5 Jul 2008, TNN

NEW DELHI: As oil continues its relentless upward march, US aircraft major Boeing sees difficult days ahead for airlines. While hardly any airline has business model to cope up with fuel at these levels, this is the first time in history that the increase in oil prices is happening at a time when world economy is slowing down.

"Most airlines business model are not designed and planned for these numbers (current and forecast oil prices). This time is a double problem as oil price hike is happening as the world economy slows down.

Normally lower consumption during a slowdown drives prices down. But today airlines are managing rise in operating cost with decline in revenues," said Dinesh Keskar, Boeing's senior V-P (sales). In the Indian context, Keskar said airlines have realised that low fares have no chance of ‘succeeding'. "Low fares may give one market shares but nothing concrete. Now airlines are cutting flights. Initially higher fares will mean exceeding capacity. But ultimately this will lead to airlines matching demand with supply at right fares," he added.

Boeing will present its annual outlook for India at the end of this month and remains bullish for the country. "We have always been realistic and never done a 100-aircraft deal," he added, taking a dig at a rival manufacturer's deal with a LCC here for 100 planes.

The aviation ministry is also not changing its outlook for the aviation sector's infrastructure requirement. "All the planned infrastructure projects will go ahead as schedule and there is not going to be any slowdown there," said aviation minister Praful Patel.

Patel is learnt to be extremely unhappy with states' refusal to reduce sales tax on jet fuel, something that could reduce airlines' operating costs and also put some check on the ever-increasing fares. In a bid to check the cost for passengers, the government had asked operators of new airports at Bangalore and Hyderabad not to charge any user development fee (UDF) for first there months.

Source : The Times of India

Vijay Mallya looks to fly away with SpiceJet
Nirbhay Kumar, ET Bureau

NEW DELHI: Another round of consolidation in the domestic skies seems imminent with UB Group chairman Vijay Mallya engaging in talks with two major shareholders of SpiceJet to buy the budget carrier in an all-cash deal.

According to industry sources, Mr Mallya is negotiating with Gulf-based fund Istithmar and the UK-based Bhulo Kansagra family, who together hold 26.33% in the low-cost airline. Acquisition of their stake by Mr Mallya would trigger an open offer for another 20% from other shareholders.

The Kingfisher chief had followed the same strategy to acquire the country’s largest low-cost airline Air Deccan last year. As per the current market price, the 26.33% stake is valued at Rs 158.40 crore. On BSE, SpiceJet shares closed at Rs 25 on Friday, up 7.76% over its previous close.

The Tatas too hold a minor stake in SpiceJet through two investment companies. There was speculation that the Tatas may take a larger role in the airline, but the group denied the buzz, insisting that the holding was purely a financial investment.

Mr Mallya’s move to acquire SpiceJet is expected to give Kingfisher enough muscle in the domestic market. If the deal goes through, the UB group would hold 40% share in the domestic market and could set fare levels across key sectors.

“Kingfisher has been talking to SpiceJet for a possible stake acquisition since a month. Mr Kansagra and Istithmar are likely to exit the company. While Mr Kansagra is keen for an early deal, Istithmar is looking for good value,” a source said.

SpiceJet is also talking to a non-aviation investor for infusion of fresh funds, the source added.

The Gurgaon-based SpiceJet has cut down its flights to 94 per day from 117 a day last month. The airline is not immune to the financial crisis in the aviation industry due to the spiralling fuel price. In a move to cut down losses, the low-cost carrier is reducing capacity and sub-leasing aircraft. It has already sub-leased one aircraft to the Netherlands-based Trasavia Airlines. SpiceJet is also planning to sub-lease two more aircraft soon.

Kingfisher, along with its low-cost arm Deccan, operates about 83 aircraft and flies 440 flights a day across the country. SpiceJet, which has nearly 11% market share, flies 94 flights a day with 15 Boeing aircraft. To expand its fleet and operations, the budget carrier is planning to raise $100 million from the market. It has been looking for an investor for months, but without success.

With oil prices reaching all-time highs, almost all the carriers in the country are reducing capacity.

Source : The Economic Times

User-charges norms for airports soon
Sindhu Bhattacharya/ DNA MONEY

The user development fee (UDF) conundrum may finally get resolved next week when the Union civil aviation ministry holds a crucial meeting to frame a broad policy on this levy.

At present, only two new airports (Hyderabad and Bangalore) have been allowed to charge a specific amount as UDF and that too only from international passengers.

