monthly newsletter august 2013 newsletter august 2013 members: page 1 of 30 contents 1. aviation...

Monthly Newsletter August 2013

Members:

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CONTENTS

1. Aviation Sector ……………………………………………………………………….….3

2. Airports

2.1 Bangalore International Airport Limited……………………………….…………….14

2.2 Delhi International Airport Limited……………….……………...……………….….14

2.3 GMR Hyderabad International Airport Limited……………….……………………..14

3. Airlines

3.1 Air India……………..…….…………………………………………………….…...16

3.2 Jet Airways.…………………………………………………………….……….……16

3.3 SpiceJet…..…………….…………………………………………….………….…...17

3.4 IndiGo…..………...…….…………………………………………….…………..…..18

3.5 Kingfisher Airlines….….…………………………………………….………………18

4. International News……………………………………………….………………………19

5. Traffic…….……………………………………………………………….………….…...23

6. Review of Report…...….….....................………………………………...........................29

Disclaimer: The information contained in this newsletter has been collected from news/articles

appeared in various newspapers and other publications and also collected from respective airport

operators. APAO makes no warranties as to the accuracy or authenticity or completeness of the

information.

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ABBREVIATIONS

AAI Airports Authority of India

ACI Airports Council International

AERA Airports Economic Regulatory Authority of India

ATF Aviation Turbine Fuel

BCAS Bureau of Civil Aviation Security

BIAL Bangalore International Airport Limited

CAG Comptroller and Auditor General

CIAL Cochin International Airport Limited

CISF Central Industrial Security Force

CO2 Carbon dioxide

CSIA Chhatrapati Shivaji International Airport, Mumbai

DGCA Directorate General of Civil Aviation

DIAL Delhi International Airport Limited

DRDO Defence Research and Development Organisation

ECB External Commercial Borrowing

FDI Foreign direct investment

GHIAL GMR Hyderabad International Airport Limited

IAF Indian Air Force

IATA International Air Transport Association

ICAO International Civil Aviation Organisation

IGIA Indira Gandhi International Airport, New Delhi

JV Joint Venture

MIAL Mumbai International Airport Limited

MoCA Ministry of Civil Aviation

MoU Memorandum of Understanding

MRO Maintenance Repair Overhaul

PPP Public-Private Partnership

PSF Passenger Service Fee

PWD Public Works Department

RGIA Rajiv Gandhi International Airport, Hyderabad

SOP Standard operating procedure

VAT Value Added Tax

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1. AVIATION SECTOR1

1. The Cabinet Committee on Investments has approved the design of Terminal 2 at Mumbai's

CSIA, making it the first airport in the country to have security checkpoints before

immigration. The sequence of security checks at the four-storey terminal was being debated

for the past few months after immigration officials, CISF and other security agencies objected

to the design.

2. AAI has signed a MoU with Chhattisgarh State Government for development of second

airport at Raigarh at a cost of Rs 280 crore. The state also declared that the tax on ATF will be

reduced from 5% to 1%, as soon as the facility of international flights commence at Raipur

airport. The Raigarh airport will be developed in two phases under a time-bound programme

of three years. In the first phase, a 1,870m long and 45m wide runway will be constructed and

in the second phase, a runway with a length of 2,000 metre will be constructed. In the first

phase, the runway will be utilized for aircraft of capacity 138-179 seats. Estimated

expenditure for development of this airport in the first phase will be Rs 120 crore and in the

second phase, it will be Rs 160 crore.

3. The BCAS is drafting a standard operating procedure for security and airline staff to screen

people with implants and prostheses and those with Autism, Down's Syndrome and similar

special needs. The SOP will also cover people and dogs that accompany differently-abled

passengers.

4. BCAS is all set to install scanners which work on millimetre-wave technology at major

airports across the country. These will be used in place of the X-ray body scanners at airports,

which had faced objections due to privacy concerns raised by passengers. Delhi's IGIA will be

the first in the country in which the new scanners will be tested soon. The scanners do not

emit any kind of harmful rays and a stylised image is created after the rays bounce off the top

layer of the skin. Any abnormality in the body contour, which could mean hidden explosives

or weapons, will be visible on the screen for both the passengers and the security official

manning it. This scanner does not produce an image where body contour and shape is visible

and only a generic image is generated. If any suspicious object is noticed, then the particular

body part will be highlighted automatically.

5. DGCA is planning to make it mandatory for flight attendants to clear the stringent ICAO

Class 2 medical test, as part of a larger attempt to improve safety standards. Currently, flight

attendants have to go through airline-specific medical tests. Those seeking to clear the Class 2

test prescribed by ICAO have to undergo electrocardiography, blood, eye, blood pressure and

diabetes tests, besides chest X-rays and assessment of body mass index.

6. The West Bengal Government on 6th August announced special incentives to airlines to

increase flights to Kolkata, Bagdogra, Durgapur and Cooch Behar airports in a bid to promote

travel and tourism and attract investment to the state. The existing sales tax rate on ATF in

West Bengal was 25%. An additional sales tax of 20% on sales tax was also levied. Thus, the

effective sales tax rate on ATF in the state was 30%. The state has announced 50% rebate on

tax on additional ATF sold to any airline from Kolkata airport compared to corresponding

ATF consumed by the airline in 2012-13. Thus effective rate of tax on ATF on excess

quantity of Fuel consumed will come down from existing 30% to 15%. The State Government

1 Newspaper Clippings

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also declared total sales tax exemption on ATF sold from Coochbehar and Bagdogra airports

for three years to boost trade and tourism.

The West Bengal government also handed the first installment of Rs 15 crore to AAI for the

expansion of the runway at Cooch Behar Airport so to make the facility fit for handling

medium-bodied aircraft. The West Bengal government will bear the entire cost for the

expansion of the runway at the Airport. According to preliminary estimate, the project will

cost around Rs 45 crore.

7. Minister of State for Civil Aviation, Shri K.C. Venugopal informed Rajya Sabha on 6th

August that seventeen new airports have been proposed for construction during the 12th Five

Year Plan. The list of the new airports is as follows:

S.No. Location State

1. Mopa Goa

2. Gulbarga Karnataka

3. Bijapur

4. Hassan

5. Shimoga

6. Aranmula (Pathanamthitta)

Kerala

7. Kannur

8. Sindhudurg Maharashtra

9. Navi Mumbai

10. Shirdi

11. Dabra Madhya Pradesh

12. Karaikal Pudducherry

13. Kushinagar Uttar Pradesh

14. Andal-Faridpur West Bengal

15. Itanagar Arunachal Pradesh

16. Kishangarh (Ajmer) Rajasthan

17. Deoghar Jharkhand

8. The Ministry of Home Affairs has granted key security clearance to AirAsia India.

9. Ministry of Home Affairs has issued orders extending Tourist Visa on Arrival facility at four

additional airports viz. Trivandrum, Bangalore, Hyderabad & Kochi with effect from August

15. Earlier, the Visa on Arrival facility was operational only at four international airports in

Delhi, Mumbai, Kolkata and Chennai. Tourist Visa on Arrival facility facility would be

extended to Goa Airport as soon as infrastructure and manpower requirements are in place.

10. Minister of State for Civil Aviation Shri K.C. Venugopal informed Lok Sabha on 8th August

that Kolkata and Chennai airports have been modernized at a cost of Rs 2325 crores and Rs

2015 crores respectively. The Task Force on Financing Plan for development of airports

constituted under the Planning Commission has recommended that operations and

management of Chennai and Kolkata Airports could be taken up through PPP mode. AAI has

suggested that management, maintenance and operation of these two airports be undertaken

by formation of JVs with world class Airport Operators, with AAI being lead partner. As a

first step, an Inter Ministerial Group has been constituted to evolve, recommend and monitor

http://economictimes.indiatimes.com/topic/trade-and-tourism

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the implementation of the appropriate model for achieving the desired objectives of operation

and management of these airports with private participation.

11. According to CAG report which was tabled in Parliament on 8th August, Pawan Hans is

putting passengers at a serious risk by flying its helicopters to Arunachal Pradesh, Katra,

Phata (Kedarnath), Amarnath, Port Blair, Koraput, Gadchiroli, Gangtok and Patna since

helipads at these places are unlicensed and are not approved by DGCA.

