Monthly Newsletter May 2013

Members:

Page 1 of 35

CONTENTS

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

2. Airports

2.1 Bangalore International Airport Limited ……………………………….……………..13

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

2.3 Mumbai International Airport Limited……….…………………………………………15

3. Airlines

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

3.2 SpiceJet………………………………………………………………………………………………17

3.3 Jet Airways………………………………….…………………………………………………….…17

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

3.5 GoAir…………………………………………………………………………………………..….…..19

3.6 Kingfisher Airlines……………………….……………………………………………….………19

4. Cargo……………………………………………….…………………………………………………………20

5. International News……………………….…………………………………………………………..21

6. Traffic…….……………………………………..……………………………………………………………25

7. Review of Reports …………………….………………………………………………………………29

Page 2 of 35

ABBREVIATIONS

AAI Airports Authority of India

AERA Airports Economic Regulatory Authority of India

BIAL Bangalore International Airport Limited

CAPA Centre for Asia Pacific Aviation

CCI Competition Commission of India

CIAL Cochin International Airport Limited

CSIA Chhatrapati Shivaji International Airport, Mumbai

DGCA Directorate General of Civil Aviation

DIAL Delhi International Airport Limited

EASF Essential Air Services Fund

GHIAL GMR Hyderabad International Airport Limited

IATA International Air Transport Association

IGIA Indira Gandhi International Airport, New Delhi

MIAL Mumbai International Airport Limited

MoCA Ministry of Civil Aviation

MRO Maintenance Repair Overhaul

RGIA Rajiv Gandhi International Airport, Hyderabad

UAE United Arab Emirates

VAT Value Added Tax

Page 3 of 35

1. AVIATION SECTOR1

1. The Minister of State for Civil Aviation Shri KC Venugopal on 2nd

May informed that Boeing

has agreed to pay compensation to Air India for the grounding of the Boeing 787 Dreamliners

due to the battery – fire incidents.

DGCA on 7th

May allowed resumption of operations of the Boeing 787 Dreamliner aircraft by

issuing an order lifting the ban on operations of the aircraft in India.

2. The Parliamentary Standing Committee on transport, tourism and culture on 3rd

May slammed

the Government decision to exchange a fresh air services agreement with Abu Dhabi as

“prime facie” a move to facilitate – one airline to strike a deal with a foreign airline for selling

its stake at a huge premium. The report of the Committee stated that “The committee feels

that the huge premium could be a backhanded way of obtaining access to the huge civil

aviation market in India”. The Committee noted that domestic airlines have not exhausted the

seats allotted under the earlier and substantially smaller bilateral agreement between India and

Abu Dhabi. The Committee has called on MoCA to reconsider the agreement for bilateral

with UAE. It has instead suggested that the agreement “may be kept frozen” at the current

level of 13,300 seats a week in each direction. The Committee also called on the Government

to not only take away the three slots sold by Jet Airways to Etihad at London Heathrow

Airport and penalise Jet Airways “for selling national property”.

The Parliamentary Standing Committee also took the government to task for not infusing the

entire equity amount Rs 8,574 crore in the current fiscal in Air India as required by its

Turnaround Plan, saying such shortfall would adversely affect its profitability. The committee

noted that only Rs 5,000 crore was infused as against the requirement of Rs 8,574 crore

saying “Any delay or shortfall in the infusion of equity would adversely affect the

implementation of Turnaround plan and Finance Restructuring Plan”. The committee further

said that the shortfall would lead Air India to be “compelled to borrow short-term loans from

banks in order to bridge the equity gap…., which may adversely affect the profitability of the

company”.

3. Minister of Civil Aviation Shri Ajit Singh on 3rd

May informed that MoCA is considering

increase in bilaterals from West Asia after the nearly three-fold increase in bilateral rights

between India and Abu Dhabi. Qatar, Dubai, Sharjah are proposing 80,000 additional seats

per week as part of bilateral negotiations with India.

4. The Supreme Court on 3rd

May sought an explanation from Jet Airways as to why it should

not be asked to pay tax to the tune of Rs 152.49 crore, as alleged by the income tax

department for 2002-03.

5. DGCA in its circular issued on 2nd

May has mentioned that “In case of failure to provide any

service already paid for by the consumer, it shall be the sole responsibility of the scheduled

airline to refund the same”.

DGCA is also looking at framing regulations to cap the number of preferential seats airlines

can offer in a flight. MoCA on 29th

April allowed airlines to unbundle charges for services

such as check-in baggage, use of airport lounge, meals, snacks and beverages etc.

1 Newspaper Clippings

Page 4 of 35

6. Civil Aviation Minister Shri Ajit Singh while launching the “India Aviation – 2014” on 3rd

May said that in order to stimulate air connectivity, airlines are expected to add around 370

aircrafts, worth US$ 27.5 billion, to their fleet by the year 2017. Moreover, it is estimated that

commercial fleet size is expected to reach 1000 from 400 today by 2020 and 1000 General

aviation aircrafts by 2020 including fleet renewal. Estimated investment requirement for the

General aviation aircrafts alone is of the order of US$ 4 Billion. Government of India has

envisaged investment of US $12.1 billion in the airports sector during the 12th Plan

period, of which US $9.3 billion is expected to come from the private sector for

construction of new airports, expansion, modernization of existing airports and

development of low cost airports to keep the tariff at its minimal at smaller airports,

improvement in connecting infrastructure, development of world class Air Navigation

Services infrastructure. At the same time, in order to develop world class ground handling,

cargo, logistic facilities including high-output distribution centers at major airports, huge

investment is also anticipated.

7. Pawan Hans Ltd. is planning to enter the commercial airline business offering regional

connectivity and has received a go-ahead from its board. The firm has yet to decide on the

business model and the timeline for the proposed venture.

8. DGCA is planning to make it mandatory for airline to have cameras installed in aircraft

cockpits amid several stories of shocking behavior of pilots on duty.

9. BCAS is exploring the possibility of the use of steel knives and forks at the restaurants of

IGIA, New Delhi.

10. CISF personnel are undergoing training in profiling passengers from experts from Israel in

order to improve security standards at IGIA, New Delhi. Profiling a passenger helps security

personnel zero in on people who betray suspicious behavior and intercept drug traffickers and

potential terrorists.

11. The Delhi High Court has quashed the Customs, Excise and Service Tax Appellate Tribunal’s

order directing Air India to make a pre-deposit of Rs 8 crore before hearing its plea

challenging the service tax departments’ demand of about Rs 65.5 crore for 2006-07.

12. The Aerocity Hotels at the IGI Airports has been given new recommendations which include

installing alarms at windows directly facing the runway and CCTV cameras on the roads

leading to the hotels that overlook the runway. These are in addition to a recommendation

made by security agencies for installing body and baggage scanners at the hotels. The

recommendations have been made by a committee that reviewed security at airports in San

Diego and Amsterdam in April 2013.

13. The Centre Government has decided to redevelop Juhu Airport by extending its runway 650

metres into the sea, in order to ease traffic congestion at CSIA, Mumbai. The government

plans to make the Juhu runway operational by 2017, when the Mumbai airport is forecast to

get saturated. The redeveloped Juhu airport would cater to operate jet and small turboprop and

ATR operations, which constitutes 15% of CSIA’s total operations. The project cost would be

around Rs 2,000 crore. The Juhu airport runway would be parallel to the main runway at

CSIA and the two airports would be able to handle landings and take off simultaneously. The

smaller runway at Juhu would be use for helicopter operations.

Page 5 of 35

14. Minister of State for Civil Aviation, Shri K.C. Venugopal informed Lok Sabha on 8th May

that construction at various airports including Aranmula airport project has not stopped. The

Government of India has granted `in principle` approval for setting up of 15 Greenfield

airports across the country out of which, physical work at 6 airports namely, Gulbarga,

Hassan, Shimoga in Karnataka, Durgapur in West Bengal, Pakyong in Sikkim and Shirdi in

Maharashtra, has already commenced. Necessary action for project development, including

acquisition of land, financing of the airport project etc is taken by the respective airport

promoter. The timeline for construction of airport projects depends upon many factors such as

land acquisition, availability of mandatory clearances, financial closure, etc by the individual

operator. In regard to setting up of Greenfield airport at Aranmula in Kerala, the airport

developer, M/s KGS Aranmula International Airport has informed that the work will

commence after obtaining the final clearance from Ministry of Environment & Forest.

