monthly newsletter february 2014 - · pdf file3.4 kingfisher ... order came in the wake of...

Monthly Newsletter February 2014

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

2.4 Mumbai International Airport Limited………………………………………..………15

3. Airlines

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

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

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

3.4 KingFisher..…….……….…………………………………………….………………17

3.5 GoAir……..…………….….………………………………………….………………18

3.6 IndiGo…..……...……….…………………………………………….………...…….18

3.7 Air Costa.....…………….…………………………………………….………………18

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

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

6. Review of Report…...….….....................………………………………...........................28

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

AERA Airports Economic Regulatory Authority of India

ATF Aviation Turbine Fuel

BIAL Bangalore International Airport Limited

CAA Civil Aviation Authority

CAPA Centre for Asia Pacific Aviation

CIAL Cochin International Airport Limited

CIDCO City and Industrial Development Corporation of Maharashtra

CSIA Chhatrapati Shivaji International Airport, Mumbai

DGCA Directorate General of Civil Aviation

DIAL Delhi International Airport Limited

ECB External Commercial Borrowings

FAA Federal Aviation Administration

FIPB Foreign Investment Promotion Board

GHIAL GMR Hyderabad International Airport Limited

IATA International Air Transport Association

ICAO International Civil Aviation Organisation

IGIA Indira Gandhi International Airport, New Delhi

MIAL Mumbai International Airport Limited

MoCA Ministry of Civil Aviation

MoU Memorandum of Understanding

MRO Maintenance, Repair and Overhaul

PPP Public-Private Partnership

RGIA Rajiv Gandhi International Airport, Hyderabad

SEBI Securities and Exchange Board of India

UDF User Development Fee

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1. AVIATION SECTOR1

1. DGCA has made it mandatory for the pilots and engineers, mainly from the armed forces, to

acquire the flying licenses from the DGCA by July 2014 if they have been operating civilian

flights for over a year with documents issued by the Army or the Indian Air Force (IAF).

DGCA issued the order to all air operators and organisations, state-run or private, to ensure

that these personnel obtain its licence by July. The DGCA also warned that non-compliance

would attract strict action against the individuals and operators under the prevailing rules. The

order came in the wake of reports of some accidents involving helicopters, including the one

in April 2011 at Tawang, that the pilot and the flight engineers were operating on the basis of

exemption under Rule 160 of the Aircraft Rules. The DGCA order also said that "all operators

/organisations are also directed to report such cases to DGCA wherein no timeline for

exercise of privilege under Rule 160 has been prescribed and the holder is exercising privilege

beyond one year from the date of issue of such exemption."

2. MoCA has asked DGCA to carry out a study of capacity and demand growth and review

some of the licencing norms, including the minimum paid up-capital requirement for starting

an airline. At present, nine airlines are operating on regional and national routes. AirAsia

India, Tata SIA Airlines, AirOne and some regional airlines have applied for licence.

3. CAPA has come out with an exhaustive report stating that the decision of the FAA to

downgrade India to Category 2 will result in all Indian airlines witnessing cost escalation due

to enhanced risk profile. The report said ―All Indian carriers could potentially suffer from

higher lease rates, more stringent maintenance covenants, and increased insurance premiums

as a result of a perceived increase in risks. The possibility exists that other jurisdictions

(countries) may raise their own concerns about safety oversight in India (after the FAA

action), which could have a much greater impact on Indian carriers‖. The report said that the

proposed Tata-SIA venture, though may be allowed to fly international immediately after its

launch, cannot operate flights to the U.S. due to the downgrade. According to CAPA report,

the downgrade highlights deep systemic flaws in India‘s aviation safety oversight. It wanted

the government to come out with a white paper to identify the problems. The report said ―An

urgent, comprehensive and independent white paper on the state of aviation safety is critical

to understand the depth of the problem. Only then, can appropriate long-term solutions be

developed‖.

4. The Civil Aviation Authority of Singapore (CAAS) has increased inspections of the aircraft of

Indian carriers operating in Singapore after FAA downgraded India‘s safety ranking to

Category 2 from Category 1 under its IASA programme. CAAS has not imposed any

restrictions on Indian carriers flying to Singapore. CAAS has a foreign operators‘ surveillance

programe (FOSP) in place for authorising foreign carriers to operate in Singapore and for the

surveillance of such operations. Under FOSP, foreign carriers are also required to have an

operations permit from CAAS to operate in the country. CAAS evaluates an application for an

operations permit using a risk-based methodology, taking into consideration factors such as

the safety oversight capability of the state of operator (state where the carrier is granted its air

operator certificate) and/or the state of registry (state where the aircraft is registered), the

operational capability of the carrier, and the safety records of the aircraft and aircraft type to

be deployed for the operations. CAAS also conducts periodic ramp inspections of foreign

aircraft when in Singapore. The frequency of ramp inspections is dependent on CAAS‘

1 Newspaper Clippings

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assessment of the carrier. Any major finding of deficiency in a ramp inspection has to be

addressed by the carrier for it to continue operations in Singapore.

5. The government on 5th February cleared two initiatives: visa on arrival and electronic travel

authorization for citizens of 180 countries barring eight "prior reference'' countries including

Pakistan, Sudan, Afghanistan, Iran, Iraq, Nigeria, Somalia and Sri Lanka. Electronic Travel

Authorization will allow foreign travelers to apply for a visa from home and receive an online

confirmation in five working days. Electronic Travel Authorization will be available for a 30-

day period from the date of the tourist's arrival in India while VoA will also be for the same

period for a single entry. India currently offers visa-on-arrival to tourists from 11 countries

like Finland, the Philippines, Singapore and Japan. A separate website would be set up for

extending the facility to foreigners intending to visit India as tourists. To get a visa, they

would need to apply on the designated website along with the required fees. They would be

granted an electronic version of the visa within three days.

6. CIDCO on 5th January floated a global tender for building Navi Mumbai International

Airport. The project, which will come up on 1,160 hectares of land, will be built in four

phases. The first phase with an annual capacity of 10 million passengers will be completed by

2018. After the completion of the whole project, it will cater to about 60 million passengers a

year. The airport will be developed through PPP on design, build, finance, operate and

transfer (DBFOT) basis. The prospective bidders for the Navi Mumbai international airport

project would have to submit their proposals by June 18. The RFQ states that the estimated

total project cost for the development of phase 1 and 2 will be Rs 9,500 crore. The cost of pre-

development work is estimated at Rs 2,358 crore, which includes Rs 1,538 crore of land

development for airport and Rs 800 crore for other works. All costs for pre-development work

such as site preparation, shifting of transmission towers, rehabilitation of affected persons,

etc. will be treated as an interest-free loan from CIDCO to the concessionaire. The bidding

process is slated to be a two-staged process. The first stage will involve qualifications of

interested parties / consortia who make an application in accordance to the provisions of RFQ,

following which CIDCO shall announce a list of pre-qualified applicants who will be eligible

for the bidding process. According to CIDCO, the bids will be invited on the basis of the offer

to pay a premium in the form of percentage share of annual gross revenue payable to the

authority over the tenure of the concession. The Mumbai International Airport Limited has the

first right of refusal for developing the Navi Mumbai airport as it would come up within 150

km of the Sahar airport. According to the RFQ, the eligible bidder should have experience

from airport sector and core sectors such as ports, highways, express ways, railways

(including metro rail), power generation and real estate will be considered for evaluation. The

bidder should also have experience in airport construction.

7. The construction work at the new international airport in Kannur, Kerala was launched on 5th

February. The Kannur International Airport is being established with an investment of around

€201m. The site spans over an area of 2,000 acres and is located 25km away from the city.

The airport is expected to cater to a large number of people from Kerala staying in the Gulf

countries, while opening up opportunities for tourism. It will be the state's fourth international

airport and the second greenfield airport being established in PPP model. The airport will be

owned by public company the Kannur International Airport Limited (KIAL), with the first

flight slated to take off on 31 December 2015. Infrastructure major Larsen & Toubro had won

the Rs 15.9bn ($253.85m) contract to establish the runway and allied facilities.

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8. Public Accounts Committee (PAC) in its report, Performance of Civil Aviation in India,

which was tabled in Parliament on 6th

February has concluded that the decision of the

government (in 2005) regarding the number of aircraft to be procured by Air India from

Boeing was ―unfortunate‖ since the Government ―went ahead with the deal without having a

long-term perspective‖. The Government had then approved acquisition of 50 aircraft by Air

India from Boeing. The report said ―The committee deplores that when the purchase

agreement was concluded in December, 2005, a desperate need for 50 aircraft was made out

and in the next few years, there had to be deferment in the delivery of aircraft to reduce the

burden of loan repayment‖. It added that the number of aircraft to be procured was revised on

the grounds that there was a requirement for long-range aircraft on the India-United States

route despite the fact that ―historically, the India-US sector was a loss-making sector and a

commercially unviable route‖. The PAC report has asked for responsibility to be fixed on the

matter. ―The Committee observes that a company (Boeing) was given business out of the

money borrowed from an American bank (Exim Bank) and to this the Government of India

had stood as a guarantor against the advice of the MoF,‖ the report states. On the finding that

during the negotiation process for the deal, the configuration of seats was reduced in the

Boeing 777 aircraft, the PAC said, ―The committee is therefore of the considered view that

post-bid seat reconfiguration was irregular and the Government should evaluate the financial

implications and report to the committee within three months of the presentation of this

(PAC) report.‖ Pointing out that there was (earlier) a want of level-playing field to Air India,

the PAC said, ―The committee is shocked over the manner in which massive excess

entitlements for the most profitable gulf sector were granted to foreign airlines to the serious

detriment of Air India.‖ Supporting a massive infusion of equity by the Government for Air

India, the PAC report said, ―The committee feels that in order to bail out the company, the

infusion of further equity of Rs. 30,231 crore is of paramount need and the equity infusion

should be expedited.‖

9. MoCA is deliberating a policy to provide extra facilities for lawmakers and other VIPs in

airports, including appointing an ombudsman for the sector. As per the existing protocol, MPs

have special privileges like access to reserved lounges, free parking, free access to terminal

buildings and visitor‘s gallery, besides others like being served complimentary tea, coffee and

water. MoCA is formulating a new policy to streamline the entire system of extending due

protocol to MPs. The ministry is also deliberating the appointment of an ombudsman where

issues like non-compliance of protocol directions could be dealt with. The policy measures

include setting up designated numbers, which will be given out to all VIPs, including MPs.