12. According to CAG report which was tabled in Parliament on 8th August, the CAG has alleged

DIAL utilised the value of Duty Credit Scrip amounting to Rs 91.83 crore, earned under the

Served from India Scheme for payment of duty but did not account for this as income. This

deprived AAI from getting the 45.99% share of the revenue i.e. Rs 42.23 crore as per the

Operations, Maintenance and Development Agreement.

13. Minister of State for Civil Aviation Shri K.C. Venugopal informed Parliament that only 20

Air India services on the domestic sector met the total cost of operations in April – June 2013.

80 services met the cash cost, but not the total cost, 11 services met the fuel cost but not the

cash cost while 2 services did not even meet the fuel cost.

14. DGCA has made it mandatory for all helipads to have doctors equipped with breathalysers to

check the blood alcohol content of pilots before they take charge of the flight controls. The

move is part of the rigorous new safety norms ordered by DGCA and follows a spate of high-

profile helicopter crashes. The DGCA has asked all helicopter operators in the country to

include a contingency plan for natural disasters in their emergency response strategies, with a

clear operating procedure for providing relief and rescue operations. The DGCA's new rules

also require helicopter operators to ensure proper screening of passengers, making them

responsible for checking their identity, nationality and their luggage. DGCA has also

suggested that states' aviation departments could be part of disaster management authorities,

and regular maintenance be conducted of state government airports and helipads.

15. Kushinagar Airport project in Uttar Pradesh is to be built under the PPP mode on a design-

build-finance-operate-transfer basis. The Rs 354 crore project is one of the first greenfield

airport project in UP to get the approval for Viability Gap Funding from the department of

economic affairs, the finance ministry and the Centre. The Viability Gap Funding approval

granted is Rs 70.93 crores (20% of the project cost) while an additional support of up to 20%

is expected from the state government.

16. AAI plans to make Indian airports a major hub in the Asia Pacific Region by 2016, besides

setting up world-class infrastructure in air traffic services. A Common Airports Operations

Data base is planned at 10 airports to provide collaborative decision making amongst all

airport stakeholders. This will reduce dwell time at airports by using state-of-the-art

technology.

17. According to ACI survey on airport, Sardar Vallabhbhai Patel International Airport,

Ahmedabad has been rated as best airport in India among the 11 AAI Airports — Chennai,

Kolkata, Jaipur, Goa, Ahmedabad, Pune, Lucknow, Srinagar, Calicut, Guwahati and

Trivandrum. Ahmedabad stood first with the satisfaction index of 4.13 on the scale of 5. It

was followed by Guwahati, Lucknow and Srinagar.

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18. According to CAPA report, Indian airlines, excluding the grounded Kingfisher Airlines, are

expected to lose a combined $400-450 million (around Rs 2,400 crore – Rs 2,700 crore) in the

second quarter of the current fiscal due to “irrational competition” resulting in “aggressive

discounting” during the off-season. In the first quarter of the current fiscal year, the airline

industry lost nearly $200 million although low-fare carriers had posted profit in the range of

$40-$50 million. The airlines lost an estimated $1.95 billion in the last fiscal on combined

revenue of $9.5 billion.

19. Government is considering a hike in the PSF charged on every domestic ticket. The levy, used

to fund the cost of providing security at airports, has not been increased since 2002. The move

to increase the PSF has been initiated as the collection of funds on this count has fallen well

short of the cost of providing security at airports. The annual expenditure in providing

security at airports was around Rs 1,200 crore, while the money collected through PSF was

estimated at about Rs 400 crore less than the spending on security. Every domestic passenger

pays Rs 130 to fund the security being provided at airports in the country. The money

collected is deposited in the respective airport operator’s account. The PSF collected from

passengers departing from private airports goes into the account of the private operator and

collections from passengers using AAI airport goes into for the government-owned airport’s

account.

20. The government on 19th August banned duty free import of flat screen television by air

travellers in a bid to prop up rupee. The government, according to a notification, has decided

to "disallow import of flat panel (LCD/LED/Plasma) television as part of free baggage

allowance" with effect from August 26. Air travellers currently can bring a flat screen

television for personal use without paying any duty.

21. DGCA on 21st August issued an order saying certain non-scheduled air operator permit

holders have been undertaking international operations without having approvals. The order

said it is “necessary and expedient” to clamp down on such operations for securing the safety

of aircraft operations. The order said “No Air Operator Permit holder (Non Scheduled) shall

undertake international operations unless the holder of such permit is specifically certified to

undertake international operations and the same has been endorsed on the Operations

Specifications of the Air Operator Permit”. To expedite the process, the DGCA has created

special cells to help operators overcome hurdles.

22. Minister of State for Civil Aviation, Shri K. C. Venugopal informed the Lok Sabha on 22nd

August that the projected date of completion of new terminal building of Veer Savarkar

International Airport at Port Blair is December, 2017 and is scheduled for commissioning by

March, 2018. The requirement of land projected initially by AAI for construction of a new

terminal building of Veer Savarkar International Airport at Port Blair was 26.50 acres, which

was reduced to 18.71 acres on the request of the Andaman & Nicobar Administration. While

10.60 acres of land have been handed over by the Andaman & Nicobar Administration and

PWD to AAI, the process is on for obtaining working permission for 4.72 acres of land from

the Indian Navy. The remaining 3.39 acres of land is still to be acquired. Veer Savarkar

International Airport belongs to Indian Navy and AAI maintains a Civil Enclave at this airport

for handling civil operations. Air traffic services are provided by Indian Navy at this airport.

The present watch hours are from 0545 hours to 1605 hours.


August that the number of foreign pilots is on the decrease in the recent years as more and

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more co-pilots are upgraded to commanders. The total number of foreign pilots employed by

various aviation companies has come down from 340 last year to 262 at present. Indian Co-

pilots who are inducted by airlines and are eligible to become Pilot-in-Command as per the

policy of airlines are trained by them to phase out foreign pilots. As a follow-up, the cases of

Foreign Aircrew Temporary Authorisation pilots are processed on the basis of information

furnished by each airline with phase-out programme of foreign pilots. Government has

allowed issue of Foreign Aircrew Temporary Authorisation up to 31st December, 2016. There

is a shortage of type rated Commanders in the country due to growth in aviation industry and

induction of new aircrafts into the fleet of the airlines. However, sufficient number of co-

pilots is available and employed with the airlines.


August that in all, 81 foreign airlines, including 72 passenger and 9 cargo carriers, operate

1,734 scheduled services a week. The foreign airlines currently operate from 25 airports.

Emirates operate 185 flights a week to India followed by Air Arabia which operates 111

weekly services. Oman Air with 98 weekly services, and Qatar Airways with 95 and

SriLankan with 84 services are the top carriers operating to India. Among the European

carriers, British Airways and Germany’s Lufthansa operate 46 weekly services, Air France 20

while UK’s Virgin Atlantic and Turkish Airlines operate 14 weekly flights each. From East

Asia, Malaysia Airlines operates 70 weekly flights, Singapore Airlines and Thai Airways

(56), Air Asia Berhad (53), Tiger Airways (42) and Cathay Pacific (35). To ensure that

Indian carriers also spread their wings across the world, the Government last November raised

them to operate 1,695 international flights a week from October 2013 from 1,074 in 2012, an

increase of almost 58 per cent. The Government not only allowed domestic airlines to operate

on new routes connecting India with Rome, Madrid, Moscow, Barcelona, Zurich, Dusseldorf,

Ho Chi Minh City and Al Najaf (in Iraq), but also permitted them to increase the frequency of

flights to international destinations in a phased manner.


August that IAF has been requested to commence night operations at Civil Enclaves including

Silchar airport. Ministry of Defence has also been requested. Silchar Airport in Assam

belongs to IAF, Ministry of Defence and the air traffic control is provided by IAF. AAI is

maintaining only a Civil Enclave for handling civil operations. However, AAI has installed

runway lights, taxiway lights, precision approach path indicator, approach lights and

instrument landing system at this airport to facilitate night operations and handed over the

same to IAF.