15. The Minister of State for Civil Aviation, Shri K.C. Venugopal informed Lok Sabha on 8th

May that at present, scheduled air services are available at nine airports in the NE Region viz.

Agartala, Lengpui (Aizawl), Bagdogra, Dibrugarh, Dimapur, Guwahati, Imphal, Jorhat and

Silchar. In addition, Lilabari, Shillong and Tezpur are also operational airports but scheduled

flights are not operating from these airports at present. Shillong airport in Meghalaya is an

operational airport. However, at present no commercial operations are taking place from this

airport.

AAI has constructed a new terminal building at Barapani (Shillong) airport with an allocation

of Rs.28.27 crores in the 11th Five Year Plan. The work commenced in June 2009 and

completed in May 2010 at a cost of Rs.29.70 crores. There is a proposal for expansion and

modernisation of Shillong airport and Rs.75.65 crores has been earmarked for this project in

the 12th Five Year Plan.

16. The Minister of State for Civil Aviation, Shri K.C. Venugopal informed Lok Sabha on 8th

May that the allocation of traffic rights to an applicant airline for international operation on a

particular sector depends upon the availability of such rights under the respective bilateral air

services agreement. The Government has recently granted traffic rights to Indian scheduled

carriers for operation on the following new international routes - Delhi-Rome-Madrid/

Barcelona, Delhi-Moscow, Delhi-Sydney/Melbourne, Mumbai-Nairobi, Mumbai-Al Najaf,

Lucknow- Al Najaf, Varanasi- Al Najaf, Mumbai-Jakarta, Mumbai-Zurich, Delhi-Tashkent,

Mumbai-Ho Chi Minh City, Delhi-Ho Chi Minh City, Delhi-Macau. This move is expected to

give a major boost to Indian carriers and spur growth of the Indian civil aviation sector as a

whole by considerably improving connectivity of Indian cities with international

destinations. The Government has received requests from eligible Indian carriers for operation

on international routes. During the last three years Government has granted traffic rights to

eligible Indian carriers for operation to the following countries: Afghanistan, Australia,

Bahrain, Bangladesh, Belgium, China, France, Germany, Hong Kong, Indonesia, Iraq, Italy,

Japan, Kazakhstan, Kuwait, Macao, Maldives, Malaysia, Myanmar, Nepal, Netherlands,

Oman, Philippines, Qatar, Russia, Saudi Arabia, Singapore, Spain, Sri Lanka, , Switzerland,

Tanzania, Thailand, Abu Dhabi, Dubai, Sharjah, USA and Vietnam.

17. Kerala Government on 8th

May said it would go ahead with the Chennai based KGS group

promoted Aranmula Airports project, notwithstanding the Parliamentary Standing

Committee’s opposition to it.

Page 6 of 35

18. MoCA is colour coding cities to make the process of clearances easier for real estate projects

in areas that may impact air transport. This move by MoCA comes after a committee

appointed by the housing and urban poverty alleviation ministry suggested single window

clearance for real estate projects to reduce the delay.

19. The Maharashtra state government may hand over the airports at Solanpur and Kolhapur to

AAI. These airfields are currently operated by the Maharashtra Airport Development

Company. Once handed over to the AAI, the airports will be better developed with wider and

longer runways, terminals and other passenger amenities to operate regular commercial

flights.

20. The work on the Greenfield Parule Chipi Airport in Sindhudurg has begun. The airport is

located 17 km from the Mumbai-Goa highway and is developed by IRB Sindhudurg Airport

Pvt Ltd. and will be able to accommodate larger planes like Boeing 737s and Airbus 310s.

The airport would enhance connectivity to Goa, parts on Western Maharashtra and North

Karnataka and also generate direct and indirect employment in the region, in sectors like

hospitability, aviation and transport. The work is expected to be completed in the second half

of 2014.

21. Bharat Petroleum Cooperation Limited has begun a trial run on its 33km ATF pipeline linking

its refinery to Cochin International Airport. The ATF pipeline has been set up at a cost of Rs

40 crore to address the twin problems of pollution caused by transport of ATF by road and

frequent disruption in supplies.

22. MoCA is setting up a Committee to study and decide time slots for Airbus A380 aircraft at

local airports. At present, Airbus A380 has been barred from flying commercially in India

because it may stretch the existing infrastructure at Indian airports. The committee will do a

time study at airports to ascertain how the aircraft can be allowed without stretching the

infrastructure.

23. MoCA has accepted the recommendations made by the government constituted committee

that was formed to suggest cost-cutting measures for Air India. The committee had made 46

recommendations, implementation of which would result in an annual estimated savings of Rs

3,240 crore. One of the main recommendations included serving only tea, coffee, cold drinks,

peanuts and biscuits free to economy passengers. An average domestic meal on an Air India

flight costs Rs 175 and implementing this recommendation will bring it down to Rs 25.

Saving estimated from this alone is Rs 100 crore per annum.

24. The Minister for Civil Aviation Shri Ajit Singh informed that the Government has approved

the proposal of MoCA to constitute an Inter-Ministerial Committee under the Chairmanship

of Secretary, Civil Aviation for suggesting various measures to overcome the bottlenecks in

the development of aviation hubs at various airports in India. The six metros with state-of-the-

art airports that have been modernized and expanded include Delhi, Mumbai, Bangalore,

Hyderabad, Chennai and Kolkata. The following bottlenecks have been identified and need

rectification.

• Need to coordinate the development of tourism and promotion of brand `India’ in a concerted

manner.

• Visa norms need to be liberalized and ‘visa on arrival’ needs to be extended to as many

countries as possible.

Page 7 of 35

• Present instructions issued by Government of India impose conditions on Indian passport

holders as well as the foreign nationals with regard to carrying / spending Indian currency.

• Exchange of their left over Indian currency into foreign currency in the security hold area

respectively which acts as an impediment in development of hubs.

• ATF price and taxation also pose a road block for development of aviation hubs.

• Service charge on air travel needs to be withdrawn in order to make air travel more attractive to

passengers and thus improve prospects for the airline industry.

• Rules and legislations dealing with trans-shipment cargo also needs to be streamlined to

facilitate growth in trans shipment cargo.

• Encourage MRO business.

• Issues regarding confluence flights relating to immigration, security check.

In the last decade, India has witnessed a traffic growth rate of about 15 to 18%, which is

likely to continue in future also. Development of these airports as aviation hubs would boost

the growth of airlines, airports and would increase the flow of tourists to India. After the inter-

ministerial group submits its recommendations, the Government expects to implement them

within the shortest possible time, after seeking approval at an appropriate level.

25. CAPA in its report on ‘India Aviation Outlook 2013-14’ has warned the government for its

lopsided policy on civil aviation. Citing the recent Jet Airways – Etihad deal, CAPA said that

the government did a complete U-turn giving up on developing Indian airports as hubs. CAPA

further stated that despite regularly-stated intentions to overhaul the framework in a

comprehensive manner, a new civil aviation policy has remained in draft format for some 20

years.

26. Parliamentary Standing Committee in its report has stated that budgetary support in the form

of grants-in-aid provided to AAI in annual plan 2013-14 is Rs 42 crore, out of this Rs 32 crore

has been earmarked for the project at Pakyong (Sikkim) in the North Easter Region and the

balance amount of Rs 10 crore for construction of new terminal building including apron at

Tirupati airport. AAI was allocated a budgetary support if Rs 280 crore in 2012-13. The

committee was informed that AAI’s requirement for various projects under Grant-in-Aid

schemes is to the tune of Rs 460.21 crore. The committee feels that such a drastic cut in

budgetary support for the airport infrastructure developer of the country will definitely slow

down the ongoing projects especially in North-Eastern Region.

