.3 billion) into the airline. Maran's equity holding would go up from 38 per cent to 43 per cent of the company's shares.

At the sidelines of its annual general meeting, Neil Raymond Mills, chief executive officer, said: "He (Maran) will be paying 50 per cent more compared to the price quoted in the market. He could have saved Rs 50 crore by buying these shares from the open market, but he was ready to pay the premium, which shows the confidence of the promoter in the airline."

The shares were trading at Rs 22 each on the Bombay Stock Exchange on Thursday, down by 2.65 per cent from yesterday's close.

The fresh shares will be issued by the first week of next month. Mills said the money would help in covering losses, as well as fund expansion.

A senior official from the airline said Canada's export finance agency, Export Development Canada, is funding SpiceJet's purchase of planes and had sanctioned $270 million of credit for this, 85 per cent of the total value for the 11 Q400 turboprop aircraft the company has planned to add by the end of March 2012.

30/09/11 Business Standard/Rediff.com

HC declines to review Mangalore air crash ruling

Kochi: A petition requesting the Kerala High Court to review its earlier order giving Air India (AI) a free hand in settling the compensation for Mangalore air crash was dismissed on Thursday.

On August 25th a division bench headed by Justice CN Ramachandran and Justice PS Gopinathan had quashed the earlier single bench order asking AI to pay Rs 75 lakh as compensation for each of the deceased, while dismissing another appeal by relatives who maintained that the Rs 75 lakh compensation ordered to each of them was not enough.

Only seven passengers survived after an AI Express flight from Dubai with 166 passengers crashed after overshooting the runway at Mangalore's Bajpe airport in May last year.

The review petition was filed by Arikkad Abdul Salam from Kumble, whose son died in the accident, after the division bench not only declined their contention that Rs 75 lakh is the minimum compensation but also declared invalid the single bench order that ordered for Rs 75 lakh to be paid as compensation.

30/09/11 Mahir Haneef/Times of India

Advanced tech to help streamline air traffic

Chennai: The Chennai region will soon be equipped with an advanced aviation system to help regulate fuel consumption of aircraft and ensure passenger safety. The cost of flying per minute for a plane is now estimated to be around $100.

Under the 'Gate to Gate Flow Management' system, the delay at the airport where a plane is supposed to land will be informed to navigators and air traffic controllers (ATCs) at the departure airport to help the latter hold the plane for a while longer. This will help the plane avoid circling the airport at the destination, wasting precious fuel. An 'En-route Safety Monitoring Agency' to monitor oceanic movements covering seven countries is also effective in Chennai.

Chennai Air Traffic Control (ATC) general manager N Ganesh said the aviation sector had to make use of the latest technology and infrastructure. "The integration of radar, enhancement in VHF-radar coverage, data link initiatives, air traffic flow management should all be used to cut down the overall operational costs of aircraft. It will benefit the industry and the public by making the aviation sector sustainable and safe," he told the media after an Air Traffic Services (ATS) coordination meeting here.

01/10/11 Times of India

Grounded plane a threat to air safety at city airport

Nagpur: The Director General of Civil Aviation (DGCA) and Bureau of Civil Aviation Security (BCAS) have several times raised objection to presence of a grounded aircraft within kissing distance of main runway of Dr Babasaheb Ambedkar International Airport.

The plane is seen as a threat to the flights taking off and landing here. Still, the airport operator Mihan India Ltd (MIL) is refusing to do anything about it. Strangely, it expressed its inability to do anything. "The aircraft has been abandoned at the airport and a case is pending in the Bombay high court," a senior MIL official told TOI.

The aircraft of Continental Aviation Private Limited (CAPL) and owned by US-based NRI Sam Verma made an emergency landing at the city airport after developing an engine snag on July 21, 1991. It has remained here since then as its owner never paid up the parking charges. Earlier, Airports Authority of India (AAI) had planned to convert it into a unique restaurant after moving it to a site near Wardha Road. Nagpur Municipal Corporation also planned to acquire it and use it for education purpose at its Aero Park project near Swawlambi Nagar. However, both plans never materialised.