The MPs can inform the airport about their travel plans by calling these dedicated numbers

and it will be the responsibility of the airport to make further arrangements.

10. DGCA has set up technical teams to carry out sudden safety checks on the aircraft of foreign

airlines and charter firms and penalise them if discrepancies are found. Foreign aircraft flying

to India could face extensive safety checks when they land here. In case of major lapses, the

aircraft could even be grounded and its owners penalised. The decision to set up the two

teams in Delhi and Mumbai was taken in the backdrop of the recent downgrade of Indian

aviation safety mechanism by the FAA. The surprise safety checks are being carried out on

the basis of Safety Oversight of Foreign Airlines (SOFA) programme and a checklist based on

the recommendations of ICAO. The checklist includes not only safety aspects on the flight

deck, but also on the equipments fitted or not fitted in the planes like Airborne Collision

Avoidance System. The status of documents like the air operating certificate (AOC) or

licenses of the cockpit or the cabin crew would also be under check. The deficiencies could be

categorised into minor or major and the penalty could range from a mere warning to rectify

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the faults within a specific time-frame to the grounding of an aircraft or, in extreme cases,

denying the airline the right to fly into India. Once a deficiency is found in an aircraft, the

concerned airline is informed of it, along with the action that was being contemplated or

taken, the airlines are asked to take corrective measures within a given time frame.

11. According to Boeing‘s Current Market Outlook, Asia-Pacific commercial fleet will almost

triple in size compared to where the fleet stood in 2012, reaching 14,750 aircraft in 2032, of

which 12,820 will be new aircraft. The $1.9 trillion market is expected to represent 36% of

the world‘s new airplane deliveries. Single-aisle airplanes like the Next-Generation 737 and

the new 737 MAX will make up 69% of new airplanes in Asia Pacific. Around 8,810 of these

aircraft are expected to be narrow-bodies while wide-body aircraft, ranging in scale from the

A350 and the 787 to the A380 and the 747-8, will account for as many as 3,590 sales. Of the

12,820 new aircraft predicted, 75% of will be for growth with 25% for replacement, around

1,930 of today‘s fleet is expected to be retained. Over the forecast period, global commercial

aircraft sales are forecast to total 35,280 valued at $4.8 trillion. 24,670 will be single-aisles,

2,020 regional aircraft and 4,530 small wide-bodies. The balance will be made up of 3,300

medium wide-body jets such as 777s as well as 760 large wide-bodies. A380 and 747-8 sales

will only represent 2% of the projected market, the 400-plus seat sector will still be worth up

to $280 billion, or some 6% of the overall market. Together with new sales and the retained

airliners, the world commercial aircraft fleet will double to 41,240 by 2032 compared to 2012.

12. According to Airbus‘ Global Market Forecast, airlines in the Asia-Pacific region will lead

global demand for larger and more eco-efficient aircraft over the next 20 years, Airlines from

the region will take delivery of some 10,940 new passenger and cargo aircraft from 2013-

2032, valued at US$1.8 trillion. This represents 37% of all new aircraft deliveries worldwide

over the next 20 years, ahead of Europe, North America and the Middle East. In value terms,

the region will account for 42% of the global market for new airliners, reflecting the higher

proportion of wide-body aircraft required in Asia-Pacific. In the passenger market, the fleet of

aircraft operated by Asia-Pacific carriers is expected to more than double in the next 20 years,

from 4,960 aircraft today to over 12,130 jets, based on higher than average annual traffic

growth of 5.8% and replacement of nearly 3,770 aircraft in service today. Airbus forecasts

that in the next 20 years carriers in the Asia Pacific region will acquire some 4,130 wide-body

aircraft (46% of worldwide demand), 6,810 single aisle aircraft, 3,350 twin-aisle aircraft and

around 780 very large aircraft with over 400 seats such as the A380. Airbus forecasts the

freighter fleet operated by Asia-Pacific airlines will triple from just over 300 today to some

970, representing a third of the global freighter fleet by 2032. While many of the aircraft will

be converted from passenger models, Airbus forecasts that around 270 will be new build. As

in other world regions, around 30% of the freighters will be in the 45-70 tonne category

served by mid-size wide-body aircraft, such as the A330. Airbus' forecast a need for some

29,200 passenger and freighter aircraft valued at nearly US$4.4 trillion over the next 20 years,

including 1,710 very large aircraft, 7,270 twin aisle wide-bodies and 20,240 single aisle

aircraft.

13. Boeing has offered to pay Air India $23 million as compensation for the 787 Dreamliners not

being as fuel efficient as promised and for the losses on accounting of grounding the aircraft

owing to technical problems. Boeing's offer is half of the $46 million that Air India has

sought.

14. Embraer Commercial Aviation forecasts that airlines in Asia Pacific, including China, will

take delivery of 1,500 new jets in the 70 to 130-seat segment over the next 20 years (valued at

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US$70 billion at list prices), representing nearly 20% of the worldwide demand for the

segment in the period. Of the region‘s new deliveries, 65% are expected to support market

growth while 35% will replace ageing aircraft being retired. The Asia Pacific market will

become more affluent, competitive and liberal, further stimulating airlines to seek system

efficiencies, brand differentiation and improved service levels. The region‘s economic growth

has altered its socio-demographic context, with an increased urban middle class with more

discretionary spending and therefore higher propensity to air travel. A positive economic

outlook and intra-regional liberalization will drive air transport demand in Asia Pacific to

increase 6% annually by 2032, led mainly by China and India. The region will become the

world‘s largest market accounting for 34% of total revenue passenger kilometers. In Asia

Pacific, Embraer has more than 80% market share in its segment with nearly 150 E-Jets

delivered to 10 operators from six countries in the region.

15. Minister of State for Civil Aviation, Shri K.C. Venugopal informed Lok Sabha that there is no

aerodrome which can be termed as unsafe. Information on facilities available at aerodromes is

published through Aeronautical Information Publication for use by airline operators. This

includes the information on non-compliance on applicable standards. The aircraft operations

are carried out by the aircraft operators after assessing the availability of facilities and their

suitability for the type of aircraft including operational mitigation measures. Certain

operational mitigation measures may be required in case of aerodromes which are surrounded

by terrain and have physical constraints. AAI airports like Sholapur, Kota, Rajkot, Patna,

Malda, Jhansi, Akola, Juhu, Mysore and Kamalpur are constrained for upgradation for

operations of wide-bodied aircrafts due to non-availability of land and further urbanisation

and existence of city infrastructure around the airports.

16. Minister of State for Civil Aviation, Shri K.C. Venugopal informed the Lok Sabha that

following steps have been taken to encourage operation of flights to some of the low density/

non-operational airports: No landing charges levied on aircraft with maximum certified

capacity of below 80 seats being operated by domestic scheduled airlines and helicopters of

all types for operation at AAI airports except at Chennai and Kolkata airports; Landing and

parking charges at all airports in the North-East Region, Jammu & Kashmir, Andaman &

Nicobar Islands and Lakshadweep (other than Defence airports) reduced by 25% of the

current rates for domestic scheduled airlines; Night parking charges between 2200 hours and

0600 hours kept at 50% of the existing parking charges at all AAI airports except at Chennai

and Kolkata airports; Waiver of night parking charges for aircraft of domestic operators at

airports located in States where the State Government levies VAT on ATF at 5% or below;

and If an existing airline plans a new flight to connect new stations at airports located in Tier-

II and Tier-III cities from Tier-I city and vice-versa or in between two or more Tier-II and

Tier-III cities, then the same is given priority over other airlines for allocation of slots as per

the slot allocation guidelines.

17. Minister of State for Civil Aviation, Shri K.C. Venugopal informed the Lok Sabha that the

construction of an Integrated Terminal Building at Chandigarh Airport along with other

infrastructure for operations has been undertaken by AAI and work commenced in August

2012. The entire work including air-side facilities for the new Civil Enclave is expected to be

completed by March, 2015. The new Civil Enclave is likely to be made operational by June,

2015. Minister also informed that Government of India has granted `in-principle` approval for

setting up of a Greenfield Airport at Karaikal in the Union Territory of Puducherry to

Karaikal Airport Private Limited in 2011. Karaikal Airport Private Limited has taken up

necessary steps for development of the airport. The timeline for construction of airport

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projects depends upon many factors like land acquisition, mandatory clearances and financial

closure.

18. The Union cabinet on 12th February approved amendments to the Bill for replacing DGCA

with a financially autonomous Civil Aviation Authority (CAA). The amendments as approved

include appointing a chairperson in the proposed authority. The role would be supervisory; he

would preside over board meetings but operational matters would be dealt by the chief

executive. Earlier, the Bill had said the chairperson would be appointed for a fixed term of

five years. In its amended version, the CAA is also proposed to levy more stringent penalties,

at five times the initial specified amount, for rule violations. The amended Bill further allows

for creation of posts in the proposed body, with prior approval of the government.