August that the Government of India has granted "in-principle" approval for setting up of a

Greenfield airport at Kannur in Kerala. The project is to be implemented on Build Own and

Operate model. The State Government of Kerala has appointed Kerala Industrial

Infrastructure Development Corporation (KINFRA) as a nodal agency for the construction of

the Kannur Airport. KINFRA has formed a Special Purpose Vehicle, namely Kannur

International Airport Limited (KIAL), for the development of the airport. Ministry of

Environment & Forest has granted necessary environment clearance to the project. KIAL has

acquired 1278 acres of land so far. KIAL has requested for financial assistance under

Viability Gap Funding scheme. MoCA has supported the request of KIAL and requested

Ministry of Finance to grant the Viability Gap Funding. The project is at ‘Request for

Proposal’ stage for awarding the contract for airside works. As per the schedule of bidding

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process, the contract is to be awarded by the end of September, 2013. This project is closely

monitored by the MoCA and the Prime Minister's Office.


August that as a part of the modernization and upgradation of airports, construction of new

terminal buildings of airports has been completed at Kolkata, Chennai, Ranchi, Raipur,

Puducherry, Bhubaneshwar and Jaisalmer (Civil Enclave). These terminals are equipped with

modern state-of-the-art passenger facilities. AAI has also taken up construction of new

terminal buildings at the airports in Goa, Tirupati, Tezu, Vadodara, Chandigarh, Pakyong,

Kadappa and Khajuraho. A request has been received for provision of a third Passenger

Boarding Bridge in the New Integrated Terminal Building at Visakhapatnam. The request has

been processed and order has been placed for the Boarding Bridge. Apart from this, AAI has

commissioned new modern Integrated Terminal with capacity to handle 400 domestic and

300 international passengers at a time at Visakhapatnam.

28. MoCA has sent for approval the redrafted cabinet note on the bilateral air services agreement

with the UAE, as suggested by the Prime Minister's Office, to clear the air on the controversy

over enhanced seat entitlements made to Abu Dhabi.

29. The Cabinet Committee on Investment has stipulated a security measure that commercial

buildings and hotels in the aero-city near the New Delhi IGI Airport “will have toughened

glass with bullet-proof films” as per DRDO-approved specifications.

30. The Bureau of Energy Efficiency is mulling to include aviation and railways in India in its

second cycle of Perform, Achieve and Trade' scheme set to begin from 2015. The final

decision would be taken by the beginning of the next financial year. Perform, Achieve and

Trade', launched under the National Mission for Enhanced Energy Efficiency, has set separate

energy efficiency targets for various industries. Those who fail to meet this will have to face

the penalty. The first cycle which started in 2012 will end in March 2015. The scheme is

unique since it creates a market for energy efficiency through tradable ESCerts. These

certificates can be issued by any of the 478 industries in the first cycle, who are able to exceed

their respective notified target. These industries can trade the ESCerts at Indian Energy

Exchange and Power Exchange India at market price. The norms would be vital for aviation

sector because based on fuel data consumption collected directly from the seven Indian

scheduled passenger airlines and one cargo airline, the carbon footprint of Indian scheduled

airlines to/from domestic destinations was 6,755,000 tonnes of CO2. In the first cycle, the

designated consumers account of 478 units to about 165 million tonnes oil equivalent of

energy consumption annually.

31. MoCA is planning to do away with a regulation that requires Indian carriers to have a fleet of

at least 20 aircraft to start international operations. The move will help GoAir and AirAsia

India (which is set to start operations by year-end) to fly passengers out of India.

32. AAI on 24th August issued a circular stating it would provide green routes to flights operating

in oceanic airspace, as part of a global initiative to cut down travel time, fuel consumption and

carbon footprints. Flights operating on these routes are referred to as green flights because

their fuel consumption is less and they have a smaller carbon footprint. The alternative routes,

known as user preferred routes (UPR), are generated by the airlines’ flight-planning

department. The system selects the most economical flight route based on the kind of aircraft

being used and the weather forecast. Trial UPR flights, which began in July 2011, have

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already shown benefits. According to AAI, 1,031 green flights operated until February 2013

resulted in approximate fuel saving of 218.572 tonne and emission reduction of 6,885.018

tonne. A projection for the rest of the summer, which ends in October, shows that 6,200 UPR

flights will be operated during this period, reducing carbon emissions by 4.17 lakh kg.

33. Minister of State in the for Civil Aviation, Shri K. C. Venugopal informed the Rajya Sabha on

27th

August that the Government of Karnataka has acquired 370 acres of land for the

development of Belgaum airport and handed over the same to AAI for development of

runway extension, basic strip, construction of a new apron with taxiway, new passenger and

cargo terminal and other infrastructure facilities. Belgaum airport is a civil airport belonging

to AAI.

34. Minister of State for Civil Aviation, Shri K. C. Venugopal informed the Rajya Sabha on 27th

August that during the regulatory audit conducted by DGCA some deficiencies related to

operational and maintenance documents have been observed in the civil aviation sector. All

the deficiencies observed during the audit are taken up with the concerned airline operators

for appropriate remedial action. The deficiencies in the system and the compliance of rules

and regulations pertaining to aviation are monitored during the surveillance of the operators

carried out by the various directorates of the DGCA and regulatory/safety audits by DGCA

teams. DGCA makes annual programme for all the surveillance/safety checks to be carried

out by each directorate and same is displayed on the website of the DGCA. The deficiencies

observed are categorised depending upon the level of severity of Class I and Class II

deficiencies. All the findings are discussed for appropriateness of the action taken. The safety

inspections by the operators are also examined during the safety checks by the DGCA

officers.


August that AAI has requested the Government of Bihar for acquisition of around 200 acres

of land for the expansion of Gaya airport. The matters relating to acquisition of land and

payment of compensation thereto are the concern of the State Government. The land is to be

handed over to AAI free of cost and free from all encumbrances. The State Government is in

the process of acquisition of the requisite land. There is no international airport in Bihar.

However, there are two domestic/custom airports in Bihar at Patna and Gaya.


August that a Working Group was constituted under the Chairmanship of Secretary, Civil

Aviation to discuss the factors causing stress in civil aviation and to suggest solutions to the

same. Based on the recommendations of the Working Group, the Government has taken

several measures to revive the aviation industry, reduce the economic losses and ensure long

term viability of the sector. These measures include

(i) Director General of Foreign Trade has allowed direct import of ATF by airlines on

actual user basis;

(ii) FDI by foreign airlines in the domestic scheduled and non-scheduled carrier has

been permitted up to 49% of their paid up capital;

(iii) ECB up to $ USD 1 billion has been permitted for the airlines to meet their working

capital requirement and

(iv)The State Governments have been persuaded to reduce the VAT on ATF. As a

result, Maharashtra, Rajasthan, Chhatisgarh, Jharkhand and West Bengal have

reduced the VAT on ATF with certain conditions.

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Most airline operators in India have been recording losses for the last three years due to the

spiralling cost of ATF, global economic slowdown, low yield due to intense competition and

consequent widening gap between revenue and expenses and depreciation of rupee have

contributed to financial crisis of the airline sector. Over the years, the operational costs for the

airlines have gone up mainly due to increase in fuel prices and depreciation of Rupee. Further,

the airport/user development fees have gone up for some major airports. The service tax has

also increased.

37. Minister of State in the Ministry of Civil Aviation, Shri K. C. Venugopal informed the Lok

Sabha on 29th

August that the State Government of Madhya Pradesh has requested AAI for

transfer of the airstrips located at Panna, Satna and Khandwa to the State Government. The

ownership of Panna Airstrip is claimed by the State Government of Madhya Pradesh on the

basis of revenue records. However, the Panna airstrip has been listed as Civil Aviation

Department airport in Aeronautical Information Circular No. 18/1986 and was transferred

thereafter to DGCA and then to the National Airports Authority and later on to AAI as per the

provisions of AAI Act. The modalities for transfer of Panna Airstrip from AAI to the State

Government of Madhya Pradesh are being finalized in consultation with AAI and the State

Government.