30/09/11 Times of India

Staff shortage hitting airport security

Nagpur: The Dr Babasaheb Ambedkar International Airport is on high alert along with other airports across the country after intelligence warnings of terror attack. Still, despite having gadgets like IP cameras the airport continues to be vulnerable.

Airport officials said Central Industrial Security Force (CISF), mandated with securing the airport, has a limited manpower to handle the gadgets and conduct checks. CISF has been making do with about half the manpower needed for the last five years. The required strength at the airport is 494 personnel but there are only around 254 present. Interestingly, CISF's strength has remained same since 2002 while the passenger traffic in this period has almost tripled.

In last five years, air traffic rose to almost 29 flights a day from just a handful. Almost 2000 passengers arrive and take off from city airport each day. Hardly 50 to 55 security personnel remain available in any given 8-hour shift to manage the security of entire airport area. "We need people to man security equipment. Also, vigilance is a strenuous task and often during such threats available manpower is stretched. An over-worked official is likely to make errors and overlook vital threats," said an airport security official requesting anonymity.

During high alert, which are common these days, the personnel are supposed to manually check all hand baggage.

01/10/11 Sachin Dravekar/Times of India

Despite problems, Air India wins Asia's leading airline award

Despite the increasing problems, including debts and huge daily operational losses, the national carrier Air India has won two awards at the World Travel Awards.

The ailing Maharaja has been selected as Asia's leading airline in the Economy class and the country's leading airline at WTA awards function in Bangkok over the weekend. Airlines from over 30 countries participated in the competition.

"The awards reaffirm the trust reposed by passengers in the national carrier's proactive approach, persistent performance and undeterred commitment to customer satisfaction," the airline said in a statement.

01/10/11 PTI/Daily News & Analysis

ATF prices hiked again; Air fares to go up?

New Delhi: For the second time this month, state-owned oil companies on Friday hiked jet fuel, or ATF, price by 1.5 percent as falling rupee made oil imports costlier.

Aviation Turbine Fuel (ATF) price at Delhi's T3 airport was hiked by Rs 899 per kilolitre (kl), or 1.5 percent, to Rs 58,578 per kl with effect from midnight tonight, an official of Indian Oil Corp, the nation's largest fuel retailer, said.

IOC and other state retailers, Hindustan Petroleum and Bharat Petroleum, had on September 16 raised jet fuel price by 2.5 percent.

ATF in Mumbai, home to the nation's busiest airport, will cost Rs 907 per kl more at Rs 59,359 per kl from tomorrow as against the old price of Rs 58,452.31 per kl.

Jet fuel makes up for 40 percent of an airlines' operating cost and no immediate comments were available from airlines on the impact of the price hike on passenger fares.

30/09/11 Zee News.com

Airfares go north in festival season

New Delhi With rail tickets unavailable, high festive season travel demand has pushed up airfares exorbitantly, with most of the direct flights between metros, especially from or to the eastern region, being completely sold out.

One-way fares for the next few days range from about Rs 14,000 to a whopping Rs 30,180 on high demand sectors like Kolkata-Delhi or Ranchi-Delhi, while a major chunk of direct flights have been fully booked, travel portals and airlines sites showed.

The travel portals showed that air travellers have been left with no option but to reach their destinations on hopping flights and that too, at a very high price.

30/09/11 Express India

Air India to serve Bengali cuisine during Puja days

Kolkata: Frequent fliers who miss the sumptuous Bengali cuisine during the Duga Pujas will now have their dreams fulfilled. A Bengali feast in the sky is now a reality for them.

State-owned Air India is all set to offer a quintessential spread of cuisines from Bengal in all domestic flights and in some international ones during the Puja days. The cuisine will be introduced for three days starting Saptami (October 3).

Traditional Bengali delicacies such as Mangsher Kofta Curry (minced meatballs), macher korma (fish curry), deserts including the all favourite Misti Doi (sweetened yogurt) and Rajbhog (flavoured rasgullas ) will feature on both the lunch and dinner.

Mouth-watering Bengali snacks such as Mangsher Singara (samosas stuffed with minced meat) and jalebis will also find their way to the connoisseurs' plates.

30/09/11 Business Line