The Parliamentary Committee on Transport, Tourism and Culture on 6th February said that

the Bill for setting up the proposed CAA seeks to create an authority which will be as good as

the existing DGCA without much change in its powers and authority. The Standing

Committee‘s report feels that the proposed authority will not be able to achieve the objectives

stated in the Bill. It also expressed the view that rather than bringing a stand-alone Bill in the

form of the CAA, it would have been better to come out with comprehensive one after

revisiting the Aircraft Act 1934, which is too old to tackle the emerging problems in the

aviation sector. Disapproving of the proposed authority, which could see retiring or retired

secretaries to the Government, especially from the Civil Aviation Ministry becoming the

authority‘s Chairperson, the Committee has suggested that suitable amendments be made to

allow professionals and heads of public sector undertakings, such as the AAI who have the

relevant experience and knowledge, also to be eligible for the post, although the post may not

be equivalent to that of a Secretary to the Government.

19. The Union Government has postponed the bidding process for the privatization of six major

airports developed by AAI till mid-march. The due date for the Request for Qualification had

earlier been pushed from January-end to February 17 for the Chennai, Kolkata, Lucknow and

Guwahati airports and to February 12 for Jaipur and Ahmedabad. These dates have been

pushed further to March 17.

20. SEBI on 12th February issued a show-cause notice to Etihad Airways asking whether the

carrier violated takeover rules in acquiring a 24% stake in Jet Airways. SEBI asked for a

response on why it should not make a tender offer to Jet public shareholders as part of

takeover rules. The notice comes after it was observed that the acquisition pact resulted in

Etihad's "joint control over Jet, more particularly over the assets and operations of Jet". If

Etihad fails to respond to the notice, it will have to make a tender offer to buy the entire 25%

public holding in Jet as per Indian takeover rules. SEBI had earlier cleared the deal with a

caveat that if another regulator says the deal involves a change in control they will reopen the

case.

21. MoF on February 10 notified Customs Baggage Declaration (Amendment) Regulations, 2014

which will come into effect on March 1. As per the amended custom baggage rules, air

travellers visiting the country will have to declare Indian money exceeding Rs 10,000 upon

their arrival. They will also need to declare the number of baggage including hand baggage in

the customs declaration form. Earlier, the ceiling was fixed at Rs 7,500 under the Customs

Baggage Declaration Regulations, 2013. Satellite phones, gold bullion, gold jewellery, meat

and meat products, aggregate value of foreign exchange including currency exceeding

$10,000, seeds, fruits and plant material have been retained in the list of articles to be

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declared. An Indian citizen needs to fill up the immigration form only when he or she goes

out of the country. There will be no immigration form for Indian citizens returning from

abroad. In August last year, the government amended the rules, adding LCD/LED/plasma

televisions to this list. A male Indian passenger residing abroad for over a year is allowed to

bring jewellery worth Rs 50,000 free of duty. The ceiling for similar female Indian passengers

is Rs 1 lakh. Items prohibited for import include maps and literature showing Indian external

boundaries incorrectly, narcotic drugs and psychotropic substances, wildlife products, goods

violating intellectual property rights, counterfeit currency and specified birds and animals. An

Indian passenger working abroad will be allowed to carry household articles worth Rs 12,000

if he or she is returning after three months. The ceiling will go up to Rs 75, 000 if the

passenger is returning after a year.

22. Minister of State for Civil Aviation, Shri K.C. Venugopal informed Rajya Sabha that Rajiv

Gandhi International Airport, Hyderabad is among the airports which have been identified for

development as international hub. An 'international airport' is an airport designated by the

ICAO Contracting State in whose territory it is situated as an airport of entry and departure

for international air traffic. At such airports, formalities relating to Customs, immigration,

public health, agricultural quarantine and similar procedures are carried out. On the other

hand, a hub is an 'international airport‘ where facilities are planned to handle large volume of

transfer/connecting passengers along with one or more carriers having a base at the airport

with ability to provide wide network on domestic to domestic, domestic to international,

international to domestic and international to international sectors. Besides Hyderabad

Airport, Delhi, Mumbai, Bangalore, Kolkata and Chennai International Airports have been

identified for development as international hubs. As per the decision of the Union Cabinet in

its meeting held on 9th May, 2013, a standing Inter-Ministerial Group has been constituted to

remove the bottlenecks and to provide the right coordination mechanism for the development

of aviation hubs in India.

23. Minister of State for Civil Aviation, Shri K.C. Venugopal informed Rajya Sabha that

Government has granted 'site clearance' to Prakasham Airport Pvt Ltd for setting up of a

Greenfield Airport at Ongole, Prakasham district in Andhra Pradesh. In the last three years,

the Government has granted 'in principle' approval to three Greenfield Airport projects

namely, Karaikal in Pudducherry (2011), Shirdi in Ahmednagar district, Maharashtra (2011)

and Aranmula in Kerala (2012).

24. Minister of State for Civil Aviation, Shri K.C. Venugopal informed Rajya Sabha that the

government, which is proceeding with privatizing six airports (Kolkata, Chennai, Lucknow,

Guwahati, Jaipur and Ahmedabad), intends to give away 14 more to private parties for

operation and development during the 12th Plan Period. The other AAI developed airports,

which the government plans to bring under PPP mode are at Bhubaneshwar, Coimbatore,

Trichy, Varanasi, Indore, Amritsar, Udaipur, Gaya, Raipur, Bhopal, Agartala, Imphal,

Mangalore and Vadodara. The Minister further added that a Task Force has observed that

after modernization by the AAI, ―the next challenge would be to ensure are management and

upkeep at a level commensurate with the quality of the terminals‖.

25. Maharashtra cabinet on 18th February approved the proposal for expansion of an airport at

Amravati by deciding to hand over 336 hectares land to the AAI. The proposed airport will be

developed by the AAI in three years and the runway will be used to land A-320 type planes.

Night landing facility, taxi way will be developed. The existing airstrip will be expanded up to

2,500 metres. The land is being given to AAI on a lease of 60 years for Rs 1 lakh every

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month. State government's flights, helicopters, heli-ambulances and emergency operations

will not be charged for landing and there will be no commercial use of the land. The

development will not take place on BOT basis. The government has sanctioned Rs 34 crore

for upgrading infrastructure on roads leading to the proposed airport and a committee headed

by the Chief Secretary has been formed to monitor the works.

26. DGCA has revised airline licensing norms, restricting foreign carriers from having

management control in domestic airlines. The revised rules regarding minimum requirement

for grant of operating permit were issued on 19th February. The amended rules also allow

airlines to carry out maintenance and repairs and training of pilots and engineers at facilities

belonging to other airlines. Earlier rules stipulated that the chairman and two-third of an

airline‘s board members are Indian citizens and that effective control and substantial

ownership is vested with Indians. The revised rules state domestic airlines shall not enter into

an agreement with a foreign airline or a foreign investor, which may give the latter the "right

to control the management'' of the domestic airline. The other modifications in the rules

include the need for prior security clearance of the chief executive officer, chief financial

officer and chief operating officer of an airline if the post is held by a foreign national.

Another clause says: ―All foreign nationals likely to be associated as a result of investment by

foreign airlines shall be cleared from a security viewpoint before deployment‖.

27. The Union Minister of State (Independent Charge) for Development of North Eastern Region

in a written reply in Rajya Sabha told that for improving the air connectivity in North East

Region, AAI had taken up a number of infrastructure development works at various airports

in the past decade and number of development works are under progress. The objective is to

make Guwahati as inter-regional Hub and Agartala, Dibrugarh & Imphal as Intra-Regional

Hubs by construction of Maintenance Hangers, Extension and strengthening of Runway,

Extension and strengthening of Apron, Construction of New Terminal Buildings/Extension

and Modification of Existing Terminal Buildings etc. In addition to the above, development

works are planned for other airports also like extension of runway suitable for A-321 type of

aircrafts at Shillong, New Terminal Buildings at Silchar & Jorhat etc. Three Greenfield

airports are also considered or taken up at NE Region viz. Pakyong (Sikkim), Itanagar

(Arunachal Pradesh) and Cheithu (Nagaland).

28. DGCA on 21st February dismissed objections raised by top Indian private carriers and cleared

AirAsia India‘s proposal to start greenfield operations in the country. DGCA disposed of all

objections and said AirAsia India would shortly be given an air operators‘ permit (AOP) on

completion of formalities. The decision also got a fillip from the Supreme Court, which

refused to pass any interim order to restrain the Centre from giving a final approval to the

Tata-AirAsia deal. The court, however, held that any decision taken by the government on the

deal would be subject to the outcome of the case pending in the Delhi High Court.

29. AAI on 25th February signed a MoU with Government of Uttar Pradesh for the development

of airports at Meerut, Moradabad, Faizabad and new Civil Enclaves in Agra, Allahabad,

Bareilly and Kanpur. The thrust of the Government is to have an inclusive growth in the

country for which the regional or remote area air connectivity can act as a catalyst. In this

endeavour, the Government has plans to take up the development of airports in Tier-II and

Tier-III cities including the airports belonging to State Governments. The Government of

Uttar Pradesh has handed over three airports namely Meerut, Moradabad and Faizabad to

AAI. Further, the State Government has also agreed to provide land and other logistical

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support for establishing new Civil Enclaves at Agra, Allahabad, Bareilly and Kanpur. Thus, a

total of seven airports / civil enclaves in Uttar Pradesh will be developed.