38. Minister of State in the Ministry of Civil Aviation, Shri K. C. Venugopal informed

the Lok Sabha on 29th

August that the aviation companies fail to pay the dues due to one

reason or the other. AAI takes adequate efforts to recover the dues by regular

monitoring. Action is also taken as per the approved credit policy of AAI. Defaulting

companies have to pay interest as per AAI Credit Policy on delayed payments. In cases where

delay persists, besides encashing the Security Deposit, the defaulting airlines are put on `Cash

& Carry Basis`. Interest @ 12% per annum is charged in respect of traffic dues. Interest on

non-traffic dues is charged as per terms and conditions of the agreement which could be either

18% or 12%. Company-wise details of dues to AAI as on 31.03.2013 are as given under:-

S. No. Name of the airlines Amount due*(Rs. in crores)

1 Air India Group 1539.75

2 Various Foreign Airlines 193.49

3 Kingfisher Airlines 186.26

4 Jet Airlines Group 100.16

5 Spice Jet 80.17

6 Go Airlines 8.71

7 Interglobe Aviation (Indigo) 2.89

*Figures are subject to C&AG Audit

39. Minister of State in the Ministry of Civil Aviation, Shri K. C. Venugopal informed the Lok

Sabha on 29th August that AAI had allotted land to M/s. Gujarat Agro Industries Corporation

Ltd. (GAICL) for the setting up of a Centre for Perishable Cargo at Ahmedabad Airport.

GAICL had entered into an agreement with M/s Cargo Service Centre (CSC) for operation

and maintenance of the Perishable Cargo facility on revenue sharing model. GAICL has

sought "No Objection Certificate" (NoC) from AAI for outsourcing the facility to CSC.

However, AAI has not issued NoC to GAICL because as per the existing Perishable Cargo

Policy, GAICL cannot outsource on revenue model to a third party.

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40. ICAO, which had clubbed India among 13 nations with the worst record of air safety

oversight, has removed India from a list of countries with serious safety concerns (SSCs) after

a three-member team of ICAO conducted a five-day audit of DGCA from August 19-23. The

audit team also validated the corrective action plan (CAP) prepared by the DGCA to address

the two specific SSCs raised by ICAO, including issues over DGCA's air operators

certification process and absence of certifying modifications made to Indian aircraft abroad.

41. Singapore, Hong Kong and Bali airports have banned Indian private chartered carriers from

landing in their airports following rising concerns about whether Indian operators adhere to

international safety norms. The ban does not apply to Indian commercial airlines. The

decision follows a December 2012 audit by ICAO that said Indian carriers do not comply with

the safety standards.

42. According to Boeing forecast, the commercial aviation industry will need more than one

million new pilots and technicians to support the expanding demand for new airplane

deliveries over the next two decades. Projected pilot demand is increasing worldwide, as is

demand for technicians in some regions. The Boeing outlook indicates that by 2032 the world

will require 498,000 new commercial airline pilots and 556,000 new commercial airline

maintenance technicians. Overall, the demand is driven by steadily increasing airplane

deliveries, particularly single-aisle airplanes, and represents a global requirement for about

25,000 new pilots annually. Global demand for technicians remains significant, at

approximately 28,000 new technicians required annually. However, the introduction of more

efficient and smarter airplanes will require fewer mechanics over time, as aging aircraft—

which typically require more maintenance—are retired from service. New airplane

technologies featuring more advanced components are likely to lead in some areas to lower

maintenance requirements and corresponding lower technician demand.

Projected demand for new pilots and technicians by global region:

Asia Pacific – 192,300 pilots and 215,300 technicians

Europe – 99,700 pilots and 108,200 technicians

North America – 85,700 pilots and 97,900 technicians

Latin America – 48,600 pilots and 47,600 technicians

Middle East – 40,000 pilots and 53,100 technicians

Africa – 16,500 pilots and 15,900 technicians

Russia and CIS – 15,200 pilots and 18,000 technicians

43. Minister of Civil Aviation, Shri Ajit Singh informed the Lok Sabha on 30th August that

performance of Dreamliners is satisfactory and they are commercially viable. The profitability

of Dreamliner aircraft for the period 19 May to June 30 was total revenue Rs 118.62 crore,

surplus over variable cost Rs 18.08 crore and passenger load factor was 70% . Dreamliners

are operating on Delhi-Bangalore, Delhi-Kolkata and Delhi-Chennai routes on domestic

sectors, while Delhi-London, Delhi-Frankfurt, Delhi-Paris, Delhi-Australia and Amritsar-

Birmingham routes on international sector. As per schedule, Air India is to get seven more

this year, five next year, six in 2015 and two in 2016.

44. MoCA will start issuing request for qualification (RFQ) from next week to private bidders to

"operate, maintain and develop" six AAI airports — Chennai, Kolkata, Lucknow,

Ahmedabad, Jodhpur and Guwahati —on a revenue-share model with AAI for a concession

period of 30 years. However unlike the PPP airports in Delhi, Mumbai, Hyderabad and

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Bangalore, AAI will not be asked to invest anything in the private companies that will bid to

run the six airports as the ministry has decided to allow the private players to have 100%

stake. AAI has a 26% stake in Delhi and Mumbai and 13% in Hyderabad and Bangalore

airports. MoCA may decide the aeronautical tariff structure for the entire 30 years with inbuilt

clauses for escalation when costs go up to give the bidders a clear idea of revenue generation.

And, bidders for these six airports may have to retain the entire staff there as after

privatization AAI is unlikely to absorb them.

IATA had criticized MoCA’s bid to privatize six airports that were recently renovated using

public funds. IATA in a letter to MoCA Aviation Secretary K.N. Shrivastava wrote that the

rationale for private-sector equity participation is “not clear” in the case of these six airports

currently operated by AAI. IATA argues that Management expertise can be achieved without

privatization and royalties payable to the government by airport developers should not be

excessive. IATA instead suggested awarding a “management contract” to a company that has

domain expertise.

45. MoCA on 30th August said it would continue to impress upon the State Governments to

reduce taxes on ATF to provide relief to the cash-strapped airlines.

46. DGCA has issued orders to airlines stipulating that one of the pilots can sleep in the cockpit at

a time during a flight with a minimum duration of three hours. The DGCA has referred to the

practice as “controlled rest” and has stipulated that this shall not be longer than 40 minutes.

The DGCA has said “Controlled rest on the flight deck is an effective fatigue mitigation tool

for flight crews and is a way of managing unavoidable excessive tiredness in-flight. This

involves the use of short sleep periods (naps) by one pilot during low workload phase of the

cruise segment”. It added, “Controlled rest shall be used on a flight sector with a minimum

duration of three hours. ... Only one pilot must take controlled rest at the discretion of the

Pilot-in-Command and at a time in his/her operating seat. Controlled rest shall commence

after reaching Top of Climb and will terminate 30 minutes before planned Top of Descent.

Controlled rest shall not be longer than 40 minutes with another 20 minutes for operational

orientation before resuming flight deck duties. The resting pilot shall keep his seat belt and

harnesses fastened and move the seat aft to such a position that unintentional interference with

the controls is minimised. The non-resting pilot must not leave his seat for any reason,

including physiological breaks. The non-resting pilot shall keep his seat belt and harness

fastened; wear a headset with the cockpit audio speaker adjusted to normal volume”.

47. DGCA is formulating rules for fixing air traffic control officers duty hours to prevent

mistakes while handling flight movements, especially during odd hours, due to fatigue.

Presently there are no fixed working hours for the air traffic control officers and they

themselves prepare and follow their rosters.

48. According to Prabhudas Lilladhar industry research report, only 10 AAI airports made profits

last fiscal among the 125 airports maintained by it. The report said after registering a

collective loss of approximately $0.1 billion in FY13, Indian airports are likely to lose money

also in FY14. However, the development of regional airports is still on the priority list, which

is expected to aid traffic growth. The report further said Indian airports witnessed passenger

traffic fall of 1.9% in FY13, after witnessing a 13.2% growth in FY12. 159 million travellers

used the airport facilities. There was a 200bps Y-o-Y fall in the share of domestic passengers.

International passenger traffic growth, however, remained subdued at 5.4% in FY13,

compared to 7.6% in FY12. The report said “With an increase in ATF prices, depreciating

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rupee, levy of airport and service charges, general slowdown in economic cycle and

increasing crude prices, corporate and leisure travel plans will surely be curtailed”. Indian

Airports reported a 3.9% Y-o-Y decline in freight at 2.2 million tonnes. De-growth was higher

in international segment at 4.2% against 3.4% in the domestic sector.

ATF PRICES

1. Jet fuel prices are hiked by steep 6.9% to Rs.75,031 per kilolitre (1,000 litres) with effect

from 1st September. This is the fourth consecutive monthly hike in ATF prices, which have

now gone up by over 20% since June. Oil companies increased jet fuel prices by 6.3% to Rs.

70,203.15 per kilolitre on August 1 due to rising crude oil prices and a sharply depreciating

rupee, which had further increased import cost. The increase came on the back of a 5.8%

increase in jet fuel rates on July 1 to Rs. 66,033.75 per kilolitre from Rs.62,416.16 on June 1.

