WL Ross announces execution of definitive documents for funding transaction
13-Aug-2008

SpiceJet Limited and WL Ross & Co. LLC (WL Ross) announced the execution of definitive documents for a funding transaction with WL Ross and others.

The completion of the transaction will make available up to INR421 crores (USD 100 million) to SpiceJet. This is higher than the INR345 crore (USD 80 million) proposed earlier and has been made possible partly through the participation of Istithmar World Capital and SpiceJet Director, Mr. Ajay Singh.

The infusion of capital will take place in two successive tranches. Completion of the funding of the first tranche is subject to certain conditions precedent, which are expected to be fulfilled in the next two weeks. The remainder of the funding will be received after shareholder approval which the Company will seek shortly. As part of the transaction, Goldman Sachs has agreed to subscribe for equity warrants in the Company under the preferential issue guidelines of SEBI and subject to requisite approvals.

Mr. Bhulo Kansagra and Mr. Ajay Singh, Board Members of SpiceJet, said "We are delighted that such a large amount of funding has been made available to SpiceJet at a challenging time for the aviation industry in India. This investment validates the confidence of our investors in the low cost model that SpiceJet has chosen to follow. We are delighted to have WL Ross on-board SpiceJet and we are confident that this will better enable SpiceJet to maintain its proud position as the most efficient airline in the country."

Mr. Wilbur L. Ross Jr., Chairman & CEO, WL Ross & Co. LLC said, "This financing is intended to give SpiceJet the staying power to get through the industry consolidation that is underway. We also gain encouragement that oil prices have been abating and that the government has appointed a Committee under the Chairmanship of the Cabinet Secretary to recommend measures to stabilize the industry."

Mr. Ranjeet Nabha, Managing Director & CEO of WL Ross India said, "We have worked closely with the promoter group and Istithmar World Capital to provide SpiceJet with a strong capital base that will enable it to emerge from the current down turn and be recognized and admired, not only in India, but on the global stage." Mr. Ross and Mr. Nabha are expected to join the Board of Directors of SpiceJet.

(c) Centre for Asia Pacific Aviation.

Travel agents to shut shop on August 14 to fight back airlines
By Krupa Vora | Mumbai

In a bid to give a strong fight to the airlines for the current commission cut scenario, 2,750 International Air Transport Association (IATA) accredited agents and 50,000 non-IATA agents will shut shops on August 14, 2008. The decision was taken at a joint meeting held between Travel Agents Association of India (TAAI), Travel Agents Federation of India (TAFI) and IATA Agents Association of India (IAAI) in Mumbai yesterday. Apart from this, the airlines and the associations will also hold a meeting on the shop shutting day to discuss the commission cut. Though the agents associations demanded the airlines to implement the zero commission regime from May 1, 2009, the airlines deferred it to November 1, 2008 from the previous deadline of October1, 2008. "When the commissions went down from seven to five per cent, Air India had given us in writing that the commissions will remain the same for the next four years. The four year deadline will get over on April 30, 2009 and hence the new commission should be implemented from May 1, 2009. We were unhappy when airlines deferred it to November 1, 2008," said Praveen Chugh, President, TAFI.

According to the associations, the transaction fee should be combined with the ticket fare, rather than the agents asking for it separately. "No end consumer is going to pay for the transaction fee if it is asked separately, the transaction fee has to be bundled with the ticket," added Chugh. Other demands by the associations to the airlines include, necessary budget for training travel agents, study tour, service tax on Profit Linked Bonus (PLB), insurance by airlines and service fee on Agency Debit Memo (ADM) and PLB for all agents.

Shuhdha Joshi, Honorary Secretary, TAAI said, “The zero per cent commission needs to be undertaken in a phased manner because there are corporate contracts which are signed on yearly basis. The back end structures need to change to adopt the zero commission regime. Training and education is required. All these things need time and cannot be undertaken in a haphazard manner.”

Source : TravelBizMonitor

Foreign airlines flock to India, ignore global downturn

India is seen as a growing market for international airline traffic and the current market size is nearly $5 billion (Rs 21,000 cr) a year

They are cutting flights to several destinations in the wake of a worldwide slump in business, but international airlines are doing just the opposite in India because they believe the country’s international air traffic will only grow in the coming years.