30. AERA has scrapped the UDF collected at RGIA, Hyderabad. The move is effective April 1.

In an order issued on 24th February, AERA said, ―The authority has decided the facilitation

component of the passenger service fee will now be merged with UDF. However, in case of

HIAL, the authority has determined UDF as zero, effective April 1 2014 to April 1 2016, for

both domestic and international embarking passengers‖. The order was issued after

consultations with all stakeholders for determination of aeronautical rates for the first control

period (April 1 2011 to April 1 2016). Currently, the UDF at RGIA, Hyderabad, is Rs 430 for

every departing domestic passenger and Rs 1,700 for every international passenger (ad hoc

determination by the authority in October 2010), along with taxes.

31. Maritime Energy Heli Air Services Pvt Ltd (Mehair), a non-scheduled air services provider, in

association with the Maharashtra Tourism Development Corporation on 24th

February

launched a unique seaplane service - the first of its kind in mainland India - linking Mumbai‘s

Juhu airport with tourist destinations of the State. The first service will take off on March 10

from Mumbai to Aamby Valley City. In the first phase, Mehair has plans to link five

destinations with Juhu, which include Aamby Valley, Nashik, Lonavla, Lavasa and

Panchgani, all around 30 minutes flying distance from Mumbai. The air charter service also

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has plans to operate flights to Nariman Point and its planes will land in the sea at Girguam

Chawpatty ferrying passengers. In the second phase, the company has plans to link five more

destinations in Maharashtra. The company will take delivery of a nine-seater seaplane to add

to the existing four-seater Cessna 206 amphibian aircraft. The company has been operating a

seaplane service in Andaman & Nicobar Islands since January 2011. It has plans to induct 25

seaplanes in five years linking destinations in Andhra Pradesh, Goa, Karnataka and Gujarat.

32. MoCA on 26th February revised the bilateral air traffic entitlements with Dubai, allowing

them a 20% increase in seats to India. Dubai, which had asked for 50,000 additional seats a

week, has been granted 11,000 seats for allocation in three phases till the summer schedule of

2015. Dubai has not been granted any additional port of call (destination) in India. The

agreement will be effective immediately. Dubai has agreed to grant change-of-gauge facility

for Indian carriers at the existing airport. Change-of-gauge will allow Indian airlines to

change their aircraft at the Dubai airport before proceeding onward to a third country. Of the

11,000 seats, 5,500 seats would be allocated in the summer schedule of 2014 and 3,300 seats

will be made available in winter schedule later this year. The remaining 2,200 seats would be

given in the summer schedule of 2015.

33. MoCA on 27th February restarted the process for setting up an Ombudsman for Civil

Aviation Sector in India as an alternative dispute settlement machinery. The stakeholders have

been asked to give comments by April 15. The Working Group constituted by MoCA in this

regard has in their report recommended setting up of an Aviation Ombudsman. The Indian

civil aviation sector is one of the fastest growing civil aviation sectors in the world. In sectors

where market forces play a lead role in providing services, such as the aviation sector in India,

it becomes necessary to provide a window for grievance redressal of passengers and also an

effective mechanism for dispute resolution. Considering the potential for future growth, and

going by the experience of the service sectors and looking at international best practices, it

appears logical to explore the possibility of creating an alternative dispute settlement

mechanism for the sector in India. Sectors like banking, insurance, and electricity have

already established an ombudsman for dispute settlement in service provision.

34. The Bengal government on 26th February signed a deal with Bengal Aerotropolis Private

Limited to look after the technical aspects of helicopter operations across five destinations in

Bengal. According to the deal, the transport department will pay Rs 5 lakh a month to the

company, which is developing an airport in Burdwan‘s Andal, for professional service related

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to the upkeep of the helipads‘ landing and take-off areas and other technical aspects of the

operation. The company — which now manages ticket sales for the chopper service between

Calcutta and Durgapur, Santiniketan, Malda, Balurghat and Haldia — will recruit personnel

for the technical services. Helicopter services in the state were started in December 2013 after

the transport department signed an agreement with Pawan Hans. According to the deal, the

government would pay Rs 50 lakh for 40 flying hours a month to Pawan Hans.

35. The Tripura Transport minister informed Assembly on 26th February that the Agartala

Airport would be made an international airport and two abandoned airports at Kailashahar in

Unakoti district and Kamalpur in Dhalai district would be revamped by AAI. For Agartala

airport, a master plan had been prepared and 72 acre acquired by the state government was

handed over to AAI for expansion of the runway.

36. DGCA on 27th February granted CSIA, Mumbai the certification to operate A380 jumbo

aircraft.

37. The Delhi High Court on 28th

February issued notice to the central government asking it to

respond to a plea seeking quashing of the approval granted to Malaysia-based AirAsia to start

flight operations in India. The plea was filed by the Federation of Indian Airlines (FIA). The

Court also sought response from the FIPB.

ATF PRICES

1. Jet fuel prices were reduced by 2.8% on 1st February. ATF price in Delhi was reduced by Rs

2,169.13 per kilolitre to Rs 74,072.20 per kilolitre. The reduction follows two rounds of price

hikes — Rs 597.48 per kl or 0.8% increase on December 1 and Rs 2,036.59 per kl, or 2.74%

hike on January 1, 2014. ATF prices had touched a life-time high of Rs 77,089.42 per kl in

October 2013 following five consecutive increases since June as the rupee depreciated against

the US dollar, making oil imports costlier.

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

http://economictimes.indiatimes.com/topic/Unakoti%20district

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

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2. AIRPORTS

1. Netaji Subhas Chandra Bose International Airport (Kolkata) new integrated terminal building

has been awarded "Excellence in Built Environment 2013" by the Indian Building Congress

(IBC). The airport has also won the IBC trophy for the project. The Airport also has been

adjudged the ―Best Improvement (Asia Pacific)‖ category at the ACI Airports Service Quality

(ASQ) Awards 2013 held on 19th

February 2014.

2.1 Bangalore International Airport Pvt. Ltd.1

1. Kempegowda International Airport (KIA) received the STAT TIMES International Award for

Excellence in Air Cargo as an emerging cargo airport in India. The award was the

demonstration of KIA continuous endeavor to make Bangalore the cargo hub of the region.

The award was received at the 5th biennial International networking Air Cargo Event, AIR

CARGO INDIA 2014 in Mumbai.

2. BIAL has opened the elevated facilities, infrastructure and design for passengers at the

Kempegowda International Airport, Bengaluru. The opening was marked with the departure

of Jet Airways 418 to Mumbai on February 8th

and arrival of the flight EK 566 from Dubai on

10th February.

2.2 Delhi International Airport Pvt. Ltd.2

1. IGIA has been ranked 2

nd in the ―Best Airport by Size (25-40 million passengers per annum

(mppa))‖ category in the world after Seoul‘s Incheon airport in the Airports Service Quality

(ASQ) Awards by ACI held on 19th

February 2014. This is the third consecutive year IGIA

had retained 2nd position in 25-40 MPPA category globally. The airport scored 4.84 on the

quality scale out of five points.

2. IGIA also ranked 5th

in the ―Best Airport by Region (Asia Pacific)‖ category at the ACI

Airports Service Quality (ASQ) Awards 2013.

2.3 GMR Hyderabad International Airport Pvt. Ltd.3

1. RGIA has bagged the prestigious National Tourism Award 2012-13 under the Best Airport

Category. RGIA has won the award for the 4th

time in a row. RGIA has adopted a focused and

proactive approach to promote destinations within India and overseas, and contributing to

cultural and tourism strength of the region. Several offerings such as tourist guidance and

interaction facilities, physical infrastructure, food and beverages, game zone, spa and

shopping avenues besides a variety of stay facilities have all made RGIA a tourist friendly

airport. The airport operates a dedicated kiosk of Andhra Pradesh Tourism where passengers

are guided towards discovering tourism options and can also make bookings. RGIA also is

identified by the Ministry of Tourism and Ministry of External Affairs to offer Visa on

Arrival for citizens of 11 countries. RGIA is the only airport connecting to pilgrim town

Tirupati. RGIA also brought together Spicejet and Tigerair to form a hybrid interline. This

1 Information provided by BIAL

2 DIAL Website and Newspaper Clippings

3 Information provided by GHIAL

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

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special arrangement, first and only of its kind in India enables passengers to travel from any

catchment city to Singapore via Hyderabad on a single ticket. RGIA is also associated with

Hyderabad Convention Visitors‘ Bureau in positioning Hyderabad as a preferred MICE

(Meetings, Incentives, Conferences and Exhibitions) destination on the national and

international stage.

2. RGIA has been adjudged as the second best Airport in the world by Size for the year 2013, in

the 5-15 million passengers per annum (MPPA) category by ACI at the ACI Airports Service

Quality (ASQ) Awards 2013 held on 19th

February 2014. RGIA has retained its 2nd position

for the year 2013 in the Airport Service Quality (ASQ) survey by ACI, with a score of 4.80.

RGIA has been consistently rated amongst the best airports having been ranked as the best

airport in 2009 & 2010, third best in 2011 and second best in 2012.

3. RGIA in association with the Andhra Pradesh Tourism Development Corporation (APTDC)

launched an all-inclusive package of assured Special Darshan of Lord Balaji at Tirumala. The

package includes, to and fro flight tickets from RGIA, twin sharing finest AC accommodation

at Harita Hotel, pick up and drop from Tirupati airport, assured Special Sheegra Darshan, half

a day guided sight-seeing including darshan of other temples and all meals inclusive. The cost

of the tour package from Hyderabad is Rs. 11,799/-, making it affordable and convenient for

devotees to enjoy divine darshan. For the benefit of passengers, RGIA started a special

counter open at the airport Departures to get more information on the same and even

passengers can purchase the tickets. The package can also be booked online at the AP

Tourism website. RGIA is the only Airport in India to have direct flights to Tirupati, operated

by SpiceJet and Jet airways.

2.4 Mumbai International Airport Pvt. Ltd.1

1. MIAL on 12th February officially opened Terminal 2 for international arrival and departure of

flights.