27. To handle import permissions Aircraft Acquisition Cell will be created in the Air Transport

Directorate of the DGCA and a provision to levy a fee too is being examined. Currently, no

fee is charged for aircraft import permissions. Under the new system, once the AAC clears a

proposal, it will go to a committee headed by a joint director general with members from

other DGCA directorates, MoCA, AAI and BCAS. Finally, the recommendation of this

committee will be approved by DGCA. As of now the import permission will be handled by

the DGCA’s air transport section.

28. CCI is investigating the allegations of anti-competitive practice against IATA along with its

Indian arm with regard to air cargo transportation services on a complaint filed by the Air

Cargo Agents Association of India. The allegation pertains to cargo agents being required to

seek accreditation from IATA to carry out international air cargo transportation services for

IATA’s member carriers. According to the air cargo agents’ complaint, the practice of

accreditation “was without any authority of law”.

Page 8 of 35

29. MoCA has initiated the task of “revision” of the list of VIPs/VVIPs who are exempt from pre-

embarkation security checks at civil airport across the country with MoCA likely to ask the

Ministry of External Affairs to study such lists of other countries and suggest “best practices”

in this regard.

30. AAI has filed 2 lawsuits against Kingfisher Airlines Ltd to recover Rs 300 crore in unpaid

airport usage fees.

31. DGCA has issued a draft policy on May 8 in which it states that supervised procedures will be

allowed depending on the pilot’s experience, weather conditions and the kind of airstrip. The

draft states that in case of emergency during supervised take-off or landing, the senior pilot

should take charge by announcing, “I have the controls”. Until now, pilots with 1,000 hours of

flying experience as commanders could permit supervised manoeuvres. The new draft states

that anyone attempting such moves must have at least 3,000 hours of total flying experience.

The proposed rules are particularly strict during monsoons. Co-pilots will not be allowed to

land a flight on a wet runway, if runway visibility is poor or if the wind is blowing at more

than 10 knots across the airstrip, DGCA has also asked airlines to maintain a database of

pilots authorised for such supervised manoeuvres and update it regularly.

32. AAI is initiating an operation called ‘Continuous Decent Operations’ which is estimated to

save 30,000 tonnes of carbon emission at Ahmedabad Airport. Continuous Decent Operations

aims to save fuel and time of the flights landing at the airport by planning the descent of the

flight in advance. When a flight reached in the airspace of an airport it lands as per the step by

step instructions given by the Air Traffic Control, also depending on the availability of the

runway. With Continuous Decent Operations in place, arriving aircraft descends continuously,

to the greatest possible extent by employing minimum engine thrust. Continuous Decent

Operations was fist carried out in Mumbai and it resulted in increase of landing of 42 flights

per hour from 32 flights before, hence increasing the efficiency of the airport and also saving

fuel and carbon emissions. The trials will continue for one month at Ahmedabad Airport

before full implementation.

33. Government will soon invite global bids for professional management of AAI-run new

Chennai and Kolkata airports through public private partnership.

34. Maritime Energy Heli Air Services has received clearances from the Navy, police and MoCA

to begin seaplane service in Mumbai and plan to begin the services from mid-June. Sea plane

services will connect Juhu in suburban Mumbai to Nariman Point. Maritime Energy Heli Air

Services will deploy Cessna 208 amphibian aircraft which has a capacity of 9 passengers.

35. The National Green Tribunal on 16th

May asked the Central Pollution Control Board and the

Delhi Pollution Control Committee to respond by May 28 to a bunch of petitions that claimed

noise created by aircrafts is affecting the lives of residents living near the Indira Gandhi

International Airport, New Delhi.

36. MoCA on 17th May met airlines CEOs to resolve the issue of creating an ombudsman to

address passenger grievances, a move that has been in the work since 2008. The meeting also

discussed airlines plans for regional connectivity capacity utilization in the Indian market and

an increase in the number of flights to Ladakh, Belgaum and Ranchi.

Page 9 of 35

37. The European Commission on 16th May said that Air China and Air India were among 10

Chinese and Indian airlines facing the prospect of fines and exclusion from airports in the

European Union for refusing to comply with rules aimed at regulating greenhouse emissions.

The carriers are accused of not providing emission data, as required by the European rules,

and not participating in a permit system that entitles airlines to emit greenhouse gases in

European airspace. The commission said that the 8 Chinese carriers could face fines totaling

€2.4 million or $3 million and the 2 Indian airlines – Air India and Jet Airways face total fines

of €30,000.

38. MoCA has directed DGCA to frame rules that would put a 15 – 20% cap on the reserved seat

category. MoCA on 17th

May directed domestic airlines to limit the number of seats on their

flights for which they charge passengers a fee, over and above the cost of the ticket. MoCA

has also sought a revision in fares as the gap between high and low fares on each flight is too

wide. Private carriers have also been asked by MoCA to not hike fares abruptly.

According to rough estimates, an airline selling about 25 preferred seats in a flight would be

able to earn additional revenue to the tune of Rs 8-10 crore annually.

39. DGCA has extended the deadline of reducing the number of foreign pilots to zero by three

years from December 2013 till December 2016 and is introducing new rules that will make it

mandatory for airlines to hire 2 unemployed commercial pilot licence holders for every pilot

from overseas on the rolls and give then alternative jobs such as flight dispatchers or in radio

telephony.

40. MoCA in a meeting on 21st May proposed to retain the route dispersal guidelines that mandate

carriers to fly to certain far-flung regions. AAI would require to plough back revenues earned

from the Delhi and Mumbai airports to cross subsidise the regional airports, waiving off

charges on them, thereby lowering operational costs by 10% for airlines.

41. MoCA may allow airlines to buy seat credit from regional carriers with non-scheduled

operators permit. MoCA will form a committee to review the proposal and suggest ways on

its implementation. With the move, an airline will be able to provide connectivity in

underdeveloped regions by buying seat credits form carriers, who can connect them through

smaller aircraft. Currently, scheduled carriers are mandated to allocate a fixed percentage of

their flights in connecting smaller cities.

42. Tata teleservices has entered into a partnership with GMR Airports to offer Wi-Fi services at

Delhi and Hyderabad international airports. The agreement would enable passengers

transiting through the IGIA Terminal 3 in Delhi and RGIA in Hyderabad, access free Wi-Fi

services for a specified time. After the specified time, passengers could continue to avail

themselves Wi-Fi services by paying for it online.

43. CCI on 22nd

May said that it is examining the over Rs 2,000 crore proposed deal between Jet

Airways and Etihad Airways. CCI has received an application seeking approval for the

proposed Jet-Etihad transaction.

CCI is also likely to examine proposed AirAsia India deal and said that “If the proposed new

airline gets a level playing field with all other carriers in terms of a common waiting period of

flying abroad, then there will not be an issue. Otherwise there will be a case for us to see.”

Page 10 of 35

44. The Government on 23rd

May issued notification to allow excise duty-free sale of goods

manufactured in India to international passengers or members of crew arriving from abroad at

the Duty Free Shops (DFSs) located in the arrival halls of international airports and to

passengers going out of India at the DFSs located in the departure halls of international

airports in the country. Directions have also been issued to specify the procedure for removal

of the goods from the factory of production without payment of duty to go downs or retail

outlets of DFSs and related matters.

Passengers or members of crew coming from aboard are entitled to a duty-free baggage

allowance subject to the conditions specified in the Baggage Rules, 1998. DFSs located in the

arrival halls sell duty-free imported goods. Indigenous goods are also being sold in the arrival

halls, but they are not duty free. Passengers going out of India are permitted to purchase duty-

free imported goods from DFSs located in the departure halls of international airports.

However, excise duty-free indigenous goods are not available for sale in such DFSs. It is in

this context that representations were received requesting to permit excise duty-free sale of

goods manufactured in India both on the arrival side as well as the departure side so as to

ensure parity with the imported goods and to promote brand INDIA.

45. Goa, Trivandrum and Kochi Airports are set to offer ‘visa on arrival’ facility following an

approval from the Centre. Visitors from 11 countries will be eligible to get a visa on arrival.

46. The air services pact signed by India and Abu Dhabi in April, allowing a four-fold increase in

weekly seat entitlements for airline between the two destinations, has been sent to the Cabinet

for ‘post-facto approval’. The move is learnt to have been initiated at the behest of the Prime

Minister’s office. The increase in bilateral entitlements pact will be kept on hold until the

approval comes from the Cabinet.