Interestingly, this comes even as the domestic aviation business is going through a downturn.

Large carriers already operating here such as British Airways and Emirates are either increasing the number of flights to Indian cities they already fly to, or beginning to fly to new cities, while smaller players such RAK Airways and Garuda Indonesia are starting to fly into the country.

India is seen as a growing market for international airline traffic and the current market size is nearly $5 billion (Rs21,000 crore) a year, said a senior official with a foreign airline.

“India, with its huge middle-class population of over 250 million, is like an untapped gold mine,” said K. Ravindran, chief operating officer, RAK Airways, which started operations in India from April, flying between Kozhikode and Ras al-Khaimah in the United Arab Emirates. “With its present international travel market not even covering 2% of the population, the country offers large opportunities for airlines. India is an important geographic area in all our future network plans.”

ON THE RADAR

Kapil Kaul, chief executive officer (Indian subcontinent and West Asia) of consulting firm Centre for Asia Pacific Aviation, said India is a critical destination for international airlines based on the “various dynamics of competition and consolidation of their network”.

“So, when a rebound happens there (in global markets), these carriers will have an advantage as they would have already built capacities in India,” he added.

Deutsche Lufthansa AG, Singapore Airlines Ltd, Cathay Pacific Airways Ltd, British Airways Plc. (BA) and Emirates are in the process of increasing the frequency of their flights and connecting new destinations here.

Hong Kong Dragon Airlines Ltd (an affiliate of Cathay Pacific), Saudi Arabia’s Sama LelTayaran Co. Ltd (popularly known as Sama), and AirAsia Berhad are also launching operations in the country.

This surge, Kaul said, is also because international airlines are trying to gain a foothold in the India-bound market before domestic private carriers Jet Airways (India) Ltd and Kingfisher Airlines Ltd grow into a threat.

Jet launched its international operations in 2004 and Kingfisher will start flying overseas routes from September.

“Other reasons include a nearly liberalized bilateral government policy with other countries and sustained economic growth amidst recession,” he added.

For instance, Emirates, which recently increased the frequency of its Delhi-Dubai flights, is readying for another round of expansion by increasing the number of flights to Hyderabad and Bangalore from October.

Singapore Airlines is also adding five flights on its Delhi-Singapore sector from September, taking its total flights to Indian cities to 63.

“We will be adding two more flights in Bangalore as India is our key market,” said Gunjn Chanana, public relations manager for India at Singapore Airlines, without disclosing the airline’s growth rates here. “We believe there is potential (for more) growth.”

“India today is by far the largest single market for Qatar Airways with a network of nine cities, which represents more than 10% of our global network of 83 international routes,” said Qatar Airways’ chief executive officer Akbar Al Baker in an email.

Qatar Airways added Kozhikode as its ninth destination in India in June.

The global aviation industry is waging a losing battle against rising aviation fuel costs, which have increased 30% this year.

However, international airlines expect potential passenger growth from India to nullify the impact over the long term.

“For example, we have registered a load factor of 86% during the first half of this year in the India-Sharjah sector,” said Housam Raydan, corporate communications manager, Air Arabia PJSC which operates 86 flights a week between Sharjah and India.

Much of the rise in international air travel from India is driven by traffic to South-East Asian countries, while demand for destinations in the US, Australia and New Zealand is also increasing.

“The overall (number of) Indian arrivals to Malaysia from January to May 2008 is 234,245, a growth of 32.5% from last year. Similarly, Singapore has also witnessed above-average growth,” said Neelu Singh, chief operating officer, Ezeego1.com, a Mumbai-based online travel agency.

Naresh Goyal, founder chairman of Jet Airways, had said in an earlier conversation with Mint that Indian airlines pose a serious threat to international carriers on account of the quality of their service.

He had added that Jet, which earns nearly half of its operating revenues from international operations, would extend its global reach to other cities in North America, Europe, Africa and Asia in phases.

“However, international carriers will have to be a bit cautious in increasing their capacities considering the current downturn,” said Wolfgang Prock-Schauer, chief executive officer of Jet Airways.

His warning holds merit as three carriers—Linee Aeree Italiane SpA (Alitalia), Eva Air (Taiwan) and British Midland Airways Ltd—have suspended their Indian operations over the past two years, because of intense competition.