2. MIAL has bagged the Prestigious ‗Best Cargo Airport of the Year 2013 (Region - India)‘

award for Excellence in Air Cargo. The award was presented by Stat Trade Times at the ―Air

Cargo India 2014‖ convention held at Bombay Exhibition Centre, Mumbai. MIAL won over

other competing major gateway airports in India in the online survey conducted by STAT

Trade Times and was a winner in the Cargo Airport (Region – India) category.

3. CSIA has ranked 5th

in the ―Best Airport by Size (25-40 million passengers per annum

(mppa))‖ category in the world at the ACI Airports Service Quality (ASQ) Awards 2013 held

on 19th

February 2014.

1 MIAL Website and Newspaper Clippings

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3. AIRLINES1

1. Purbayan Airlines, a self help group, will launch airline services from Umroi and Baljek

airports, resuming air connectivity to and from landlocked Meghalaya. The Airline will

launch the Guwahati - Silchar flight services from March 1 and will also start the Guwahati-

Tura-Shillong services. The Airline is also contemplating to start the Guwahati-Dimapur-

Aizawl-Shillong-Guwahati services. The group will be operating nine-seater Cessna Caravan

208 engine aircraft. Purbayan is a tour and travels company which started operations in 2013

running night super buses between Assam and Meghalaya.

3.1 Air India (AI)

1. AI is introducing ‗premium economy class‘ on some of its all-economy class Airbus A-320

aircraft. The start will be made on February 15 on the Delhi-Guwahati-Imphal and return

sectors. Under the premium economy class, the first two rows of the A320 aircraft will be

converted into a premium class with the middle seat in each of the two rows being blocked off

for sale. AI will charge the lowest business class fare for those travelling in premium

economy. The higher fare also provides facilities like cancellation of a ticket before travel and

changing the date for the flight free of charge, which is a common practice for those travelling

in business class. Passengers travelling in premium economy will be allowed 35 kg free

baggage as against 20 kg allowed to other passengers and will be provided access to executive

class lounges and allowed to board the aircraft at their leisure. In addition, they will be

provided a welcome drink, a cold or hot towel, choice of meals and choice of reading

material. But unlike the business class section in domestic flights, there will be no separate

business class section on the aircraft.

2. AI in 2013-14 incurred a loss of Rs 39.89 billion on revenues of Rs 202.59 billion. This was

an improvement over 2012-13, when the airline lost Rs 54.90 billion after earning revenues of

Rs 242.48 billion. Outstanding debt stood at Rs 260 billion and working capital loans were

about Rs 211 billion. As a result of high interest costs, Air India‘s total earnings in 2013-14

were Rs 202.59 billion, while expenses were Rs 242.48 billion. AI has received equity

support of Rs 122 billion from the government. This is part of a capital infusion of Rs 302.31

billion that was committed to the airline, provided it met performance benchmarks.

3. AI has decided to sell five of its Boeing 777-200 Long Range aircraft at a total consideration

of $336 million. It will also receive budgetary support to the tune of Rs. 5,500 cr in the

financial year 2014-15 from the government.

3.2 Jet Airways

1. Jet Airways reported a net loss of Rs 267.89 cr during the October-December quarter on

account of rising expenses due to high fuel prices and rupee depreciation. The airline had

registered a net profit of Rs 85 cr in the year-ago period while it had reported a net loss of Rs

891.01 cr in July-September quarter. The domestic yields improved 20% during the period

compared with the previous three months. At an operational level, the airline saw a growth of

4% in passengers and a rise of 5% in available seat kilometres. This led to the company

posting a net income of Rs 4,229.41 cr compared with Rs 3,941.39 cr in the year-ago period.

1 Newspaper Clippings

http://atwonline.com/finance-amp-data/air-india-increase-borrowing

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During the quarter, Jet‘s average gross revenue per passenger showed a decline of nearly 2%

in its domestic operations but rose 3.1% in its international operations. Fuel rates increased

around 10.6 % over the same quarter last year. The grounding of some planes impacted the

quarter by nearly Rs 106 cr. Jet's debt came down to Rs 10,895.2 cr in the December quarter

as against Rs 12,494.7 cr in the July-September period.

October - December Quarter 2013-14 (Figures in Rs cr) 2012 2013

Income from operations 4,206 4,536

Total Expenses 3,870 4,762

Net Profit / Loss 85 -268

2. Jet Airways is adding nine Boeing 737‘s to its network next year. The move will enable Jet to

maximize revenues without incurring significant additional costs. The new aircraft would be

leased. Jet Airways is set to raise $300 million through the ECB route to retire its high cost

debt. Etihad Airways will help Jet to raise $150 million through its network of bankers and

the remaining $150 million will be raised by Jet through its own bankers.

3. Jet Airways has sought approval of shareholders to sell the frequent flyer programme business

to its subsidiary Jet Privilege Private Ltd (JPPL) for Rs 695.21 cr. The company sought

approval of shareholders to transfer, sell or dispose of the Jet Privilege frequent flyer

programme to its subsidiary JPPL "as a going concern on a slump sale basis".

4. Jet Airways has got the government‘s approval to buy 50 new Boeing 737 Max planes. The

737 Max costs about Rs 640.87 cr at list price.

3.3 SpiceJet

1. SpiceJet on 11th

February received shareholders approval to create, offer, issue and allot up to

4.5 cr warrants convertible to equity shares of face value of Rs 10 on a preferential basis to

Kal Airways. Shareholders also approved issuance of 1.916 cr convertible warrants to

Kalanithi Maran.

2. SpiceJet has posted a net loss of Rs 172.79 cr for the quarter ended 31 December, as against a

profit of Rs 102 cr in the year ago quarter. During the quarter the revenue grew by 14% to Rs

1,807 cr and traffic grew by 10%. The factors that impacted are the high aircraft fuel prices,

significant depreciation in the value of currency, pricing pressures from competition and

general economic slowdown.

3.4 Kingfisher Airlines (KFA)

1. KFA has reported net loss of Rs 822.42 cr for the third quarter ended December 31, 2013 as

compared to a net loss of Rs 755.17 cr in the year ago period. The airline's auditors has said

that the accounting method used by the airline to calculate costs incurred on maintenance and

repairs of aircraft was "not in accordance with generally accepted accounting standards

prevalent in India" For the nine month period, KFA reported a net loss of Rs 2,694.89 cr.

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3.5 GoAir

1. GoAir on 4th

February launched a direct-daily flight service between Patna and Kolkata.

With the introduction of this new service, Patna will get further connected to Ahmedabad

and Guwahati via Kolkata. Currently, Patna is directly connected to Mumbai, Delhi and

Ranchi while Kolkata can be directly reached to and from Guwahati, Delhi, Ahmedabad and

Bagdogra.

3.6 IndiGo Airlines

1. IndiGo has announced a non-stop direct flight service between Dibrugarh and New Delhi.

The airline will launch the non-stop direct flight from Delhi to Dibrugarh while the outgoing

flight will have a stopover at Guwahati en route to New Delhi.

2. IndiGo on 21st February added Varanasi as its 31st domestic and 36th overall destination in

its schedule for 2014. The new schedule introduces three new daily non-stop flights to

Varanasi from Delhi, one new daily flight each between Bengaluru-Varanasi, Mumbai-

Varanasi and Hyderabad-Varanasi (via Delhi).

3.7 Air Costa

1. Air Costa on 13th February placed an order for 50 Embraer E-Jets E2 aircraft worth $2.94

billion. The deal covers 25 E-190-E2s and 25 E-195-E2s. The purchase rights cover a further

25 E-190-E2s and 25 E-195-E2s. Air Costa currently flies between Bangalore, Chennai,

Hyderabad and Vijayawada. It plans to add services to Pune, Vizag, Goa, Madurai, Mysore

and Thiruvananthapuram in a phased manner. Air Costa would start pan-India operations by

2015 with 14 routes and reach 25 destinations in three years from then.

INTERNTAIONAL AIRLINES

1. Etihad Airways on 5th February got CCI‘s approval for purchase of 50.1% stake in Jet

Privilege Private Ltd (JPPL), a customer loyalty programme unit of Jet Airways. Clearing the

transaction by majority, CCI said that the deal was unlikely to have any adverse impact on

market competition, as Etihad's purchase of 24% stake in Jet Airways has already been

approved and the two carriers were already partners in their respective frequent flyer

programmes.

2. Malindo Air, Malaysian Airlines, on 15th February launched its five times weekly flight

services from Kuala Lumpur to Mumbai. The airline will introduce service from Ahmedabad

on March 19 and Kochi on April 24.

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4. INTERNATIONAL NEWS1

1. Abu Dhabi Airport has opened a pre-clearance facility for passengers traveling from the UAE

to the USA enabling them to arrive in the US as domestic passengers. The facility allows

passengers to be processed through US immigration and customs, public health and

Department of Agriculture inspections before boarding their aircraft, eliminating the need to

do so on arrival in the US. The U.S. has pre-clearance passenger facilities throughout Canada,

in four Caribbean locations and Ireland. The new facility in Abu Dhabi is the Middle East's

first. It is also the first pre-inspection arrangement to be enacted with another country since

the 1980s. The decision gives competitive advantage to Etihad over U.S. airlines, which don't

fly direct between Abu Dhabi and the USA.