Many other airport developers have been clamouring for permission to also charge UDF in the absence of a policy. Then, the quantum of UDF each airport developer can charge is being decided by the ministry at present instead of there being a set formula for the purpose.

The meeting on July 11 is expected to frame broad guidelines for this levy. UDF is the additional levy (over and above the airline ticket price) the airport developers charge from each passenger to part finance modernisation and development of the airport.

It became relevant recently when developers of the two brand new airports-at Bangalore and Hyderabad-sought to levy it to recover costs. Now, not just Bangalore and Hyderabad but developers of airports at Delhi, Mumbai and Cochin are also keen to use UDF levy to part finance their project costs.

In a written reply to Rajya Sabha in this year's Budget session, civil aviation minister Praful Patel had assured members that "actual quantum of UDF for domestic and international passengers as well as other regulated charges in respect of both Hyderabad and Bangalore airports would be fixed up only after the receipt of final audited project costs from them".

The UDF may well be reduced going forward and an indication of this came from Patel himself. Pointing out that Bangalore International Airport (BIAL) had to make additional investments for increasing the capacity because of increase in traffic, the minister had said "the scope for cost recovery would also undergo a change".

From 4.5 million passenger traffic projected earlier, BIAL is now expected to handle 9 million passengers; this increase in traffic has meant additional cost of about Rs 540 crore.

Senior civil aviation ministry officials have said earlier that additional cost for this project vis-a-vis traffic increase makes the case of lower UDF even stronger.

They said that the government could ask airport developers to recover UDF in a 15-year horizon against the 5-year period they want, thereby also bringing down the levy per passenger. UDF is a new levy for Indian passengers, since Hyderabad became the first airport modernised by a private developer (GMR Group)-to ask each passenger to pay for using "world class" facilities.

At present, Indian airport charges (which include parking and landing charges for aircraft and the passenger service fee which forms part of your fare each time you take a domestic flight) are low compared to many other countries in the world.

According to Patel's answer to the Upper House, on a scale of 1-100 (1 denoting the lowest airport charge), India holds the 22nd position.

Under license from www.3dsyndication.com

BIA sees drop in domestic departures

ENS

BANGALORE: HERE is some bad news for the Bengaluru International Airport (BIA), which wants to have sole rights on Bangalore’s commercial airspace. The BIA has been witnessing a dip in the number of domestic flight operations in its very first month after it started operations on May 24 and this continues.

According to the statistics available with the Express, on the daily domestic flight operations from Bangalore (both HAL and BIA), during May 2008 the number of daily domestic flights departing from the HAL Airport was 161 whereas the BIA has recorded just 139 scheduled departures of domestic flights on July 2.

Out of these scheduled flights, a few were cancelled and some others were clubbed due to poor occupancy. Therefore, the net departure reduced further.

The above Airport Authority of India statistics is in sharp contrast to the predictions made by airport operators Bangalore International Airport Limited (BIAL) before the airport was commissioned.

BIAL had, in March, said that domestic airlines have requested for an average of 20 to 25 per cent increase in slots for summer 2008.

It had also stated that approximately 29 per cent of the domestic flights had been given better flight timings. BIAL officials had also said that many airlines would increase frequency from Bangalore after BIA would start operations, with the total number of flights touching 1595 per week, of which domestic flights comprise 85 per cent.‘’The number of domestic departures on July 2 dropped by 13.66 per cent as compared to that at the HAL Airport,’’ said an official source.

The reasons suggested for a dip in the number of domestic, especially short-haul flights are long travel time from the City to the Airport and hike in air fare and a steep hike in aircraft turbine fuel.

Most of the domestic carriers and many domestic routes like Chennai, Thiruvananthapuram, Hyderabad, Coimbatore, Madurai, Goa, Pune, Mumbai and Jaipur are affected.

Source : The New Indian Express

By Lakshmi Vishwanath | Bangalore

Dragonair, the sister airline of Cathay Pacific Airways launched its daily service on Bangalore-Hong Kong route, day before yesterday. The first flight landed at Bengaluru International Airport (BIA), at 01.18 hours on July 1, while the first flight from Bangalore to Hong Kong departed at 02.35 hours yesterday. Bangalore is the seventh new destination, being catered by Dragonair after joining hands with the Cathay Pacific Group in September 2006.