Ryanair Ltd, United Air Lines Inc., US Airways Inc., Qantas Airways Ltd and BA have either deferred, or cancelled their international flights to various cities owing to the high jet fuel prices.

Source : The Mint

New Bangalore airport faces probe by legislators
August 10th, 2008 ICT by IANs

By Vishwanath Karnic

Bangalore, Aug 10 (IANS) The two-month old Bangalore international airport, a Rs. 25-billion ($625-million) greenfield project, faces a probe by a Karnataka legislators’ panel over alleged deviation in design and lack of sufficient facilities for passengers as well as visitors. “The new airport is no better than an ordinary bus stand”, “It is substandard”, “There is no proper seating arrangements for passengers and visitors” - these are the terms in which state legislators and ministers describe the new airport.

A consortium of Unique Zurich Airport, Siemens Project Ventures and Larsen & Toubro (L&T) has built the airport, with the Airports Authority of India (AAI) and the Karnataka government as minority stakeholders.

“There has been deviation from the architecture, style and design. It does not add to the image of Bangalore. There are no proper facilities for passengers and visitors,” Congress legislator D.K. Shivakumar, who raised the issue in the state assembly last week, told IANS.

Legislators from other parties supported him. The Bharatiya Janata Party government agreed to set up a committee of members from both the assembly and the council to probe the lapses. The panel is to be set up soon.

“I have raised the issue based on my personal experience at the airport and also because of complaints I have received from several people,” Shivakumar said.

“As a representative of the people I cannot sit quietly,” he said when asked why the alleged deviation and lack of facilities are being raised now, more than two months after the airport began operations.

“I am a former urban development minister. The design of the airport is different from what was approved,” Shivakumar charged.

When asked if there was any scope to change the design now, he insisted: “There are lots of possibilities to improve. It can be done. The legislators’ panel will decide that.”

On Wednesday Minister for IT and BT, Katta Subramanya Naidu, called the new airport, about 40 km north of the city centre, “a poor cousin to other airports of international standards, including the New Delhi and Hyderabad airports.

“The new airport was expected to enhance Bangalore’s image and also that of Karnataka. But it is nowhere near the expectation one had from it.”

He said if the airport management does not upgrade the facilities to international standards, the state government may invite others to take up the job.

While the management declined comment on the move for a probe by the legislators’ panel and Naidu’s near-threat, the response from industry and trade organisations was lukewarm.

“It is a ticklish question. It is better if we leave these issues to the judgement of users,” said D. Muralidhar, president of the Federation of Karnataka Chambers of Commerce and Industry.

“Personally I think facilities are good. However, scope for improvement is always there,” he said.

“It is a new airport. Some questions (regarding facilities) do get raised when we tend to compare it with other international airports. At the same time we need to understand that facilities are far better than at the old airport,” Muralidhar said.

T. Ramappa, secretary general of the Bangalore Chamber of Industry and Commerce, shared Muralidhar’s views.

“Personally I don’t think it is so bad,” he said.

“I have used it twice and I did not have any problems. Of course there certainly is room for improvement,” Ramappa said.

The airport began operations May 24 after three failed starts in the previous two months. The promoter operator - Bangalore International Airport Ltd (BIAL) — had to settle for a soft launch because the Election Commission’s model code of conduct was in force as assembly elections were on in Karnataka.

Marred by controversies, litigations, protests and cost over-runs, the much-awaited launch was put off thrice (March 28, May 11 and May 23) due to delays in setting up the air traffic control, training operators, government clearances and finally the poll panel’s directive.

With the opening of the new airport, the 50-year-old state-run Hindustan Aeronautics Ltd (HAL) airport in the city was shut for civilian traffic despite protests by corporate honchos of the new economy against its closure.

However, Naidu said the state government will ensure HAL airport stays as there are a number of cities with two airports. “We will take up the matter with the central government,” he said.

According to the Concession Agreement between BIAL promoters and the Indian government no airport can operate within 150 km of the new Bangalore international airport.