47. DGCA has requested Supreme Court to drop the contempt proceeding against its top officials

for not efficaciously implementing the Civil Aviation Regulations with regard to flight duty

time limitation refuting any “intention” on its part to delay the norms for rationalizing the

flying duty hours for pilots. The contempt plea claimed that DGCA’s actions prejudiced

passenger’s safety on the pretext of referring the matter to government.

48. DGCA has proposed draft rules that will allow one of the pilots at a time to take a short rest or

nap in the cockpit during a flight to combat fatigue provided the nap is not longer than 40

minutes on a flight that should be of duration of at least three hours or more. The DGCA has

used the term “controlled rest” and has said this is commonly referred to as “cockpit

napping”. DGCA has specified that it should not be used as a substitute for proper pre-flight

sleep and that is only meant as a response to “unexpected fatigue experienced during

operations” facing already well-rested pilots.

49. MoCA is considering a proposal to allow scheduled regional airlines to induct smaller aircraft

for deployment on regional routes. Under the existing guidelines, regional airlines can fly

aircraft with 19 seats (excluding the pilot’s seat) or more. MoCA is also considering a

recommendation to waive the interim requirement to induct a fleet of three aircraft within two

years from commencement of regional operations with at least one aircraft, while retaining

the requirement of having an operational fleet of five at the end of five years. MoCA has

decided against levying a cess on travellers flying out of metropolitan cities to cross-subsidise

air fares in regional and remote areas. The EASF would be supported through budgetary

resources from the government on a year-to-year basis, besides route-specific support from

Page 11 of 35

state governments and AAI. According to initial estimates, EASF would require an annual

provision of Rs 250-300 crore to support connectivity in 40 regional Tier-II and -III towns

and cities identified for implementation of the policy in its first phase.

AAI is proposed to earn and share revenues from privatisation of existing and future airport

infrastructure as being undertaken by the ministry for EASF. MoCA is considering providing

direct financial support to airlines operating in regional areas with EASF resources, while it

has initiated talks with state governments to underwrite seats on new routes between towns.

MoCA is asking state governments to bear the cost of security by CISF or state police. The

cost of security is Rs 200 per passenger. They are also being asked to provide land, access

infra and utilities like water and power connection free of cost, reduce the VAT on ATF to

4% for aircraft weighing less than 40 tonnes for development of low-cost airports. To make

air fares cheaper on regional routes, MoCA is also looking at doing away with landing,

parking and route navigation charges at regional airports. These measures are expected to

reduce the operational expenses of airlines flying to regional and remote areas by 15-20%.

50. According to CAPA 2013-14 outlook report on traffic and financial performance released on

28th May, the debt of Indian airlines increased 8-9% in 2012-13 to an estimated $14.5 billion

(around Rs.80,765 crore today). Of the total debt, Air India had the biggest share—$8.9

billion. Followed by Jet Airways at $2.25 billion, Kingfisher Airlines at $1.8 billion, SpiceJet

at $336 million, IndiGo at $176 million and GoAir at $147 million. These figures are

provisional as some of the private airlines are yet to file their numbers for 2012-13 also the

estimates do not include non-fund based debt.

India’s airlines posted a combined loss of $1.65 billion (Rs 9,270 crore as on 29th May) in

2012-13 ($1.15 billion if Kingfisher is excluded), down from approximately $2.28 billion (Rs

12,809 crore) the previous year. More than 40 per cent of the loss was incurred in the last

quarter (Jan – Mar 2013) alone, squandering the improved performance posted during the first

nine months of the year. Kingfisher’s exit from the Indian aviation sector was one of the most

significant developments for the market in FY13. It highlighted the fragility of the sector.

51. The Uttar Pradesh Government plans to start short distanced air services, linking 9 major

cities in the state. The 15 routes identified for air services are Lucknow-Agra, Meerut-

Allahabad, Lucknow-Meerut, Varanasi-Agra, Agra-Allahabad, Varanasi-Kushinagar,

Lucknow- Kushinagar, Varanasi-Chitrakoot, Lucknow- Chitrakoot, Agra-Chitrakoot, Agra-

Kanpur, Meerut-Kanpur, Barielly-Allahabad, Lucknow- Varanasi and Lucknow- Allahabad.

The state government has set up a committee headed by principal secretary tourism to work

out the modalities of these air services. Representatives from other departments, including

civil aviation, finance and planning, law and industrial development will also be part of the

committee.

52. AAI on 29th

May announced that airlines introducing flights from Kolkata to new destinations

will get a 25% concession on landing charges in the first year of operation. The concession is

primarily meant for international flights but domestic services might also be considered for

the benefit. AAI is also contemplating a similar concession to cargo aircraft flying into

Kolkata. The move is aimed at encouraging more airlines to operate flights from Kolkata

without worrying about immediate commercial viability and to increase the utilization of

cargo handling capacity of the city airport, which is now stagnant at around 20%.

Page 12 of 35

53. DGCA on 29th

May informed that the night landing facility for aircraft will soon start at

Bagdogra airport in Siliguri and this will lead to an increase in flights.

54. According to the latest statistics of AAI, 14 bird hits were recorded at CSIA Airport, Mumbai

in 2012. In comparison, there were 12 cases of bird hits in 2013, which came down to 10 in

2011. The highest number was recorded in 2009, with 15 instances of bird hits. According to

an estimate, the Indian aviation industry loses over Rs 20 crore annually due to bird hits.

Page 13 of 35

2. AIRPORTS

2.1 Bangalore International Airport Pvt. Ltd.1

1. Bangalore Customs has introduced two first of its kind initiatives through online portal to ease

the waiting time of the passengers and to enable faster clearance of courier consignments

The first initiative allows commuters to obtain an export certificate by logging onto the

Bangalore Customs website and fill in the format available there, carry a hard copy and get it

endorsed from customs officers manning the designated counter at the departure level of the

airport. The passengers will have to download the format on the website and mail the duly

filled-in form to acairportbangalore@gmail.com as an attachment 24 hours before their flight.

Export certificates are issued to passengers possessing high-value goods on their departure

from India. The certificate is a proof that the item brought back is not a newly imported item

and, therefore, no duty needs to be paid in this respect.

In another initiative, the Bangalore customs have created a link to access real-time

information regarding customs issues. Bangalore custom’s website will enable consignees or

importers to input their airway bill no. and obtain information regarding queries, if any, raised

by customs. This will help them in providing appropriate clarifications to customs, through

their courier company, without visiting the airport.

2. Bengaluru International Airport celebrated its 5th Anniversary as the airport has completed its

5 years of operations. Bengaluru International Airport started its operations on May 24th 2008

and clocked 5 years of successful operations. It now stands poised for growth as well as

expansion of its infrastructure facilities. The airport has gone through a tremendous elevation

in the landscaping with over 10 acres of newly landscaped spaces in and around the airport

terminal.

The recent highlights include the commissioning of a brand-new VIP/GA terminal campus

covering over 80,000 sqft as part of the terminal 1 expansion, a new energy center that will

cater to the entire power requirement of the new expanded terminal and a new chiller plant

towards the expanded terminal’s air-conditioning. Besides this, the installation of new

security screening machines and check-in counters has been completed successfully. With

smooth progress on expansion of passenger terminal areas, travellers can look forward to

enjoying the enhanced T1 in stages from the fourth quarter of 2013 onwards.

These developments come at a time of renewed optimism in the aviation industry. Bengaluru

International Airport witnessed a record high in passenger traffic just ten days before its fifth

anniversary, with 42,981 passengers in a single day on May 13, 2013. The previous record

was achieved over 15 months ago, with 42,505 passengers in December 2011. The airport has

till date welcomed over 55 million passengers, even as its expanded T1 is all set to open its

doors this year. For the year ending March 31, 2013, the Bengaluru International Airport

handled close to 12 million passengers and 226,667 MT of cargo. Bengaluru International

Airport is also the first in APAC and second in the world to be certified on business

continuity. This airport has been certified with a Level 2 carbon accreditation – the first for

any airport in Asia-Pacific.