2. London Heathrow is set to become the first airport in the world to introduce a new traffic

management system for handling arriving aircraft – using the amount of time between flights,

rather than distance. The planned switch will be based on recommendations made by the UK's

independent Airports Commission. The new system – introduced by air navigation service

provider NATS – will lower delays and cancellations due to the strong head winds caused as a

result of the flights landing arriving flights closer together. It is expected to lower the flight

delays caused a result of high winds by 50%, reducing the disruption for passengers by more

than 1,300 hours each year. The new procedures will be introduced from early 2015. Flights

are typically separated by set distances based on the type of aircraft and the size of spiraling

turbulence, or wake vortex, they create as they fly. For the new initiative, NATS evaluated

more than 100,000 flights using state of the art equipment to accurately measure the

behaviour of aircraft wake vortices in strong headwinds. The study results revealed that the

wake vortices dissipate more quickly in windy conditions, allowing aircraft to be closer

together on final approach while maintaining the focus on safety. Heathrow is the world‘s

busiest two runway airport and has been operating at 98% of its runway capacity for a decade.

In normal conditions a flight takes off or lands every 45 seconds, however, during strong

headwind conditions, aircraft fly more slowly over the ground resulting in extra time between

each arrival. Having to maintain a set separation distance in those conditions reduces the

landing rate and causes delays.

3. Abu Dhabi Duty Free posted record retail revenue of $248 million in 2013 and a rise of 13%

on 2012. December proved to be the busiest month of the calendar year with sales figures

reaching $25 million at Abu Dhabi International Airport. The most popular gifts purchased

were beauty products, fragrances, watches, gold and diamonds. Abu Dhabi Duty Free

launched a new brand identity in October with a new logo to reflect the iconic architectural

design of the new Midfield Terminal Building, which will open in 2017. Abu Dhabi Duty

Free has expansion plans ahead of the new terminal building, with the introduction of new

outlets to improve the shopping experience for passengers passing through Abu Dhabi

International.

4. Charles de Gaulle Airport, Paris is conducting a three-month self-bag drop trial which will

start in March 2014 through the Scan & Fly units. The units will be used by Air France

passengers and will be retrofitted on existing check-in positions in the Departure Hall.

Aéroports de Paris and Air France have installed them as a test is to measure the reached

capacity and the overall performance of the Scan & Fly product.

1 ACI Airport World

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5. Abu Dhabi International Airport has double digit increase in passenger traffic with a 14.5%

rise for January 2014 as compared to the same month last year. The airport‘s passenger

statistics show that 1,564,266 passengers used the airport in January 2014, growing from

1,366,433 in January 2013. Aircraft movements are also registering a parallel increase of

7.7% growth compared with the same month last year to record 11,972 movements. Cargo

activity showcased a tangible increase with 58,114 tonnes handled at the Capital‘s airport,

marking an 18.9% increase in January 2014 compared to the same in 2013. The top five

routes from Abu Dhabi International Airport during January were Bangkok, Jeddah, Doha,

Manila and London Heathrow.

6. Singapore Changi Airport handled 4.60 million passengers in January 2014, an increase of

6.3% on-year. Air traffic movements grew correspondingly, with a total of 30,400 landings

and take-offs recorded during the month, or 7.6% more compared to a year ago. The growth

in passenger traffic was supported by a healthy increase in air travel between Singapore and

Southeast Asia, Northeast Asia, Southwest Pacific and the Middle East. Among Changi‘s top

country markets, double-digit growth was registered for travel to and from China, Hong

Kong, Indonesia, Japan, Malaysia and Vietnam. Travel to Thailand however saw a decline

with Bangkok traffic decreasing by a quarter. In terms of airfreight, 151,400 tonnes of cargo

were processed at Changi Airport last month, a 3.8% increase year-on-year as air shipments

picked up ahead of the Lunar New Year period, which this year occurred 10 days earlier.

New Airport Initiatives Internationally

1. Narita Airport, Japan is introducing a number of multilingual services across the airport to

simplify the travel experience for non-Japanese passengers. The airport‘s voice and text

translation app – NariTra – will be updated to support Indonesian voice translation, as well as

Thai, French and Spanish text translation. This is in addition to the existing Japanese, English,

Chinese and Korean capabilities. New multilingual information leaflets will also be made

available, with Thai, French, Spanish and Indonesian leaflets being produced for the first

time. International travellers arriving at the airport will also receive a welcome in their native

language thanks to the installation of new signage and the addition of welcome messages on

the digital signage in the arrivals. The welcome messages will be displayed in 25 different

languages, covering all 33 countries in Narita Airport‘s global network.

2. San Francisco International Airport has installed interactive digital wayfinding screens.

Passengers can use the screens to search for directions to airport facilities, as well as find

information on the retail and food and beverage options that are available. The wayfinding

solution is linked to the airport‘s main IT systems, which means it can be updated in real-

time.

3. Orlando International Airport (MCO) has introduced innovative biometric kiosks for

passengers arriving from Visa Waiver Countries, a move which expedites the arrival

experience for travelers. The kiosks process international passengers who hold Electronic

System for Travel Authorization (ESTA) approval prior to travel. Using the new kiosks,

passengers from international flights can complete their customs declaration form on touch-

screens, have passports read and fingerprints and facial images captured. The new passenger-

friendly system adopts a 'land, touch, go concept that improves the arrival experience. The

Visa Waiver Program (VWP) is an initiative of the United States Government which allows

citizens of specific countries to travel to the US for tourism, business, or while in transit for

up to 90 days without having to obtain a visa.

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4. Denver International Airport is running a light art exhibition for passengers and visitors

featuring work by local artists. The exhibition is entitled A Light Journey and is taking place

at the Art Gallery on Level 5 of the Jeppesen Terminal, and runs until early May. Among the

art showcased in the seven days a week, 24 hours a day exhibition - is free standing, pedestal

and wall-mounted light sculptures. Most of the work is powered with LED lighting elements,

while each sculpture stands alone as an artistic expression.

5. George Bush Intercontinental Airport has installed an innovative automated passport control

(APC) system to improve traveller facilitation and security of international travel. The 20 self-

service kiosks are available for use to US and Canadian citizens who are arriving aboard

international flights. The system expedites the processing of arriving passengers by allowing

them to enter required data using touch-screen technology, as opposed to hand writing the

information on a traditional card.

6. Cork Airport has become the first Irish airport to make Google Indoor Street View feature on

Maps available for all public areas of the airport. The innovative service allows passengers to

take a virtual tour of the inside of the Cork Airport terminal building. According to the

gateway, the launch of the new Google Maps service is one of two significant digital

initiatives to further improve the passenger experience at Cork Airport, as it has also launched

a new free iPhone and Android App, which is the essential guide to the full range of services

at the airport. The Google Indoor Street View of Cork Airport uses over 840 stitched images,

allows passengers to explore the check-in areas, departure and arrivals halls, shops and

restaurants before they even get to the airport. Once they are inside the airport, passengers are

able to instantly identify where they are and navigate their way around. The new Cork Airport

App, developed by Cork Airport in tandem with Irish web design company FeedHenry,

includes features such as live arrivals and departures information, car park booking, integrated

maps and details of all of the retail and catering outlets within the terminal. The app also

includes links to airport shopping services with all the latest offers from The Loop. It provides

current weather details at Cork Airport, as well as live weather reports for all destinations.

7. Indianapolis International Airport (IND) is displaying a new rotation of temporary art created

by Indiana artists. The works are part of the Indianapolis Airport Authority‘s (IAA) temporary

art programme and the newest exhibits are being showcased in the main ticketing hall. IND‘s

temporary art programme introduces innovative new works, primarily from artists with ties to

the local community, and to the airport space, while complementing the IAA‘s robust

permanent art collection. The exhibits are on display until May 4.

8. London Heathrow Airport has introduced ‗View Heathrow‘ platform at Terminal 4, the first

of its kind at Heathrow since the old Terminal 2‘s viewing platform was closed along with the

building itself. Passengers at the airport can now enjoy some aircraft spotting as they wait for

their own flights to depart. The new 270 degree observation deck has a view of the southern

runway, the control tower and British Airways‘ Concorde. The observation deck is located

between gates 15 and 16 and was converted from an unused former airline lounge and is open

to all passengers in Terminal Four during normal operating hours. Fixed iPads on the platform

show live flight radars so that visitors can identify the aircraft movements in front of them as

well as binoculars to get a better view.

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9. Seattle-Tacoma International Airport has installed three new water bottle filling stations in its

latest customer service initiative. The gateway claims that the move means that passengers

"can say goodbye to awkwardly tipping bottles while chasing water at fountains". The new

wall-mounted system use sensors to dispense filtered water. After emptying liquids pre-

security into collection stations, travellers can now seamlessly fill up their containers post-

security.

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5. TRAFFIC1

1. Top 10 airlines share of India – US traffic – Data for FY 13:

Airlines % Share

1 Emirates 18

2 British Airways 14

3 Lufthansa 12

4 Air India 11

5 United 7

6 Qatar Airways 5.5

7 Etihad 4

8 Air France 4

9 Jet Airways 3.5

10 Delta 2.5

2. Top 10 busiest airport in the world in 2013:

Airport Passengers (in millions) % Change

2013

1 Atlanta-Hartsfield Jackson 94.4 -1.13%

2 Beijing 83.7 2.2%

3 London Heathrow 72.3 3.4%

4 Tokyo Haneda 69.0 2.6%

5 Chicago O’Hare 66.9 0.1%

6 Los Angeles International 66.7 4.7%

7 Dubai International 66.4 15.2%

8 Jakarta Soekarno-Hatta 62.1 3.4%

9 Paris Charles de Gaulle 62.0 0.7%

10 Dallas/Forth Worth 60.4 3.2%

3. International passenger traffic in and out of India in 2013 stood at 43 million - an increase of

5.5% over the previous year. India, currently the ninth-largest aviation market globally, is

likely to become the third-largest aviation market by 2020, handling over 350 million

domestic and 85 million international passengers. About 40% of all international traffic from

India is West Asia-bound. Three of the top international carriers operating to India in 2012-13

were from the Gulf while two were from South Asia.