The airline has announced an initial promotional fare of Rs 22,000 on the Bangalore-Hong Kong route. The fare for Business Class is Rs 62,000, inclusive of taxes. Though the load factor of the airline is 80 per cent on an average, on the first flight from Hong Kong to Bangalore, the load factor was 91 per cent. There were 25 Business Class and 246 Economy Class passengers on the flight from Hong Kong to Bangalore. Similarly on the first flight from Bangalore to Hong Kong there were nine Business Class and 117 Economy Class passengers.

“We were looking for opportunities to enter the Indian market. The service to Bangalore was long overdue and we are very pleased to have commenced operations on this route to serve the business and leisure traffic to and from Bangalore,” said Tom Wright, General Manager, India, Middle East, Africa and Pakistan, Cathay Pacific Airways Limited. The bilateral agreement announced earlier this year with regards to increased frequency between India and Hong Kong gave Cathay Pacific and Dragonair an opportunity to enhance their services to India. The airline will however not be able to service other Indian cities for now, as they are constrained by traffic restrictions. Commenting on the increase in Aviation Turbine Fuel (ATF) prices, Wright said, “It is hitting the aviation industry hard. The fuel prices have gone up by 60 per cent as compared to last year. The new aircraft therefore, is more fuel efficient. We have launched this service, as there is a huge demand from business travellers, despite the increase in fuel prices.” Dragonair and Cathay Pacific Airways together operate 35 flights from India. Cathay Pacific has recently added 20 new flights a week including new services from Chennai, making a total of 28 flights a week from India to Hong Kong.

Source : TravelBizMonitor

Jet Airways will enhance its network connectivity from Pune with the launch of its new direct services to Hyderabad, Nagpur and Ahmedabad, effective 15-Jul-08.

The flight from Pune to Hyderabad and Ahmedabad will be a daily direct flight whereas flights between Pune and Nagpur will operate six days a week, with the exception of Saturdays.

Jet Airways’ flight 9W 3421 (Pune-Hyderabad) will depart Pune at 0615 hrs and arrive Hyderabad at 0740 hrs. The return flight 9W 3422 (Hyderabad-Pune) will depart Hyderabad at 0825 hrs and arrive Pune at 1035 hrs. Jet Airways will operate the first flights of the day into both Pune and Hyderabad on this sector.

Jet Airways’ flight 9W 3423 (Pune-Nagpur) will depart Pune at 1105 hrs and arrive Nagpur at 1255 hrs. The return flight 3424 (Nagpur-Pune) will depart Nagpur at 1325 hrs and arrive Pune at 1535 hrs. Jet Airways Pune-Nagpur-Pune flights will operate daily except on Saturdays.

Jet Airways’ flight 9W 3425 (Pune-Ahmedabad) will depart daily (except Saturdays) from Pune at 1610 hrs and arrive Ahmedabad at 1745 hrs. On Saturdays, Jet Airways flight 9W 3425 (Pune-Ahmedabad) will depart Pune at 1705 hrs and arrive Ahmedabad at 1840 hrs. The return flight 9W 3426 (Ahmedabad-Pune) will depart daily (except Saturdays) from Ahmedabad at 1815 hrs and arrive Pune at 1950 hrs. On Saturdays, Jet Airways flight 9W 3426 (Ahmedabad-Pune) will depart Ahmedabad at 1910 hrs and arrive Pune at 2045 hrs. Jet Airways’ Ahmedabad-Pune service is the last daily direct flight on this sector.

Announcing the launch of these new flights, Mr. Wolfgang Prock-Schauer, CEO, Jet Airways, said, “With several large Indian and multi-national companies setting up operations in and around Pune, and the resultant growth of the city, there has been a growing demand for greater air connectivity to and from Pune. As such, with the launch of these direct flights to Ahmedabad, Hyderabad and Nagpur, Jet Airways will tap into the passenger demand on these burgeoning sectors, given the enormous growth potential on these routes”.

(c) Centre for Asia Pacific Aviation. Date posted: 3-Jul-08

BIA II phase suffers a setback
From B S Arun, DH News Service, New Delhi:

Just as the first phase of the Bengaluru International Airport (BIA) was finally declared open after hitting air pocket several times, the proposed second phase has received a blow. The Defence Ministry is opposed to the proposed second runway direction and wants it to be shifted.

As per the Master Plan, approved by several agencies including the ministry, the second runway, part of the second phase, is to come up to the south of the existing one.

IAF’s objection

The Indian Air Force has raised objections now and wants it to the north or the eastern side of the present one.