1 Information provided by BIAL

Page 14 of 35

3. BIAL on its 5th Anniversary undertook a special drive to engage with the NGO’s in the

airport vicinity. As a part of this initiative, 45 kids from Reaching Hands, an NGO were taken

on a tour of the airport where they were given a holistic perspective of airport operations. The

kids were told about the journey of the airport over the past five years. Later the children were

involved in an origami workshop conducted by visual art experts Bondasoup art studios.

4. BIAL is set to offer ‘visa on arrival’ facility following an approval from the Centre. Visitors

from 11 countries will be eligible to get a visa on arrival at the airport.

2.2 GMR Hyderabad International Airport Pvt. Ltd.1

1. RGIA has been awarded the prestigious 5-star rating by the British Safety Council for its

health and safety management system. The BSC 5-star rating is a very prestigious safety

award globally and RGIA is the only Airport in the whole world to receive this coveted

award. The award criterion is very stringent. There are 995 safety compliance requirements

for the Health & Safety Management System covering 57 elements. In order to get a 5-Star

rating, a minimum of 92% has to be obtained out of a total score of 5000, whereas RGIA

scored 96%.

2. International passengers travelling through RGIA will now have an even more convenient

transit with the Govt. of India’s decision to extend the ‘Visa on Arrival’ facility at this

airport. Visitors from eleven countries will be eligible to get a Visa on Arrival w.e.f.31st May,

2013 at RGIA. The Tourist Visa on Arrival with a maximum validity of 30 days with single

entry facility shall be granted by the Immigration officers at RGIA to the citizens of eleven

countries viz., Finland, Japan, Luxembourg, New Zealand, Singapore, Cambodia, Laos,

Vietnam, Philippines, Myanmar and Indonesia. The introduction of ‘Visa on Arrival’ scheme

will facilitate enhanced tourism opportunities to India and specifically Hyderabad and the

State of Andhra Pradesh. This initiative by the Government of India will position RGIA as a

preferred point of entry for foreign tourists planning to visit India.

3. The Mayor of London Mr. Boris Johnson recently said that he is mesmerized by India's

airports - especially in Hyderabad and Delhi - and wants to emulate India's growth in

airport capacity so much that he is now backing a new plan to expand London's airport

capacity to accommodate new flights and more people coming into the city. Mr. Johnson was

in India in November 2012 and visited both the airports. He said "London needs to catch up

with India when it comes to aviation capacity. Heathrow has no space for new planes to land.

It is already running at 98% capacity. London should learn from India on how to expand

aviation space. I want to emulate India and create a new hub airport in the east of London".

Mr. Johnson had special praise for Hyderabad's airport. "When in Hyderabad, I saw this

amazing Aerotropolis and I want to do the same in London," he said. Aerotropolis is a new

urban form placing airports in the center with the cities growing around them. He has already

appointed "a mighty team of experts" to help develop his airport hub plans.

1 Information provided by GHIAL

Page 15 of 35

2.3 Mumbai International Airport Pvt. Ltd.1

1. GVK celebrated seven years since taking over operations at CSIA in Mumbai with a series of

events. On May 3, a group of children were given a tour of CSIA and then entertained with

fairground attractions such as jugglers, clowns and stilt-walkers. Passengers through the

gateway were also treated to a red carpet experience and handed specially designed chocolate

boxes.

2. MIAL has terminated the slum rehabilitation contract given to Housing Development and

Infrastructure Ltd (HDIL). The slum rehabilitation project entails shifting and re-housing

thousands of slum dwellers to free land for the airport.

.

1 Newspaper Clippings

Page 16 of 35

3. AIRLINES1

1. SkyFisher Airways, a private operator, will connect Varanasi to Patna, Gaya, Bhagalpur in

Bihar with daily flights. The Airways will use 12 seater aircraft and will start services either

by the end of May or the first week of June.

2. Pawan Hans Helicopter Services on 30th

May inaugurated service between Kanpur and

Lucknow. The service will formally start on June 1.

3. The first sea-plane service in Kerala will commence from June 2. The project aims at

connecting various backwater destinations in the state.

3.1 Air India (AI)

1. AI is resuming flights between New Delhi and Dharamsala from May 15.

2. AI on 6th

May announced lowering of free baggage allowance from 20 to 15 kgs on the

domestic sector and will charge flat rate of Rs 250 per kilo on excess baggage for tickets sold

from May 13. However, the passengers booking in the top four fare levels of economy class

will be allowed 20 kg of baggage. Top four fare levels are applicable for tickets booked

between less than 30 days and last minute bookings. Business class passengers will be

allowed 35 kg of free baggage. AI has also hiked the no-show, cancellation and itinerary

change fees. For lowest fare economy tickets, re-issue or date change will now cost Rs 1,500

– twice the earlier fee of Rs 750. These tickets remain non-refundable in case of no shows.

Mid range fare bucket tickets have now been made non-refundable while AI earlier used to

charge Rs 500 as penalty for no-show sand allow then to use it on some other flight. Changing

this fare level’s tickets will now cost Rs 1,000 up from earlier Rs 500. No-show charge has

been hiked to Rs 1,000 from the earlier Rs 200. AI is also tweaking its software to start

charging from pre-booking of seats.

3. AI is planning to replace 14 Airbus 320s with 168 seats and 5 Airbus 319 with 144 seats with

19 Airbus A-320s which will have 180 seats in an all-economy configuration. The proposal

was approved on 7th

May and the new aircraft will be taken on lease.

AI is also planning to either sell or lease out the 8 Boeing 777 200-LR aircraft in its fleet and

replace them with Boeing 787S. If unable to sell or lease the aircraft, AI will fly them all-

economy on international routes.

4. Air India has decided to stop its Companion Free Scheme (CFS) with immediate effect on

account of irregularities in issuance of such tickets was detected between October 2011 and

April 2012. Under the scheme, passengers buying first class or business class tickets or full

fare economy class tickets were entitled to one free ticket for their companion.

5. AI is looking at starting courier services for central and state governments and big corporate

houses by the second half of the financial year, in a bid to improve its financial performance

and boost its ancillary revenues.

1 Newspaper Clippings

Page 17 of 35

6. AI resumed the commercial flight operations of Boeing 787 Dreamliner planes from 15th

May. AI will add 8 Boeing 787 Dreamliner to its fleet by December 2013. AI will begin full-

scale global operations with Dreamliner planed in the Delhi - Birmingham and Sydney –

Melbourne routes from August, between Rome and Milan from October and to Moscow early

next year. The resumption of Dreamliner flights is expected to help AI cut costs to the tune of

Rs 2,000 crore in 2013-14.

Air India’s performance during financial year 2012-13, the total revenue during the period has

increased by about 9.6% from Rs. 14,714 crores in 2011-12 to Rs. 16,130 crores in 2012-13.

Air India carried 14.05 million passengers in the year 2012-13 as against 13.40 million

passengers in previous financial year, which shows a growth of about 5%. The net loss of Air

India for the financial year 2012-13 has come down by about Rs. 2,261 (Net loss in 2011-12 –

Rs.7,559.74 crores in 2012-13 – Rs. 5,198.55 crores). The EBITDA has improved by Rs

2256 crores over previous year and it stands at Rs. 19.45 crores during the financial year

2012-13 [EBITDA in 2011-12 (-) Rs. 2236.95]. Passenger Load Factor stood 72.7% during

2012-13 compared to 68% during financial year 2011-12.The On-Time Performance during

financial year 2012-13 has been 77.1% (domestic 80.2% and international 70.8%).

7. AI has sought compensation from Boeing for Dreamliners not meeting the 20% efficiency

claims as the airline could achieve only a little over 17% fuel economy by its six 787s.

8. Government on 27th

May appointed 5 new part-time directors on AI board. They were

appointed to utilise their specialised skills to help Air India achieve the targets set by the

Government through its Turnaround and Financial Restructuring Plans.

3.2SpiceJet

1. SpiceJet has announced four-in-one package where flyers can buy a pre-selected seat, meal

and get priority check-in and baggage retrieval on arrival. The new service called ‘Max’ will

be on offer for a fee of Rs 500 for domestic travellers and Rs 1,000 for international flights.