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2. AIRPORTS

2.1 Bangalore International Airport Pvt. Ltd.1

1. BIAL in partnership with Karnataka State Road Transport Corporation launched the first

intercity airport coach luxury line ‘Flybus’ from Bengaluru International Airport to Mysore in

August. The Flybus, with services twice a day - is aimed at providing convenient, comfortable

and affordable transportation for travellers.

2. BIAL was recipient of the Special Outstanding Award for ‘Best maintained Gardens’ at the

Landscape garden competition organized by Mysore Horticultural Society on the occasion of

Independence Day.

3. BIAL was recipient of the ‘Best Implementation of Green IT’ at an Airport by Thought

Leaders for BEST CIO Awards for Leadership and Innovation. S. Francis Rajan, VP –

Information and Communication Technology, received the ‘CIO Hall of Fame’ award, at the

same forum.

4. BIAL was recognized as an ‘Energy Efficient Unit’ and also awarded the ‘Most Useful

Presentation Award on Energy Management’ at a competition held for National Energy

Award for Excellence in Energy Management by CII. A total of 231 companies across the

nation participated in this competition and only 74 companies were short listed for this award

and called for presentation on energy management system during.

5. BIA on 15th

August made operational the visa-on-arrival facility for visitors from 11

countries. For the benefit of tourists, BIA is providing separate visa desks, special seating

arrangements and appropriate signage. The visa will be issued at the immigration desk and

will be valid for a maximum period of 30 days. The facility will have an enclosure for

photographing foreign nationals and Forex counters in the future.

2.2 Delhi International Airport Pvt. Ltd.2

1. IGIA has become the first airport in India to get its very own 6D cinema. Entertainment

company Paramount Technologies has launched its state-of-the-art 6D theatre, under the

brand name iRido 6D, at the domestic departure Terminal 1D of IGI Airport for airline

passengers. The show duration is approximately 15 minutes and the ticket is priced at Rs.250

plus 15% entertainment tax.

2.2 GMR Hyderabad International Airport Pvt. Ltd.3

1. RGIA implemented the tourist visa on arrival scheme for international passengers from 15th

August.

2. RGIA celebrated Independence Day with a theme named “Azadi Ki Udan”. All across the

terminal building, patriotic songs played in the backdrop and pictures and stories narrated the

1 Information provided by BIAL

2 Website

3 Information provided by GHIAL

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freedom struggle and sacrifices. A short skit “Wings of Freedom” was presented by the group,

Bird on Wire. The skit presented some crucial segments of the Independence struggle by

involving passengers. On the eve, national flags were distributed to passengers while the

environs echoed with “Jai Hind” and “Bharat Mata ki Jai” slogans.

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3. AIRLINES1

3.1 Air India (AI)

1. AI has generated cash surplus of Rs 460 crore in April-June on the back of a consistent

growth trend since last July. The improvement resulted from a strategy that encompassed a

review of Air India's fleet and network, pricing, schedules and revenue management.

2. AI has started the process of acquiring 19 new Airbus A-320s with sharklets and in an all-

economy configuration on lease for 6 years. The airline has invited global technical and

financial bids for dry-leasing these planes, with the technical bids to be opened in September.

The deliveries of these 19 leased aircraft should preferably begin from the fourth quarter of

this year when it would require seven of them. It proposes to acquire four more in 2014-15

and eight more in the next fiscal in a phased manner.

3. AI has set-up a sub-panel to negotiate with Boeing the issue of compensation for losses

suffered by the airline due to the grounding of the B787 Dreamliner aircraft following

incidents of battery fires. AI has to incur an extra expenditure of Rs 60 lakh per day

approximately, due to substitution of other aircraft on the 787 route and an extra cost on

account of aircraft financing, cost of maintenance of pilots, etc. amounting to Rs 1.43 crore

per day approximately.

4. AI on 29th August started a direct flight from India to Australia with its daily service from

Delhi to Sydney and Melbourne.

5. AI has announced introduction of new services linking Mumbai to Gwalior and Agra from

September 9, 2013. Along with this, AI will also introduce four times a week service on

Delhi-Allahabad-Mumbai route and a flight connecting Mumbai to Allahabad and then

onwards to Delhi.

6. AI is mulling expanding operations of AI Express in the domestic market. AI has set up a

three-member committee to explore the feasibility of such an expansion plan and also review

the routes of the two carriers, to leverage synergies.

3.2 Jet Airways

1. Jet Airways has ordered 50 Boeing 737 MAX planes with CFM-Leap-1B engines and

configuration of 168 seats for delivery starting 2018 and ending in 2021. Jet Airways is also

in talks to lease 5 Airbus A330 planes, long term, to Kuwait Airways and 3 Airbus A330s to

Etihad Airways.

2. Jet Airways is planning to grow international capacity by 10-12% and have a 10-year network

plan to expand its footprints to Abu Dhabi and beyond. International operations accounted for

58% of its total revenues. Jet Airways will add capacity on domestic and international routes

from October 2013 and will have a net addition of 6 narrow-bodied Boeing 737s in the fleet in

the current financial year. Jet Airways is also looking to raise $300 million through the

external commercial borrowing route. This will include the deal for $150 million that will be

1 Newspaper Clippings

http://economictimes.indiatimes.com/topic/Airbus

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facilitated through its partnership with Etihad and another $150 million through financial

institutions. Through the ECB route, Jet Airways will have access to cheaper foreign currency

loans.

3. Jet Airways has reported a net loss of Rs 355 crore for the quarter ended June 30, 2013 as

against net profit of Rs 24.7 crore a year ago. Revenue for the quarter declined 12.4% from a

year ago to Rs 4,064 crore, as against Rs 4,636 crore. The devaluation of rupee versus US

dollar, steep increase in landing and navigation charges at key metros and high fuel prices

have impacted the industry's profitability. However, higher yields and continued cost control

measures helped Jet Group post an operating profit of nearly Rs 530 crore.

4. Etihad Airways has extended until end-September the deadline for Jet Airways to get

regulatory approval for the Abu Dhabi airline’s $379 million investment in it. Etihad Airways

on August 5 agreed to lease Jet Airway's Airbus A330-300, which will help Jet Airways to

save $50-55 million (R320 crore-350 crore) annually in leasing costs. The aircraft being sub-

leased to Etihad was out of service for the last two quarters as Jet pulled out of some

unprofitable routes.

5. Jet Airways is considering merging the Jet Konnect (JetLite) fleet with its own under a single

operating permit to improve efficiency. This is one of the options under consideration as part

of restructuring Jet Konnect. Other plans under consideration include dropping Jet Konnect

brand altogether and using the entire fleet for Jet Airways. This would mean passengers will

get free meals and better mileage points for their trips. Another plan is to continue with both

full service and no-frills service models. The airline is also considering with the idea of

increasing the number of business class seats (at present eight each) in Jet Konnect.

6. Jet Airways on 29th August announced the introduction of a second daily direct frequency

from Mumbai to Singapore effective November 1st, 2013 on Boeing 737-800 aircraft. The

new frequency into Singapore will also make Jet Airways the only Indian carrier to operate

six daily direct flights connecting Singapore with Delhi, Chennai and Mumbai.

7. Jet Airways has appointed Seabury Group to prepare a market study on route network and

fleet. This will help the airline and its strategic partner Etihad Airways to chalk out a plan to

expand operations and acquire planes. Seabury Group will study how the Indian and middle

eastern market will pan out in the next ten years and is likely to submit its report in a month or

two.

3.3 SpiceJet

1. SpiceJet has introduced four unique travel plans like empty seats, multiple bookings,

preferred flights and flexibility reward options to increase its ancillary revenues and give

more travel options to passengers. SpiceJet has partnered with online post-ticket sale travel

portal Optiontown for the introduction of the new travel plans. The features provided by the

online post-ticket-sale travel portal allows the airline to utilise its empty seats and generate

revenues. Each option has a unique function. While an empty seat option allows the

passengers to book empty seats next to theirs at a nominal price starting as low as Rs.250 for

one seat and Rs.400 for two empty seats. The sign-up fee for the portal services is pegged at

Rs.50. The multiple booking option allows passengers to book more than one flight, where the

passenger gets to decide up to one day before departure which one to fly on. The passengers

http://www.business-standard.com/search?type=news&q=Jet+Konnect

http://www.business-standard.com/search?type=news&q=Jetlite

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can also earn up to Rs.1,500 per flight by agreeing to fly on a different time and enabling the

airline to make money by selling the seat to a last minute passenger through the flexibility

reward option. The passenger is paid upon deferral of the initial date or time of travel.