At a meeting convened by Cabinet Secretary K M Chandrashekhar recently to hear the views of the players involved, the Airports Authority of India opined that the second runway would not be of much use because of the present airspace constraints, while the Bengaluru International Airport Limited (BIAL) and Karnataka government were against changes in the plans.

Deccan Herald has learnt that at the meeting, the IAF raised safety concerns if the second runway goes as planned, as it said the lateral separation between existing runway at the BIA and the nearby Flying Training School at Yelahanka would be only 4.03 nautical mile (1 nm=1.85 km). It was also emphasised that as the helicopter circuit is towards the north of Yelahanka, the distance between helicopter traffic and aircraft on the final approach at the BIA, the first runway as existing would not be more than 2.5 nm.

In the case of the second runway, this distance would reduce to only 1.5 nm, which, it said, was inadequate and may lead to near misses also.

According to the BIAL, the site for the airport was selected by the Ramanathan committee and the no-objection certificate for the second runway, as per the Master Plan, was issued by the Defence Ministry itself in March 2004. Besides, if the second runway has to be shifted, the entire agreement would need a relook and this would not be acceptable to the various partners of the BIAL.

Noting that the growth of traffic has exceeded the forecast made in 2005, the BIAL said in view of this, the airport operator was required to embark on the implementation of the second runway as per the Master Plan.

The BIAL also pointed out that shifting the second runway to the north would have consequences on air traffic operations and on the overall plan. The capacity and efficiency of the airport would be reduced significantly.

Source : The Deccan Herald

DH News Service, Bangalore:

In its first step towards implementing the proposed high speed train project to Bangalore International Airport, the State government on Wednesday called for Expression of Interest (EI) from private firms to take up the project on Build Operate and Transfer (BOT) basis.

The EI has been issued by Karnataka Industrial Investment and Development Corporation (KSIIDC), which has been appointed by the government as the nodal agency to implement the project. As per the EI, firms have time till September to respond.

Tender

A BOT operator (also called project promoter) will be selected through the global tender. The plan is to complete the project connecting the airport from Police Parade ground off Cubbon Road in the heart of the city, by 2011.

The BOT operator will have to bear almost the entire cost, which is estimated at Rs 3796 crore, except for equity participation by both the State and the Centre Governments (Rs 135 crore each) and Bangalore International Airport Limited (Rs 30 crore), official sources said.

The State Government will also bear the land acquisition cost (Rs 155 crore) and BIAL will bear civil engineering cost for the train at the airport premises (Rs Rs 148 crore).

BIAL has been made an equity partner as the train is proposed to pass through the airport, sources added.

Source : The Deccan Herald

To introduce A-SMGCS for monitoring movements at Mumbai and Kolkata airport
By Anita Jain | Mumbai

Airports Authority of India (AAI) is planning to introduce Advanced Surface Movements – Guidance and Control System (A-SMGCS), to monitor Air Traffic Management (ATM) in Mumbai and Kolkata airport by next year. The System was introduced by USA based, Sensis Air Traffic Systems at Indira Gandhi International Airport, Delhi, in 2006. AAI is also aiming at further expanding the service in Delhi airport. Explaining the advantages of A-SMGCS, a source from AAI said, “This technology relies completely on automated processes, providing both pilots and traffic controllers’ exact information about positions and directions of the aircraft. The new system will help in reducing the number of accidents occurring at the ground level at the airport, resulting in safe movements and operations.”

Talking about the expansion at Delhi airport, Tonu Lo Brutto, Vice President and General Manager, Sensis Air Traffic Systems said, “The expanded A-SMGCS will provide surveillance coverage to address the terminal and runway expansion project. The expansion will include additional Sensis Multistatic Dependent Surveillance (MDS) multilateration sensors and a second Surface Movement Radar.”

According to AAI official, the International Civil Aviation Organisation (ICAO) has already described A-SMGCS as the future of modern airport, controlling the airport space. The system provides complete surveillance, control and guidance, on and around the airport, from single or multiple user positions. Displayed information include identification, aircraft number, vehicle type or number, operator, aircraft derived position, speed and intent. A-SMGCS will help enhance airport efficiency and capacity in low visibility, while maintaining current safety level. Internationally, Sensis is deploying its A-SMGCS at Brisbane, Melbourne and Sydney airports in Australia and Hong Kong International Airport. In the United States, Sensis’ A-SMGCS is being deployed at 35 airports through the FAA’s Airport Surface Detection Equipment, Model X (ASDE-X) programme.

Source : TravelBizMonitor