2. SpiceJet on 24th

May posted net loss of Rs 186 crore for the fourth quarter ended March 31,

2013 as compared to a net loss of Rs 249 crore during the same period last year on the back of

higher passenger traffic and fare hikes. Its revenue rose by 31% to Rs 1,456 crore for the

fourth quarter ended March 31, from the year ago period. The yield from passengers rose to

Rs 4,052 crore in the March quarter, up to 23% from Rs 3,293 a year ago. For the financial

year ended March, SpiceJet net loss stood at Rs 191 crore, against a net loss of Rs 606 crore

in the preceding year.

3. SpiceJet will start its services from New Delhi to Dharamshala from June 7.

4. SpiceJet has raised Rs 100 crore from three travel agents since April towards working capital.

3.3 Jet Airways

1. Jet Airways has sought approval of the Foreign Investment Promotion Board to sell 24%

stake to Etihad Airways. The Foreign Investment Promotion Board will take the proposal on

June 11.

Page 18 of 35

2. Jet Airways on 8th

May launched its first mobile application for Windows Phone in

association with Nokia to offer services like ticket booking, checking new status.

3. Jet Airways on 9th

May announced that it would charge a flat rate of Rs 250 per kilo in excess

of 20 kg effective 15th

May. Jet Airways will charge for advance reservation of seats in

economy class on all international routes operated by Boeing 737 aircraft. The airline, which

operates Boeing 737 to neighbouring regions like Gulf and Nepal, will charge Rs 1,500 for

front row seats, Rs 750 for Row 10 seats and Rs 400 for window and aisle seats on rows 11 to

15. The pre-booking will not apply to middle seats of the single aisle B-737.

4. Jet Airways on May 16th

introduced daily services from Kochi to Kuwait via Abu Dhabi.

5. Jet Airways on 15th

May said it has obtained regulatory extension to meet the mandatory 25%

public shareholding norm in the private airline. On 24th

May, Jet Airways shareholders

approved the proposed issue on a preferential basis to Etihad Airways. However, these shared

would be allotted after completion of all regulatory approvals.

6. Jet Airways on 24th

May posted a net loss of Rs 495.53 crore for the quarter ended March 31

from a loss of Rs 298.12 crore during the same period a year earlier.

For the entire financial year, Jet Airways posted a net loss of Rs 779.28 crore for the year

ended March 31, compared with a net loss of Rs 1,429.13 lakh for the year ended March 31.

2013 on a consolidated basis. Total income increased from Rs 17,067.04 crore for FY 12 to

Rs 19,409.22 crore fro FY13.

7. Jet Airways on 27th

May said it is planning to buy more single-aisle aircraft from Boeing,

amid the airline seeking to operate code-share flights with Etihad Airways connecting as

many as 23 domestic destinations with Abu Dhabi by 2016.

8. Jet Airways on 28th

May said it has tied up with six new partners in retail, travel and

publishing segments for its frequent flyer programme JetPrivilege.

3.4 Indigo

1. IndiGo on 8th

May announced that it will charge the passenger a premium of Rs 500 for pre-

booking a seat in Rows 1, 2, 12 and 13 on a domestic flight and Rs 800 for an international

flight under its IndiGo seat Plus plan. Pre-booking for window and aisle seats would cost Rs

200 on domestic and Rs 300 on international flights. Pre-booking middle seats on rows 1, 12

and 13 would cost Rs 100 on domestic and Rs 200 on international flights.

2. IndiGo is planning to offer passengers the option of using lounges at airports in Delhi,

Hyderabad and Bangalore airports for a fee of around Rs 600. The passengers could avail it

from 2 hours before the flight’s departure from the airport.

3. Indigo on 30th

May launched 7 new flights on its domestic network. IndiGo will operate its

new daily direct flight between Mumbai - Jammu and Chennai - Kochi. It would operate 2nd

daily flights between Mumbai - Srinagar, Chennai - Thiruvananthapuram, Mumbai –

Thiruvananthapuram, Jammu - Srinagar and 3rd

direct flight between Mumbai and Kochi.

With this, IndiGo will be operating 422 flights.

Page 19 of 35

On the International sector, IndiGo from June 15 will be connecting Mumbai and Muscat with

daily and direct flights. Frequency between India and Oman would be increased from 4 times

a week to 7 daily flights.

3.5 GoAir

1. GoAir has signed a letter of intent with Airbus to retrofit 5 ship-sets of sharklets for the

airlines in-service A320 aircraft. This upgrade is scheduled for 2014.Sharklets are newly

designed wing tip devices that improve the aerodynamics and performance of Airbus aircraft,

cut fuel burn by up to 4% and reduce CO2 emissions.

2. GoAir is in talks with 3-4 overseas airlines (Lufthansa, Emirates and Qatar Airways) from

Europe and the Middle East to sell up to 49% stake and has appointed investment bank

JPMorgan to scout for a foreign strategic partner.

3. GoAir has decided to levy Rs 200 for pre-selecting each window and aisle seat on its flights.

The charges for pre-booking seats with more legroom on rows 3, 12 and 13 stand at Rs 500

per seat. Passengers who check in via web would have the option of selecting seats of their

choice without any fee except those on rows 3, 12 and 13 which will be blocked. GoAir has

made provisions for pre-purchasing excess baggage limits in increment of 3, 5 and 10 kg. Rs

600 for 3 kg extra over and above the standard limit of 20 kg, Rs 900 for 5 kg and Rs 1800

for10 kg.

3.6 Kingfisher Airlines (KFA)

1. KFA has posted net loss of Rs 2,141.80 crore for the quarter ended March 31,2013 (Q4) the

second quarter in which it did not have operational revenues. The loss in the comparable

quarter of 2011-12 was Rs 1,151.62 crore. KFA’s accumulated losses as on March 31, 2013

stood at Rs 16,023.46 crore and a negative net worth of Rs 12,919 crore.

2. The UB Group has sought damages worth about Rs 3,200 crore from various lenders of

Kingfisher Airlines. The Group has also sought a permanent order and injunction restraining

the consortium of bankers from taking any steps to reclaim the loan given to the airline.

Page 20 of 35

4. CARGO

1. The new International Air Cargo Complex at Mangalore Airport became fully operational on

1st May 2013. All customs activities like filing of IGM/EGM and procedures related with

export / import clearance of cargo are now available at the facility.

2. The state of Chhattisgarh is working with AAI to expand Raipur Airport and enable it to cater

to larger aircraft. AAI has approved the use of the old terminal building at Raipur airport for

dedicated air cargo operations. AAI will incorporate cargo handling facilities into its master

plan for Raipur airport. A budget of Rs 260 crore has been allocated for Raipur airport to fuel

its expansion with a project completion time of about 4 years.

3. The Commissioner of Customs has allowed airlines or authorised airline representatives to

import temperatures controlled cool-containers at Air Cargo Complex, Sahar, Mumbai

without payment of duty, although it has imposed certain restrictions on the same.

Page 21 of 35

5. INTERNATIONAL NEWS1

1. Etihad Airways on 1

st April formally approached CCI to seek its nod for its acquisition of a

24% stake in Jet Airways. The deal is valued at Rs 2,054 crore.

2. Qatar Airways has sought more traffic routes and seats from India to serve two-tier cities as

the airline has exhausted all the traffic routes allotted by the Government of India.

3. According to the monthly traffic report issued by operator Dubai Airports on 27th May, Dubai

International Airport has registered nine straight months of double-digit growth. The world’s

second busiest airport for international passenger traffic, Dubai International recorded

5,418,946 passengers in April, an increase of 18.7% compared to 4,566,673 during the

corresponding month in 2012. April was the fifth consecutive month with more than five

million passengers passing through Dubai International. The year to date traffic increased by

16.3% to 21,905,363 compared to 18,828,279 recorded in the first four months of 2012.

In April, the top destination countries included India with a total of 672,557 passengers,

followed by the UK (419,053) and Saudi Arabia (405,695) while Doha (207,146), London

(201,587) and Jeddah (151,517) were the top destination cities.