2. SpiceJet on 5th August reported a 10% decline in net profit at Rs 50.6 crore for the first

quarter ended June as compared to Rs 56.2 crore recorded in the corresponding period last

year. While income from operations increased 19.6% to Rs 1,688 crore aided by growth in

passenger traffic and improved yields.

Fuel expenses for the airline increased by 10.5% to Rs 740 crore during the quarter. Fuel cost

as a proportion fell to 43% of the revenue in the quarter against 46% in the comparable

quarter for the previous year. Passenger traffic for the airline grew by 13% in the April-June

period. Though average yield per passenger improved by 5% to Rs 4278 during the quarter,

passenger load factor dropped to 77% as compared to 80% registered in the corresponding

period last fiscal.

3. SpiceJet will launch three weekly non-stop flight between Muscat and Ahmedabad from

August 29. SpiceJet has also announced the launch of direct services between Pune and

Sharjah from 21st September.

3.4 IndiGo

1. IndiGo on 16th

August announced launch of two daily flights to Ranchi from Delhi via Patna.

IndiGo also announced launching of the third daily direct flight from Delhi to Patna.

3.5 Kingfisher Airlines (KFA)

1. KFA posted a net loss of Rs 1,156.91 crore for the April-June quarter compared to a net loss

of Rs 650.78 crore a year earlier. KFA said its accumulated losses as of March 31 were Rs

16,023 crore and its net worth a negative Rs 12,920 crore. During the quarter, the airline spent

Rs 323.5 crore on finance costs down 16% on year. Lease rental costs were 47% lesser at Rs

105.5 crore. Kingfisher's non-operating income fell almost a 100% to Rs 46 lakh.

INTERNTAIONAL AIRLINES

1. Qatar Airways has announced plans to extend its Boeing 787 Dreamliner route network to

India with the launch of services to and from Delhi and Bangalore starting September 01,

2013.

http://economictimes.indiatimes.com/kingfisher-airlines-ltd/stocks/companyid-276.cms

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4. INTERNATIONAL NEWS1

1. British Airways has deployed two new IAC Acoustics ground run enclosures (GREs) at

London Heathrow Airport in a bid to reduce the impact of noise on communities adjacent to

the airport. Built using the Jetshield sections and Aerowall (side walls), GREs are designed to

accommodate large passenger aircraft, such as A380, for post-maintenance engine testing,

including testing take-off power.

2. Heinemann Duty Free has unveiled a ‘QR code wall’ at Frankfurt Airport. The billboard

allows people to scan pictures of duty free items and have them delivered to an airport

collection point or straight to their home. The virtual shopping billboard displays 60 different

perfumes, cosmetic items, spirits and confectionery products. Shoppers make their choices

from three categories: Bestsellers, New and Special Offers. Alongside each product is a QR

code which travellers can scan using the Heinemann Express Shopping app or a standard QR

code reader. By scanning the codes, shoppers get more information about the goods on offer,

place selected items into a virtual shopping basket and place orders for those goods. All it

takes is a few clicks – and the products ordered are conveniently delivered to a pick-up point

right next to the QR code wall in less than 15 minutes.

3. Changi Airport Group is to partner with SITA to introduce the latest passenger self-service

technology. The Airport Group has equipped more than 450 check-in counters and 111

boarding gates with SITA’s common-use system, AirportConnect Open.

4. Plaza Premium Lounge has opened Kuching International Airport’s first pay-in lounge. The

lounge will give all travellers an opportunity to enjoy premium lounge facilities without

having to fly business or first class. These include the use of comfortable seating,

complimentary Wi-Fi, a range of beverages and hot food, television, newspapers and

magazines and computer stations.

5. Abu Dhabi Duty Free sales revenues continue to soar, rising by 17.4% to top $120 million in

the first six months of the year. The growth in revenue is largely attributed to the growth

witnessed in the Spend Per Passenger, which registered an increase from $14.6 in 2012 to $15

in 2013 – up 2.1% on the same period last year. The impressive growth exceeded the 12.6%

growth in passenger traffic at Abu Dhabi International Airport in the first half of 2013.

6. Dubai International Airport has reported a 6.1% rise in passenger traffic during July 2013,

registering 5.31 million compared to 5 million handled during July 2012. Aircraft movements

at Dubai's gateway rose 2.3% during the period to 28,462, compared to 27,829 movements

registered during the corresponding period in 2012, bringing the number of passengers per

aircraft movement to 201. Cargo volume during the month rose 1.2% to 206,950t from

204,510t of freight handled in July 2012. During the initial seven months of 2013, passenger

traffic at Dubai Airport rose 15.3% to 37.97 million compared to 32.93 million registered

during the corresponding period in 2012. The airport handled about 1.40 million tonnes of

cargo during the January to July 2013, registering 9.8% growth than 127 million tonnes

transported during the initial seven months last year.

7. Singapore Changi International Airport passenger traffic at rose 4% in July 2013 to 4.54

million, compared to 4.3 million passengers served during the corresponding period in 2012.

1 ACI Airport World

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Aircraft movements grew by 6.9% to 29,000 take-offs and landings, compared to 27,093

handled during July 2012. During the period, cargo traffic at Changi Airport reached

160,000t, up 1.1% from the 158,205t handled during the same period in 2012. The strong

demand for air travel to and from Southeast Asia, Northeast Asia, Southwest Pacific and the

Middle East contributed to the growth in passenger traffic. During the initial seven months of

2013, Changi Airport handled 30.8 million passengers, up 4.9%.Aircraft movements

increased 4.9% during the January to July to 196,000, compared to 186,623 movements

handled during the same period in 2012, while cargo shipments for the period rose 1.3% to

1.1 million tonnes compared to 1.05 million tonnes in 2012.

8. Dublin Airport Authority (DAA) and Beijing Capital International Airport (BCIA) are now

‘Sister Airports’, with plans for joint marketing and commercial collaboration. Under a

memorandum of understanding, the two airports aim to work together to establish direct

flights between the two cities. DAA and BCIA also plan to share operational information and

work together on sustainable development. In addition, the airports will examine the scope for

commercial co-operation between Beijing Airport and ARI, DAA’s retail arm.

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New Airport Initiatives Internationally

1. Dubai International Airport Terminal 3 has installed 14 smart gates which will allow

passengers to clear immigration in 20 seconds flat, helping avoid the hassle of standing in

long queues and saving precious time. The smart gate is an automated, secure and convenient

self-service alternative to the conventional border control process through immigration

officers. The smart gate identifies users through their passports, ID cards or E-Gate cards. It

uses facial and eye-recognition technology to identify and verify the user. Once the checks are

made, the gate opens automatically for travellers to pass through to baggage reclaim areas.

2. Changi Airport has unveiled its plans for ‘iconic’ retail and leisure complex. Changi Airport

aims to woo tourists and transit passengers with Project Jewel, a multi-purpose

building featuring a garden and giant waterfall. Under plans from a group of designers,

Project Jewel will occupy an area of 3.5ha (30,500sqm) by Terminal 1. The design

includes check-in counters, a lush garden and a waterfall descending from the glass and steel

structure’s roof. Replacing an open-air car park, the complex is expected to be ready by 2018.

Changi Airport Group is working on the concept with CapitaMalls Asia, one of Asia’s largest

listed shopping centre developers. CAG and CapitaMalls are expected to announce a joint-

venture partnership by the end of 2013. A key goal for Project Jewel is to cater for transfer

passengers. Project Jewel may also provide a central facility for the 32,000 people based at

the airport. In combination with work on Terminal 4, due to complete by 2017, Project Jewel

will raise Changi’s handling capacity up to 85 million passengers a year.

3. London Luton Airport has teamed up with a mobile marketing company to launch an

optimized mobile version of its website, m.london-luton.co.uk. Due to customer demand,

access to detailed flight information, alerts and mapping services can now be accessed on the

go using mobile devises. Among other things the mobile site will provide maps of Luton

airport, a car park booking service and alerts from air traffic control in order for customers to

better plan their time in transit. Third party resources such as Google maps and National Rail

have also been integrated so that customers can plan their journey to and form the airport and

track flights as they arrive or depart.