1 ACI, IATA, DGCA and Press Information Bureau

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Source: CAPA

4. According to IATA Air Passenger Market Analysis December 2013, air travel markets gained

5.2% compared to 2012, despite high fuel costs and relatively slow global economic growth.

Strongest overall growth (domestic and international combined) was recorded by carriers in

the Middle East (11.4%) followed by Asia-Pacific (7.1%), Latin America (6.3%) and Africa

(5.2%). The slowest growth was in the developed markets of North America (2.3%) and

Europe (3.8%).

Dec 2013 vs. Dec 2012 2013 vs. 2012

RPK Growth ASK Growth PLF RPK Growth ASK Growth PLF

International 6.2% 5.9% 78.2% 5.4% 4.9% 79.3%

Domestic 7.4% 6.2% 79.4% 4.9% 4.6% 79.9%

Total Market 6.6% 6.0% 78.7% 5.2% 4.8% 79.5%

Dec 2013 vs. Nov 2013 FTK Growth AFTK Growth FLF

International -1.2% 2.6% 49.0%

Domestic 2.5% 2.3% 30.8%

Total Market 1.4% 2.6% 45.3%

International passenger demand grew by 5.4% in 2013 compared to 2012 with all regions

reporting growth. Capacity rose 4.9%, boosting load factor to 79.3%, up 0.4 percentage points

over 2012. Asia-Pacific airlines‘ traffic rose 5.3% in 2013, the highest increase among the

three major regions and slightly above 2012 annual growth of 5.2%. After a slow start,

carriers in the region saw a pick-up in demand in the third quarter, supported by stronger

performance of major economies such as China and Japan. Capacity expansion of 5.2% meant

load factor was virtually flat at 77.7%.

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Domestic air travel demand rose grew by 4.9% in 2013 compared to 2012, up from 4.0% in

2012 versus 2011. Capacity rose 4.6% and load factor climbed 0.4 percentage points to

79.9%. All markets recorded positive gains, with the strongest growth occurring in China and

Russia. Indian domestic traffic rose 4% in 2013 as compared to a 2.1% decline in 2012. The

demand environment has been challenging in view of the weakening economy, high inflation

and slowing manufacturing and resource industries. Capacity climbed 3.5% in 2013, and load

factor was 74.6%, up 1.7 percentage points compared to 2012.

5. According to IATA Air Freight Market Analysis December 2013, air freight markets showed

slow and steady improvement throughout 2013, with a more notable pick-up in growth during

the second half of the year. Global freight tonne kilometers (FTKs) expanded 1.4% in 2013

compared to 2012. In December, air freight markets were up 1.8% on a year ago, above the

annual trend, but slower than November growth (6.0%). Capacity grew faster than demand at

2.6% and load factors were weak at 45.3%. Asia-Pacific carriers saw freight volumes fall

0.3% in December, and declined 1.0% for 2013 as a whole, compared to 2012. Despite

shrinking demand, capacity grew by 0.8% in 2013.

Dec 2013 vs. Dec 2012 2013 vs. 2012

FTK Growth AFTK Growth FLF FTK Growth AFTK Growth FLF

International 1.6% 4.0% 50.0% 1.2% 2.6% 49.0%

Domestic 2.7% 2.1% 32.4% 2.5% 2.3% 30.8%

Total Market 1.8% 3.6% 46.3% 1.4% 2.6% 45.3%

Dec 2013 vs. Nov 2013 FTK Growth AFTK Growth FLF

International -1.2% 2.6% 49.0%

Domestic 2.5% 2.3% 30.8%

Total Market 1.4% 2.6% 45.3%

6. According to ACI, global passenger traffic grew 6% for December 2013. Both international

and domestic traffic performed above the annualized average achieving growth rates of 6.6%

and 6.2% respectively. For the year as a whole, 2013 saw passenger traffic increase by 4%.

This growth in air travel occurs in a year that was riddled with economic challenges ranging

from the cyclical slowdown in emerging markets to the lingering economic uncertainties in

the euro area and the United States. Air freight volumes increased by over 3% for the month

of December. Despite a global economy that remained sluggish for most of 2013, air freight

markets still inched up by 1% in 2013 as compared to 2012. On an annualized basis,

international freight traffic increased by 0.9% whereas domestic freight increased by 1.2% on

the year. With an overall rise in business confidence coupled with the recent improvements in

international trade, the recent rise in air freight volumes signals a potential revival.

The Asia-Pacific airports reported overall growth of 6.4% in passenger traffic for the month

of December. Annualized growth in passenger traffic for 2013 was 7.2%. Many of the regions

airports are experiencing slowing growth as a result of a cyclical slowdown in markets such as

China. Beijing (PEK) grew by 2.2% in 2013, which is much lower than the yearly double

digit growth rates that it posted before 2011.While domestic traffic is significant in markets

such as Japan and China, international passenger traffic was a driving force behind the gains

for the Asia-Pacific region. International traffic grew by 8.6% in 2013 for the region. Growth

in air freight volumes in the Asia-Pacific region was relatively mixed with an aggregate level

increase of 3.4% in December. The top global air freight hub, Hong Kong (HKG), had a slight

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decline of 0.3%. Shanghai (PVG) and Incheon (ICN) had year-over-year increases of 10.1%

and 3.5% respectively. This is in stark contrast to previous months where growth was much

lower or even in negative territory. Nevertheless, overall traffic only inched up by 0.9% in

2013 with five of the top 10 airports posting declines on the year.

SUMMARY WORLDWIDE TRAFFIC RESULTS, DECEMBER 2013

(% CHANGE)

December 2013 over

December 2012

Year to

Date

12-Month

Rolling Year

PaxFlash

International Passenger 6.6 5.2 5.2

Domestic Passenger 6.2 2.7 2.7

Total Passenger 6.4 3.9 3.9

FreightFlash

International Freight 2.5 0.9 0.9

Domestic Freight 4.4 1.2 1.2

Total Freight 3.2 1.0 1.0

7. According to IATA Airlines Financial Monitor December-January 2014, airline shares gained

6% in January compared to December, outperforming the broader market which fell 4%.

Airlines shares were unaffected by emerging market turmoil, buoyed by solid financial

performance and lower fuel prices. Jet fuel prices eased in January, but remain within 3 year

range supported by improving demand for crude oil. Air freight markets improved in 2013 as

business confidence and world trade picked-up, and passenger travel sustained growth at the

solid 30-year growth trend (%5+), reflecting strong performance of emerging markets.

Growth in available seats rose strongly in December, as new deliveries and stored aircraft

entered the fleet. But passenger load factors rebounded as a result of a fast expansion in

volumes, rising above 79%, globally. Air freight loads paused their recent improvement, but

remain at 2013-highs despite being barely above 45%.

8. According to IATA Premium Traffic Monitor December 2013, premium international passenger

travel expanded 4.2% in 2013 compared to 2012. This is a slowdown on 2012 (4.8%), but

growth has picked-over recent months, with December up 5.5%. Growth in premium travel

has been supported by a stronger business environment in H2 2013. Key markets like the

North Atlantic improved – still growing slowly (2.3%), but up on 2012 (0.6%). But the largest

share (21%) of the rise in total premium travel was within the Far East. This market expanded

7.2% in 2013, supported by regional trade growth in the second half of the year. Economy

international travel expanded 3.5% in 2013, significantly down on 2012 (5.9%). The outlook

for premium travel is broadly positive, but recent improvements in key drivers appear to be

pausing. Business confidence has flattened and export orders growth has slowed, reflecting

weakness in emerging markets. Nonetheless, performance of advanced economies should

sustain premium travel, at least at current growth rates.

9. Foreign Tourist Arrivals in India during January, 2014 was 7.20 lakh as compared to

6.99 lakh in January, 2013 and 6.81 lakh in January, 2012. There has been a growth of 3% in

January, 2014 over January 2013 as compared to a growth of 2.6% registered in January,

2013 over January, 2012.

10. Foreign Exchange Earnings in India during January 2014 were Rs.11,197 crore as compared

to Rs.10,465 crore in January, 2013 and Rs.8,623 crore in January, 2012. The growth rate in

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January 2014 over January 2013 was 7.0% as compared to 21.4% in January 2013 over

January 2012.

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6. REVIEW OF REPORT

CAPA: Key Themes of India Aviation Outlook Report FY2015

CAPA India has published Key Themes of India Aviation Outlook Report for the Financial Year

2015 explaining the outlook of Indian aviation. The report highlights the key themes for the

industry and analysis of the direction of one of the world‘s most important emerging market -

India.

The report suggests that the regulatory uncertainty remains a key concern and represents a key

disincentive and barrier to serious investors. The unpredictability and lack of transparency in

India‘s regulatory framework continues to be the greatest strategic challenge in the market. For

example, on the issue of new airline licences there are no defined criteria for whether, how and

when applications will be assessed. Indeed the process seems to differ depending upon the

applicant as evidenced by the sudden, unexpected and unprecedented call for public

representations at the AOC stage for AirAsia India. A legal case also remains in place challenging

whether control of the company rests with Indian nationals. The start-up had earlier received its

Foreign Investment Promotion Board approval and No-Objection Certificate in record time. Tata-

SIA is also awaiting its No-Objection Certificate and there is no certainty about the status or

timing. Yet other weaker start-ups may find it easier to obtain approvals.