Aircraft movements at Dubai International increased by 6.9% to 30,469 compared to 28,503

recorded in April 2012. Year to date aircraft movements totalled 121,599, an increase of 6.2%

compared to 114,517 during the same period in 2012. Freight volumes increased by 7.3% to

199,985 tonnes compared to 186,385 tonnes in April 2012. The year to date cargo totalled

784,832 tonnes, up 11.5% to 703,826 tonnes during the first four months last year.

4. Singapore Changi Airport handled 4.24 million passenger movements in April 2013, an

increase of 0.8% over the same period in 2012. Flight movements increased by 4.3% to

27,500. In terms of airfreight movements, 145,600 tonnes of cargo passed through Changi in

April 2013, 1.8% lower than a year ago. During Jan- Apr 2013, 17.3 million passenger

movements were recorded at Changi, 4.8% more than the corresponding period in 2012.

Aircraft movements grew in tandem, increasing by 4.0% to 110,100. Cargo shipments

decreased 2.1% to 579,600 tonnes for the same period.After three years of double-digit

increases from 2010 to 2012, traffic growth at Changi Airport has eased in recent months and

continued downside risks are expected. The near-term outlook for aviation remains cloudy

with external threats such as high fuel prices, depressing cargo volumes and weak economic

prospects for the global economy. With some airlines operating at Changi reporting forward

passenger bookings to be flat, the number of passenger movements in the coming months may

be volatile. As at 1 May 2013, more than 100 airlines operate at Changi Airport, connecting

Singapore to 250 cities in some 60 countries and territories worldwide. With more than 6,500

weekly scheduled flights, an aircraft takes off or lands at Changi roughly once every 100

seconds.

5. According to the Tax Free World Association (TFWA), the global duty free and travel retail

industry is on target to achieve projected annual sales of $64 billion by 2015, with Asia-

Pacific leading the way. The preliminary results for 2012 showed that global sales broke the

$49 billion barrier. Based on data provided by Generation Research, Asia Pacific remains the

1 Newspaper Clippings

Page 22 of 35

powerhouse of growth, with sales of $18.6 billion in 2012. The Fashion & accessories

category registered the strongest growth at 18.9%.

6. Statistics: INDIA – UAE Aviation Market:

How Indian airlines measure up against their Gulf counterparts and how Jet-Etihad kind of

deals will work to their detriment:

Over 40 per cent of Indian traffic to the Gulf is outbound to US and Europe. For Abu

Dhabi, it is much higher at 74 per cent.

India offers Gulf carriers access to about 10 airports. In return, Indian carriers get access

just to two or three airports, as most Emirates are city-states

Higher seat allocation to Abu Dhabi is likely to affect the traffic of Indian carriers like Air

India, Spicejet and Indigo. Jet itself may get the advantage of its tie-up with Etihad.

Other global carriers might also exert pressure, seeking more seat capacity, further

affecting Indian airlines

Airport operators have opposed higher seat allocation to Abu Dhabi saying it has utilised

only about 65 per cent of its seat entitlement. India’s seat utilisation is similar.

Government move to allow Jet-Etihad to fly from 23 more smaller cities will help fliers

but affect business of larger airports like Delhi and Mumbai.

Source: Outlook Magazine

7. International Airport Statistics – Gulf Countries:

Airport Capacity

(Yearly)

Passengers

(Yearly)

Indian

Passengers

National

Carriers Dubai 60 mn, expanding to

90 mn by 2015

54 mn 7.4 mn Emirates,

FlyDubai

Abu Dhabi 12.5 mn, expanding to

47 mn by 2030

12 mn 1.14 mn Etihad

Sharjah 7 mn. Announced

expansion

Over utilised at 7.5

mn in 2012

2.1 mn Air Arabia

Page 23 of 35

Ras Al Khaimah 0.5 mn expanding to 2

mn

Over utilised 0.5 mn Not available RAK

Doha 12 mn. New Hamad

airport to take 29 mn

Over utilised at over

12 mn in 2012

Not available Qatar Airways

Bahrain 9 mn, expanding to

13.5 mn by 2013

8.4 mn in 2012 Not available Gulf Air

Muscat (Seeb

International

Airport)

5 mn, expanding to 12

mn by 2014

Over utilised at 7

mn in 2012

1 mn Oman Air

Saudia Arabia

(Jeddah, Riyadh)

Jeddah has 9 mn,

expanding to 80 mn by

2035

Jeddah handled 20

mn in 2012

Entitlement

of 1.04 mn

seats yearly

Saudia

Istanbul* (two

international

airports)

50 mn, building a new

airport with 150 mn

capacity

45 mn Not available Turkish

Airlines

Note: A brand new Al Maktoum International Airport, coming up in Dubai will have a capacity

of 180 million.

*Turkey has been included here as Turkish Airlines is sometimes called the fourth gulf

carrier and is a fast growing hub.

Source: Airport websites, Anna Aero and BW Research

8. Passenger traffic growth for the month of April 2013 on certain international airports:

April 2013

Hong Kong

International Airport

Passenger trips and flight movements recorded year-on-year growth

of 1.1% and 5.1% to 4.9 million and 30,530 respectively, while

cargo throughput reached 342,000 tonnes, up 4.5% compared to last

April.

Melbourne Airport Passenger numbers increased by 4% compared to the same month

last year with a total of 2,451,847 domestic and international

passengers travelling.

Oslo Airport Passenger numbers increased by 12.1% over April 2012. Domestic

surged 20%, while international traffic increased 5.3%. The number

of passengers travelling through Oslo Airport in April totalled

1,889,018.

Aéroports de Paris Passenger traffic decreased by 1.4% compared to April 2012 with a

total of 7.5 million passengers including 5.1 million at Paris-Charles

de Gaulle (-3.1%) and 2.4 million at Paris-Orly (+2.3%).

Frankfurt Airport The airport welcomed nearly 4.7 million passengers in April 2013, a

decrease of 2.2% year-on-year.

Edinburgh Airport The airport saw 4.4% more passengers, up 34,000 on April 2012.

Aberdeen

International Airport

The airport reported 3.7% more passengers, although numbers in the

helicopter sector were down 6.4%.

Heathrow Airport Airport saw 5.8 million passengers in April, a 0.7% decrease on

Page 24 of 35

April 2012.

Copenhagen Airport Passenger numbers grew by 2.2% in April. The total number of

passengers passing through the terminals of Copenhagen Airport in

April was 1,962,190, representing a 2.2% increase. The year-to-date

increase was 0.1%.

Glasgow Airport The airport handled almost 550,000 passengers in April,

representing an increase of 0.4% compared to April 2012.

Dublin Airport According to the Dublin Airport Authority, over 1.6 million

passengers used the Airport in April, a 1% increase on the same

period last year. Passenger volumes to and from continental Europe

remained on par with last year with more than 854,000 people

travelling to European destinations in April. UK traffic increased by

1% with almost 577,000 passengers travelling to and from the UK

during the month.

Glasgow Prestwick

Airport

Almost 112,000 people passed through the terminal in April - 1,000

more than in March. Volumes were up 7.4% on the same period last

year.

Malta International

Airport

Passenger traffic grew by 8.9% in April reaching 331,369. This was

brought about by an increase of 10.7% in seat capacity. The average

seat load factor registered a slight decrease of 1.3% points when

compared to April 2012, reaching 75.2%, while aircraft movements

for the month were up 9.4%.

Page 25 of 35

6. TRAFFIC1

1. According to DGCA, the domestic air passenger traffic declined 0.27% in April and stood at

50.77 lakh from 50.91 lakh during the corresponding month in 2012. The overall passengers

carried by domestic airlines during January – April, 2013 was down 0.35% at 202.89 lakh

from 203.60 lakh passenger ferried during the corresponding period in 2012. On a month-on-

month basis the traffic declined by 2.15%, as the domestic airlines carried 50.77 lakh

passenger on the month under review from 51.89 lakh passengers ferried in March 2013.

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

1 ACI, IATA, Press Information Bureau and Newspaper clippings

Page 26 of 35

3. The passenger load factor of scheduled domestic airlines for the month of April 2013 is:

4. Indian carriers account for about half of India’s outbound passengers every year. With

foreign trips rising, this market is expected to double by 2018 to about 48 million.