4. Hartsfield-Jackson Atlanta International Airport has opened its first ‘common use’ lounge in

August 2013, which will allow passengers on any international flight access to VIP services

for a small fee. Lounge access costs $35 and allows passengers access to food, drinks,

showers, entertainment and high speed Wi-Fi whilst waiting for their flight.

5. Helsinki Airport is proving its ‘Z’ factor with a new relaxation zone for happy nappers. From

September, passengers at Helsinki Airport can nod off while awaiting their flights in carefully

designed rest facilities. The new Relaxation Area in Terminal 2 will offer three dozing

options. Travellers can either take a free siesta in a chair or pay an hourly rate to rest in

sleeping pods or tubes. The zone's design is intended to evoke Finland’s natural attractions,

such as its ice and northern lights. Acoustic walls and ceilings will ensure a

peaceful environment.

6. Edinburgh Airport is celebrating its second million-passenger month in a row, topping off a

record-breaking summer. The airport saw more than two million passengers pass through its

doors in July and August. To celebrate its passengers being ‘1 in 2 million’ and offer its

thanks, the airport is buying a cup of coffee for every departing passenger who flies out of

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Edinburgh today (Aug 30). As they board their flights, travellers will be handed a postcard

with the offer to receive their free drink the next time they travel through the airport. It is

estimated that approximately 18,000 cups of coffee will be given away.

7. Frankfurt Airport has opened several new smoking lounges in Terminal 1. In collaboration

with JTI tobacco company, Frankfurt airport has opened six tastefully decorated, Camel-

themed smoking lounges. Smoke-free (apart from smoking booths) since 2008, the airport is

offering smokers the opportunity to enjoy a cigarette without affecting non-smoking

passengers, as part of its ‘Great to have you here!’ service programme. The free lounges,

located in Piers A, B and Z, can be used round the clock. Four additional smoking lounges

are in the planning phase, while glass smoking booths continue to be available in all terminal

areas, including Terminal 2.

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5. TRAFFIC1

1. According to DGCA, domestic airlines registered a 7.25% increase in passengers flown in

July.

2. The market share of scheduled domestic airlines for the month of July 2013 is:

1 ACI, IATA, DGCA and Press Information Bureau

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3. Airline-wise International Traffic Statistics during Jan-Mar 2013 for the top 10 Airlines (All

India Airports):

Passengers

Airline Passengers (in nos.) % Share

Air India 25,42,809 21.59

Jet Airways 13,25,925 11.26

Emirates 12,46,417 10.58

Qatar Airways 4,29,640 3.65

Air Arabia 4,14,588 3.52

Indigo Airlines 3,68,641 3.13

Saudi Arabian Airlines 3,31,023 2.81

Thai Int'l Airways 3,13,918 2.67

Lufthansa 2,93,423 2.49

Singapore Airlines 2,92,067 2.48

Cargo

Airline Freight (in tonnes) % Share

Emirates 48,452 14.13

Jet Airways 31,162 9.08

Cathay Pacific Airways 24,145 7.04

Singapore Airlines 22,419 6.54

Air India 22,317 6.51

Lufthansa 21,376 6.23

Qatar Airways 17,286 5.04

British Airways 15,525 4.53

Thai Int'l Airways 13,766 4.01

Etihad Airways 13,130 3.83

Aircraft Movements

Airline Aircraft Movements (in nos.) % Share

Air India 21490 26.29

Jet Airways 8643 10.57

Emirates 4822 5.90

Air Arabia 2865 3.51

Qatar Airways 2689 3.29

Indigo Airlines 2464 3.01

Oman Air 2,338 2.86

Srilankan Airlines 2,132 2.61

SpiceJet 1,894 2.32

Etihad Airways 1,854 2.27

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4. According to ACI, passenger traffic expanded by 4% and air freight declined by -1.1% for the

month of June. Asia-Pacific region experienced an increase in their international passenger

traffic by +8.5% for the month. Asia-Pacific airports enjoyed a near 6% rise in passenger

traffic during the first half of the year. Passenger traffic for the month of June 2013 has

increased by 6.6% in Asia-Pacific compared to June 2012. For air cargo traffic, a slight

decline of 1.1% was recorded at Asia-Pacific airports in June 2013 comparing to June 2012,

while Middle Eastern airports continued the upward trend with a +4.8% year-on-year

growth. Cargo traffic from January to June 2013 showed a small drop of 0.7% in Asia-Pacific,

and +6.1% increase in the Middle East comparing to same period last year.

5. According to IATA Airlines Financial Monitor for July 2013, worldwide airline share prices

rose 3% in July.

6. According to IATA Premium Traffic Monitor for June 2013, air travel markets stabilized in

June after signs of deterioration in recent months. Premium passenger numbers were 4.1%

higher in June year-on-year, up on the 2.0% growth in May. This helped contain any further

decline in premium’s share of total international air travel. In July there was a small

improvement in business confidence and a solid rise in export orders.

7. Visa on Arrival registered a growth of 22.6% during July 2013 as compared to July, 2012.

During the month, a total number of 1,154 Visa on Arrivals were issued as compared to 941

during July 2012. During the period January to July 2013, a total number of 10,482 Visa on

Arrivals were issued as compared to 7,662 Visa on Arrivals during corresponding period of

2012 registering a growth of 36.8%.

8. Foreign Exchange Earnings during the month of July 2013 were Rs 8,920 crore as compared

to Rs 8,389 crore in July 2012 and `7,116 crore in July 2011. The growth rate in Foreign

Exchange Earnings in July 2013 over July 2012 was 6.3% as compared to 17.9% in July 2012

over July 2011. Foreign Exchange Earnings from tourism in rupee terms during January to

July 2013 were Rs 59,573 crore with a growth of 14.2%, as compared to the Foreign

Exchange Earnings of Rs 52,149 crore with a growth of 23.3% during January to July 2012

over the corresponding period of 2011.

9. Foreign Tourist Arrivals during the Month of July 2013 were 5.24 lakh as compared to

Foreign Tourist Arrivals of 4.86 lakh during the month of July 2012 and 4.76 lakh in July

2011. There has been a growth of 7.9% in July 2013 over July 2012 as compared to a growth

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of 2.2% registered in July 2012 over July 2011. Foreign Tourist Arrivals during the period

January to July 2013 were 38.32 lakh with a growth of 3.3%, as compared to the FTAs of

37.10 lakh during January to July 2012.

10. The number of Foreign Tourist Arrivals and Indian National Departures have registered a

positive growth during 2010, 2011 and 2012. The number of Foreign Tourist Arrivals and

Indian National Departures along with the growth rates during 2010, 2011, 2012 and January-

July, 2013 are given below:

The number of foreign tourists visiting India has shown a steady increase in the past three

years. The number of foreign tourist visits has increased to 207.31 lakh in 2012 as compared

to 194.97 lakh in 2011 and 179.10 lakh during 2010. This shows an increase of almost 16% in

the past two years.

The Foreign Exchange Earnings from tourism has also shown a significant growth rising to

Rs.94,487 crores in 2012 as compared to Rs.77,591 crores in 2011 and Rs.64,889 crores in

2010. This marks an increase of around 46% in the three year period from 2010 to 2012. The

Foreign Exchange Earnings is estimated as Rs.50,448 crores in the period January to June,

2013.

The number of Domestic Tourist Visits to States/UTs has also shown an impressive growth of

around 39% in the past three years. The number of DTVs in 2012 is estimated at 103.64

crores as compared to 74.77 crores in the year 2010.

11. ACI Airline Traffic Report 2012, 50 Busiest Airports in the world in terms of the number of

passengers handled. (Total Passengers: Arriving + Departing + Direct transit passenger

counted once.)

AIRPORT AIRPORT CODE 2012 PASSENGERS % CHG.