Longest range commercial jetliner will connect Atlanta to one of world’s fastest-growing economies

Boeing 777-200 Long Range aircraft features lie-flat seats in Delta’s BusinessElite class

ATLANTA, Aug. 7, 2008 – Delta Air Lines (NYSE: DAL) today announced a new daily nonstop flight between Hartsfield-Jackson Atlanta International Airport and Mumbai, India, starting Nov. 1, 2008*. The new flight will connect the world’s largest airport with one of the world’s fastest-growing economies.

Delta’s recently acquired Boeing 777-200 Long Range (LR) aircraft will make the 17-hour, 55-minute westbound nonstop flight possible. The world’s longest range commercial jetliner bolsters Delta’s ability to connect customers and cargo between virtually any two cities around the globe, nonstop.

Delta’s first two 777-200LRs joined the fleet earlier this year as the first of 10 such models to be delivered through 2010. Since April, these aircraft have been serving the New York-JFK-Mumbai route, which will be discontinued with the start of nonstop service between Atlanta and Mumbai.

“The size and scope of Delta’s operations at our Atlanta hub are best suited for the capacity of the 777-200LR in terms of cargo and passenger lift,” said Glen Hauenstein, executive vice president – Network and Revenue Management. “Serving Mumbai from Atlanta will allow us to optimize the route thanks to the approximately 150 U.S. destinations to which Mumbai customers will be able to connect, as well as the more than 30 easy connections available to and from Latin America and the Caribbean.”

With the new service, Delta will offer customers nonstop service to 78 international destinations from Atlanta, including service recently announced or inaugurated between Atlanta and Shanghai, China; London-Heathrow, England; Stockholm, Sweden; and Kuwait City, Kuwait (effective Nov. 7).

Delta’s schedule between Atlanta and Mumbai will be:

Flight	Departs	Arrives	Frequency
DL 184	Atlanta at 7:15 p.m.	Mumbai at 10:35 p.m.**	Daily
DL 185	Mumbai at 1:05 a.m.	Atlanta at 8:30 a.m.	Daily

** arrives the next day

The 777-200LR is the flagship aircraft for Delta’s global product, including fully horizontal personal sleeper suites in BusinessElite®, next-generation, more comfortable seats in coach, and Delta’s on-demand entertainment system on larger screens at every seat.

BusinessElite customers flying on the 777-200LR enjoy:

• Reclining seats that adjust to multiple comfortable positions, including a completely flat 6-foot 3-inch bed;
• Privacy screens incorporating pull-out meal table, fold-out 10.6-inch personal video screen, integrated footrest and personal stowage compartment for bags, shoes or blankets;
• Immediate access to the aisle so customers do not have to disturb another passenger when exiting their seat; and
• USB ports offering charging ability for laptops and MP3 players.

Customers flying BusinessElite on any Delta international aircraft enjoy Delta on Demand featuring first-run and popular classic movies, music, TV programming and video games – all available on demand; a five-course menu offering culinary creations by celebrity chef Michelle Bernstein, including an appetizer, soup or salad, and choice of four entrees (including a vegetarian selection); a reinvented wine program launched in February by Master Sommelier Andrea Robinson featuring wines from around the world; new full-size pillows, duvets; modern and stylish dinnerware; and in-seat power outlets that allow customers to recharge their laptops.

Delta’s 777-200LR aircraft offers customers flying in coach comfortable new, all leather slim-line seats each with on-demand music, movies, games and television on individual 9-inch video monitors. Delta is the first airline to offer the sleek, new, leading-edge seats from Weber Aircraft LP, offering up to 1.5 inches of increased personal space, additional under-seat storage, and ergonomically-designed cushions.

Delta Air Lines operates service to more worldwide destinations than any airline with Delta and Delta Connection flights to 312 destinations in 61 countries. Delta has added more international capacity than any major U.S. airline during the last two years and is the leader across the Atlantic with flights to 44 trans-Atlantic markets. To Latin America and the Caribbean, Delta offers 393 weekly flights to 47 destinations. Delta's marketing alliances also allow customers to earn and redeem SkyMiles on more than 16,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. Including its SkyTeam and worldwide codeshare partners, Delta offers flights to 500 worldwide destinations in 105 countries. Customers can check in for flights, print boarding passes, check bags and flight status at delta.com.

*Subject to foreign government approval