The report mentions that three carriers – Air India, Jet Airways and SpiceJet – are expected to

post combined losses in excess of USD1.2 billion. And this figure could rise higher as a weak

outlook for March could trigger further promotional pricing. Air India is once again expected to

incur the largest loss at close to USD700 million, although this represents an improvement of

approximately 20% year-on-year in local currency terms. Jet Airways and SpiceJet are likely to

report record losses. In addition to their losses, Air India and Jet Airways are also likely to be

impacted by travel agency defaults which have reached USD40 million in Delhi recent weeks and

could increase further. GoAir is expected to end the year with a break-even result or a modest

profit which is disappointing after a very promising first quarter. IndiGo will be the only carrier to

report full year profitability but this too will be significantly lower than our earlier estimates.

Nevertheless, as the only consistently profitable airline in India the time may be approaching to

leverage this achievement and an IPO is possible in FY2015.

As at 31 March 2013 the total accumulated losses of the airline industry over the previous seven

years had risen to USD8.6 billion (based on current exchange rates). Industry debt had climbed to

USD12.6 billion, however the full service carriers – Air India, Jet Airways and Kingfisher –

accounted for 94% of this. Approximately 40-50% of full service carrier debt was related to

working capital. In addition, there were close to USD2.4 billion worth of outstanding payments to

vendors. In contrast LCC debt was just over USD750 million and most of this was aircraft-

related. The report further suggests that India‘s incumbent carriers can expect no respite on the

competitive front heading into FY2015 with several new carriers expected to launch operations.

Apart from AirAsia India and Tata-SIA a further 2-3 start-ups are reportedly awaiting licences to

commence national and regional operations. The induction of additional capacity when load

factors are already soft, and the consequent downward pressure on yields is expected to hurt all

carriers. Continued red ink may start to test the holding power of a couple of airlines.

As per the report the domestic traffic is up by 6% and international traffic for the first eight

months is up 10.7% (CAPA estimate was 10-12%). The high cost operating environment and the

continued weakness in the economy would suggest that domestic traffic growth remains

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vulnerable and all other things being equal may remain in low single-digit territory in FY2015.

However, there is considerable uncertainty about the potential impact of the new market entrants.

If a fares war is instigated traffic growth could be stimulated significantly above this underlying

rate however this would be at the expense of the airline balance sheets. Domestic traffic

performance could therefore be volatile from month to month. However, we may see signs of a

more sustained recovery from 3QFY2015 onwards as economic confidence is expected to

increase following the general elections. International traffic on the other hand has been a strong

and steady performer over the last decade, even during periods where the domestic has dropped

into negative territory. Growth for the 12 months ending 31-Mar-14 is expected to reach 12%

year-on-year. In FY2015 double-digit growth of 10-12% is expected once again and may exceed

15% if the 5 year/20 aircraft rule is lifted and a number of bilaterals are relaxed.

The report suggests that the foreign airline investment transactions involving existing Indian

carriers appear unlikely in the short term given recent losses and in light of the increasing

intensity of competition in the market as a result of the expected launch of several new airlines.

SpiceJet has reportedly signed a terms sheet with a UAE based investor however the ongoing

challenges in the market may make it difficult to close this deal. Indian carriers are expected to

require capital infusions of USD1.6 billion over the next 12-18 months just to continue

operations, let alone investment in aircraft. Air India accounts for approximately USD1 billion of

this requirement. Inability to access sufficient funds when required may impact the operational

integrity and customer proposition of some carriers.

According to the report privatisation of Air India is expected to be back on the agenda in FY2014

as realistic funding requirements likely to exceed earlier government commitment. With general

elections due by May-14 the administration that comes into power will have to face up to

developing a credible plan for the ownership of Air India. The government‘s fiscal deficit means

that it is already facing challenges in honouring the funding that it has committed to the national

carrier. And under its proposed turnaround plan Air India is expected to require a further USD3.9

billion of funding before returning to profitability. With the internal and external operating

environments having become even more challenging since the turnaround plan was developed,

these estimates are likely to be conservative. As a result, a practical and dispassionate approach

requires that all options be on the table, including privatisation. However Air India has made

improvements across operational, commercial and financial metrics and the decision by Star

Alliance to resume the carrier‘s preparation for membership is a positive development.

Integration with and formal membership of the alliance is expected to be concluded by Jun-14.

The discriminatory 5 year/20 aircraft rule was expected to be lifted in Nov-13 but this did not

happen. Strong expectations have once again surfaced that the regulation could be abolished in

Feb- 14 but uncertainty remains and a last minute change of heart cannot be ruled out. Indian

aviation will require billions of dollars of investment over the next decade however serious

investors are unlikely to be forthcoming in the absence of a structured and predictable framework.

Jet-Etihad deal is once again under the spotlight, significant challenges still remain. Delays have

been costly and almost all of the USD379 million equity infusion will be wiped out by FY2014

losses. After having earlier received all of the necessary approvals, the Jet-Etihad deal has

reportedly once again come under scrutiny from several agencies including the Competition

Appellate Tribunal, SEBI and even the Home Ministry, seeking additional clarifications with

respect to the ownership and control of the company. Most recently SEBI is also understood to

have issued a notice to Jet Airways stating that it is investigating whether the promoters need to

make an open offer for the outstanding shares in the company.

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As per the report the downgrade of India to Category 2 by the FAA in Jan-14 due to concerns

about deficiencies in the safety oversight framework is an embarrassing development for India,

but reflects systemic weaknesses at DGCA. Restoration of Category 1 could take much longer

than expected. An urgent, comprehensive and independent White Paper on the state of aviation

safety is critical to understand the depth of the problem. Only then can appropriate long-term

solutions be developed. The report further mentions that a silver lining perspective is that this

could be a useful wake-up call which will act as a catalyst to bring the focus on to strengthening

the regulator institutions and help to establish a professional and independent Civil Aviation

Authority (CAA) run by technical and domain experts. However, some of the early indications

are not encouraging. In an effort to be seen to be taking action in the aftermath of the downgrade

the government appears to be re-thinking the independence of the CAA and may rush through

under-prepared legislation to form the new authority, the outcome of which may be a regulator

that continues to be run by bureaucrats and controlled by government.

The report mentions that airport privatisations likely to remain stalled until after the elections.

Navi Mumbai project costs are likely to be revised upwards and uncertainty about the project is

likely to continue until the RFP is issued. The Airports Authority of India remains committed to

plans to award PPP concessions for 15 of its most profitable airports, starting with Chennai,

Kolkata, Ahmedabad, Guwahati, Jaipur and Lucknow. However the tender process for these first

six airports has been stuck since Oct-13 due to a lack of preparedness with respect to the

concession agreement and the approved tariff structure. Although the qualification and bid

process may resume in the coming weeks the award of the concessions will only happen after the

elections. It is a matter of concern that the tenders for projects of such significance were

commenced before the relevant government agencies had even reached internal agreement

amongst themselves on fundamental issues. Meaningful action on three PPP greenfield airport

projects at Navi Mumbai, Kannur and Aranmula is similarly stalled until the post-election period.

Request for qualification documents for the delayed Navi Mumbai Airport project were finally

issued on 5-Feb-14 however qualified bidders will not be announced until Aug-14. Although the

commencement of the long-awaited tender process is a welcome development the Navi Mumbai

project continues to face a number of challenges.

The report mentions that corporatisation of air navigation services remains on the agenda with

plans to hive it off as a separate entity. The Airports Authority of India is responsible not only for

managing and developing more than 120 airports but also for providing air navigation services in

Indian airspace. It has been argued that having these distinct activities combined under a single

entity and with common financials leads to mis-allocation of capital and prevents efficiencies

from being realised. A proposal is under consideration to hive off the air navigation services

division as a separate entity with its own balance sheet, however a decision on this is not expected

until after the elections.

The report also mentions that Ground handling policy remains stuck in the courts. The new

ground handling policy, which was first proposed in 2007, has remained stuck in the courts as

airlines have objected to mandatory outsourcing of customer-facing terminal handling to third

party providers.

The report further mentions that at the end of 2013 Indian carriers had approximately 350 aircraft

on order. By the end of FY2015 this is likely to have swelled to over 700 aircraft, including Air

Costa‘s recent order for 50 firm (plus 50 options) Embraer regional jets, and Tata-SIA‘s 20

A320s, which may be converted from an operating to a finance lease. Tata-SIA‘s conservative

initial order will certainly be followed by a more robust long term order if the 5 year/20 aircraft

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regulation is lifted. SpiceJet and Jet Airways are expected to confirm reported orders for 40 and

50 737MAX aircraft respectively. Jet may also be allocated some of the more than 100 wide body

aircraft ordered by Etihad at the Dubai Air Show in Nov-13. Meanwhile, IndiGo is expected to

place another massive order for 200-250 additional aircraft. However financing of this equipment

may be challenging for some carriers. Given the ongoing difficulties in the operating environment

and with the Kingfisher experience still fresh, some banks and lessors remain concerned about the

level of risk in the Indian market, especially as the provisions of the Cape Town Convention are

yet to be formally incorporated into the Indian Civil Aviation Regulations.

As per the report, the General aviation continues to be neglected with no clear signs of

improvement. Despite the fact that the number of general aviation aircraft in India is larger than

the scheduled fleet, the sector has remained neglected in terms of dedicated airport infrastructure,

access to airspace and availability of maintenance and training facilities. At a policy and

regulatory level the industry has largely been ignored and the sector is subject to numerous taxes.

These challenges are expected to continue into FY2015 with no clear developments on the

horizon which could ameliorate the situation.

The report also mentions that India represents a challenging environment for 3rd party MROs,

with high taxation, expensive infrastructure, a shortage of skills and strong competition from

neighbouring markets. So much so that Indian carriers continue to offshore heavy checks. IndiGo

alone recently completed its 100th C-check in Sri Lanka, representing in excess of USD25

million foregone revenue for Indian MROs due the absence of an enabling operating

environment.

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