1 Atlanta, Ga. ATL 95,513,828 3.4

2 Beijing, China PEK 81,929,689 4.5

3 London, UK LHR 70,038,857 0.9

4 Tokyo, Japan HND 67,788,722 8.3

5 Chicago, Ill. ORD 67,091,391 0.4

6 Los Angeles, Calif. LAX 63,687,544 3

7 Paris, France CDG 61,611,934 1.1

8 Dallas/Fort Worth, Texas DFW 58,591,842 1.4

9 Jakarta, Indonesia CGK 57,730,732 14.4

10 Dubai, UAE DXB 57,684,550 13.2

11 Frankfurt, Germany FRA 57,520,001 1.9

12 Hong Kong, China HKG 56,064,248 5.2

13 Denver, Colo. DEN 53,156,278 0.6

Year Foreign Tourist

Arrivals

Growth Rate Indian National

Departures

Growth Rate

2010 57,75,692 11.8 1,29,88,001 17.4

2011 63,09,222 9.2 1,39,94,002 7.7

2012 65,77,745 4.3 1,49,24,755 6.7

Jan-Jul,

2013 (Prov.)

38,31,715 3.3 N.A. N.A.

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14 Bangkok, Thailand BKK 53,002,328 10.6

15 Singapore SIN 51,181,804 10

16 Amsterdam, Netherlands AMS 51,035,590 2.6

17 New York, NY JFK 49,293,587 3.1

18 Guangzhou, China CAN 48,548,430 7.8

19 Madrid, Spain MAD 45,175,501 -9

20 Istanbul, Turkey IST 44,992,420 20.2

21 Shanghai, China PVG 44,880,164 8.3

22 San Francisco, Calif. SFO 44,431,894 8.6

23 Las Vegas, Nev. LAS 41,666,527 0.5

24 Charlotte, NC CLT 41,226,035 5.6

25 Phoenix, Ariz. PHX 40,452,009 -0.3

26 Houston, Texas IAH 40,022,736 -0.5

27 Kuala Lumpur, Malaysia KUL 39,887,866 6.6

28 Miami, Fla. MIA 39,467,444 3

29 Incheon, Korea ICN 39,154,375 11.3

30 Munich, Germany MUC 38,360,604 1.6

31 Sydney, Australia SYD 37,342,798 3.7

32 Rome, Italy FCO 36,980,161 -1.8

33 Orlando, Fla. MCO 35,214,430 -0.4

34 Barcelona, Spain BCN 35,131,771 2.2

35 Toronto, Ontario YYZ 34,912,456 4.4

36 London, UK LGW 34,222,405 1.7

37 New Delhi, India DEL 34,211,608 -1.5

38 Newark, NJ EWR 33,993,962 0.9

39 Shanghai, China SHA 33,828,726 2.2

40 Seattle, Wash. SEA 33,219,723 1.2

41 Minneapolis, Minn. MSP 33,125,768 0.2

42 Tokyo, Japan NRT 32,874,530 17.2

43 Săo Paulo, Brazil GRU 32,477,646 6.9

44 Detroit, Mich. DTW 32,205,358 -0.7

45 Manila, Philippines MNL 31,878,935 7.9

46 Chengdu, China CTU 31,599,353 8.7

47 Philadelphia, Pa. PHL 30,228,596 -2

48 Mumbai, India BOM 30,038,696 -1.3

49 Shenzhen, China SZX 29,569,725 4.7

50 Melbourne, Australia MEL 29,431,084 4.9

12. Association of Asia Pacific Airlines Preliminary traffic figures for the month of July showed

continued growth in international passenger traffic, whereas international air cargo demand

remained weak. Collectively, carriers based in the Asia Pacific region carried a total of 19.5

million international passengers in July, a 6.6% increase compared to the same month last

year, reflecting robust demand, particularly on regional routes. Measured in revenue

passenger kilometres, international passenger traffic grew by 6.1%. With available seat

capacity expanding at a similar pace of 6.2%, the average international passenger load factor

was maintained at a high level of 80.0%. For Asia Pacific airlines, international air cargo

demand, expressed in freight tonne kilometre terms, fell by 2.6% in July compared to the

same month last year, extending the prevailing period of weak market demand over the past

two years. Offered freight capacity expanded by 1.8%, resulting in a deterioration in the

average international freight load factor by 2.9% points to 64.2% for the month.

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During Jan – July 2013, Asia Pacific airlines carried an aggregate total of 127 million

international passengers, a 5.8% increase compared to the same period last year. Continued

growth in regional Asian economies maintained positive consumer and business sentiment,

and was reflected in passenger demand for both leisure and business related travel. On the

other hand, air freight markets remained weak, with a further 2.4% fall in air freight demand

during Jan – July 2013, as a result of weak demand in Europe and other key export markets.

Asian airlines remain optimistic about the potential for further growth in passenger traffic,

and are committed to maintaining their competitive edge with ongoing investments in fleet

upgrades and network development, as well as a range of innovative new product and

customer service initiatives. Less positively, Asian airlines have been badly affected by the

extended slump in the air cargo market, with surplus freighter capacity depressing both rates

and aircraft values. Whilst the outlook for further global economic growth remains positive,

airlines continue to focus on delivering productivity improvements and remain vigilant in

managing costs throughout the business.

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6. REVIEW OF REPORT

‘India Rating & Research’ has published a special report with the title AIRLINE INDUSTRY

– AIR POCKETS ON WAY TO GROWTH, August 2013.

In the report, the ‘India Rating & Research’ has come out with issues related to Airline Industry

facing today and the efforts required to improve the sector. As per their report the financial

performance of the global airline industry is volatile due to the industry’s capital intensity, price

competition and highly cyclical demand. In India, the industry also contends with tax and

regulatory-driven inefficiencies of its cost structure. Thus, a majority of domestic airlines are

unlikely to enjoy investment grade ratings based on their standalone profile. However, the

presence of a parent/sponsor with a strong credit profile, proven track record of support and

strong operational expertise may be a rating positive.

The report further mentions that the regulatory distortions also burden the operations. According

to the report, the current regulations also weigh down the chances of consistently profitable

operations for the Indian airline companies, which arguably have much future potential. ATF

prices are around 45% to 60% higher than that for other airline hubs in Asia and Middle East

mainly because of high taxes on the fuel in India. Additionally, the financially sub-optimal

routing requirements of India’s airlines increase pressure on their operating margins.

The report also mentions about the several operational challenges facing the airline sector today.

According to the report, the tax on ATF erodes the operating margin of the Indian airlines by

around 12-18 percentage points. Also, infrastructure-related constraints make aircraft handling

and scheduling inefficient. Domestic aircraft use is therefore estimated to be around 10%-15%

lower than that of profitable global players. Higher estimated maintenance cost and sundry taxes

further eat into the already weak margins. The report further mentions that India’s air fares are

30% to 50% more expensive than its substitute in rail transportation. Conversely, air fares in

Europe and China are usually no more than 20% expensive than comparable rail routes.

The government has allowed airlines to import ATF and unbundle airfares while efforts are also

underway for modernising airports. Proposals exist for special subsidy to regional players and the

common use of airspace between civil and military. However, implementation may be a challenge

and benefits, if any, may accrue only in the medium to long term.

Another challenge mentioned in the report is on the highly leveraged players with weak parental

support. Domestic airline operators have a highly geared capital structure due to their high levels

of debt and negative/ relatively low equity base. Also, the average financial cost rate in India is

much higher than in other geographical regions, which also adversely impact the already stressed

operating performance of domestic airlines. Debt servicing problems arise due to chronic cash

flow generation issues. The leverage levels of domestic players are higher than global peers’. The

Indian airline industry had around USD13.3bn of debt (excluding any lease rental adjustment) in

FY12.

The report further mentions that the maintenance costs of domestic players are estimated to be

higher than that of global players. Domestic airlines outsource major MRO work to hubs like

Dubai, Singapore and Malaysia. High service tax, custom duties, VAT and octroi on imported

spare parts offset the advantage of low labour costs. The Indian government has taken some

tentative steps to address this issue. Third-party MROs are recently exempted from the basic

customs duty on importing spare parts and testing equipment.

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Further, the report mentioned that Route disbursal guidelines also put pressure on the profitability

of airlines as these make it mandatory for them to operate on the routes that are commercially

unviable.

The report suggested that availability of FDI would be a positive for the sector. Any equity

infusion which may reduce debt levels could provide the much-needed stability to the sector.

Apart from the direct benefit in the form of lower interest-bearing rupee debt, FDI by an

experienced partner may also benefit indirectly. This will be through access to low-cost fund,

favourable negotiation with aircraft vendors and ATF suppliers and operational expertise of

global profitable airlines. This may improve the credit profile of domestic airlines.

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