(Source: DGCA)

5. According to IATA Air Passenger Market Analysis April 2013, global revenue passenger

kilometers were up 3.2% in April compared to a year ago and down on the March result of

6.2%. Emerging markets are continuing to lead air travel growth, with all regions reporting

year-over-year gains. Capacity rose 4.4% on the previous April which was slightly ahead of

demand. This pushed the industry load factor downwards by 0.9 percentage points to 78.1%.

If we adjust for the impacts of seasonality, the load factor remained near record highs of 80%.

International Markets

International air passenger demand grew 3.0% in April compared to a year earlier and was

1.4% up from March. Capacity rose 4.3% versus April 2012 and load factor dipped 1.0

percentage point to 77.8%.

Page 27 of 35

Asia-Pacific carriers recorded an increase of 2.4% compared to April 2012. This compared

to a 5.7% rise in March year-over-year. In addition to seasonal factors, this likely reflects the

softening in regional economic indicators. China’s business confidence slipped in April to

levels indicating stagnation in the manufacturing sector, and growth in Asian trade volumes

has flattened after a pick-up toward the end of 2012. Capacity rose 3.7% and load factor

slipped one percentage point to 76.9%.

Domestic Market

Domestic markets climbed 3.5% in April compared to a year-ago, driven primarily by strong

demand in China, as other markets experienced declines with the exception of Australia,

which rose 3.8%. Total domestic capacity was up 4.7% compared to April 2012 and load

factor fell 0.9 percentage points to 78.6%.

Indian domestic traffic slipped 0.3% in April compared to a year ago. This followed a

sharp rise in March traffic attributable to fare discounting. April capacity fell 0.2% and

load factor was unchanged at 75.5%.

Page 28 of 35

6. According to IATA Air Freight Market Analysis April 2013, Air freight markets showed a

slight improvement in April compared to March, but growth remained weak overall. Global

air freight tonne kilometers were up 1.4% in April on a year ago, after contracting 2.6% in

March. International freight traffic grew 1.2% from April 2012 and was 0.8% up from March.

Asia Pacific airlines saw air freight demand fall 0.4% in April compared to a year ago, but

there was an expansion month-on-month (1.3%), which helped stabilize the global growth

trend.

7. According to IATA Premium Traffic Monitor March 2013, the number of passengers

traveling in premium seats on international markets was 4.4% higher in March compared to a

year ago, improving on the February growth of1.2%. Economy class passenger numbers were

up 7.4% in March on a year ago, compared to 3.7% in February. The trend in premium travel

is showing improvement, consistent with the more supportive business environment.

Comparing March to October, premium travel is increasing at a 9% annualized rate. During

much of 2012, premium traffic trended at a slow 3% annualized rate. Emerging regions

continue to be the major source of growth;

8. Foreign Tourist Arrivals in April 2013 was 4.52 lakh which was the same in April 2012.

However, Foreign Tourist Arrivals during the period January-April 2013 were

24.80 lakh with a growth of 1.9%, as compared to the FTAs of 24.34 lakh during January-

April 2012.

9. Foreign Exchange Earnings during the month of April 2013 were Rs. 7,248 crore as compared

to Rs. 6,745 crore in April 2012 and Rs. 5,724 crore in April 2011. The growth rate in Foreign

Exchange Earnings in rupee terms in April 2013 over April 2012 was 7.5% as compared to

17.8% in April 2012 over April 2011. Foreign Exchange Earnings from tourism in

rupee terms during January-April 2013 were Rs. 37,323 crore with a growth of 17.7%, as

compared to the Foreign Exchange Earnings of Rs. 31,713 crore with a growth of 28.5%

during January-April 2012 over the corresponding period of 2011.

10. Visa on Arrival scheme of the Government registered a growth of 23.5% during April, 2013

as compared to April, 2012. During the month, a total number of 1408 Visa on Arrivals were

issued as compared to 1140 during April, 2012. During the period January to April, 2013, a

total number of 7,152 Visa on Arrivals were issued as compared to 5,045 Visa on Arrivals

during the corresponding period of 2012, registering a growth of 41.8%.

Page 29 of 35

7. REVIEW OF REPORTS

1. CAPA Year Book 2013 South Asia Outlook

CAPA has published a year book 2013 capturing the civil aviation business across south Asian

countries. A brief review of the report is furnished below:

1) CAPA in their report has estimated that India’s carriers will report a combined loss of

approximately USD1.6 billion in the 12 months ending 31-Mar-2013, with most of this

accounted for by Air India and Kingfisher Airlines.

2) Many of the structural challenges in Indian aviation – such as the uncertain and unpredictable

policy environment, intervention by the regulator on commercial matters, high sales taxation

on fuel, and the low productivity of airports and airspace – remain unaddressed. However,

two key developments in recent months have given rise to greater optimism.

a) Firstly, Kingfisher’s exit in Oct-2012 has positively impacted market dynamics for the

remaining carriers. The withdrawal of capacity, combined with pricing discipline,

resulted in higher yields and improved financial performance in FY2013, at least up

until 4Q when aggressive discounting returned.

b) Secondly, the historic decision by the government in Sep-2012 to allow foreign airlines

to invest up to 49% in Indian carriers is a vital step in establishing a more professional

and corporatised sector in India. It offers the promise not only of introducing strategic

capital and expertise into the market, but also delivers a much needed confidence factor

for other institutional funding.

3) Air India has delivered a significant improvement in its operational and financial performance

in FY2013, but its beleaguered business plan is under attack on all fronts. With poor aircraft

utilisation, a huge interest burden, a bloated workforce, insufficient recapitalisation and

regular government intervention, the challenges are huge.

4) The Jet Airways-Etihad deal has the potential to be a game-changing combination. It brings

together one of the most successful airlines in India with a well-capitalised Gulf carrier with

global ambitions.

5) IndiGo remains the leading performer in the market, both financially and from a brand

perception perspective. The carrier continues to grow aggressively on domestic and short-haul

international routes.

6) SpiceJet is understood to be in quite advanced discussions with more than one party,

including foreign airlines as well as private equity funds. CAPA expects that the carrier will

increase its regional fleet in due course.

7) In March, 2013 the Foreign Investment Promotion Board ruled that foreign airline investment

is not limited to existing carriers and as a result it approved a 49% investment by AirAsia in a

proposed joint venture with the Tata Group and Telestra Trading. The carrier, to be named

AirAsia India, intends to launch domestic services from a hub in Chennai to non-metro cities

across the country. If AirAsia India is successful in securing a licence it will introduce a

formidable new entrant into India’s airline industry.

Page 30 of 35

8) With intense competition on domestic routes – which could increase further if new licences

are awarded – India’s airlines have been keen to expand overseas. However, the Indian

Government’s stance on bilaterals has lacked clarity and transparency, which has made it

virtually impossible for Indian carriers to plan their international strategy.

9) Elsewhere in South Asia, SriLankan Airlines is struggling to take advantage of the boom in

inbound tourism to Sri Lanka following the end of the civil war. SriLankan Airlines, which

has been lossmaking since 2008, reported a record loss of USD135 million for FY2012

10) In the Maldives, the two locally-based international carriers are targeting complementary

growth markets. Maldivian, the government owned airline, which was earlier limited to

domestic routes and a short-haul service to Trivandrum in India with its fleet of turboprops,

took delivery of an A320 in Nov-2012. The aircraft has been deployed to open up routes to

Mumbai, Chennai and Dhaka, with a second A320 expected to join the fleet in Apr-2013. The

airline has stated that its primary focus at present is in developing Indian and other South

Asian markets.

11) Bangladesh saw the launch of a fourth domestic operator in Jan-2013 with Novo Air joining

Biman Bangladesh Airlines, Regent Airways and United Airways. The new carrier entered

the market less than 10 months after GMG Airlines suspended operations. Despite being a

price sensitive market with very short domestic sectors, there are no LCCs operating

domestically. Novo Air continues the status quo by positioning itself as a full-service airline.

The domestic market remains small with less than one million passengers per annum.

International traffic to/ from Bangladesh has experienced steady growth in recent years, but it

is dominated by foreign operators, which have a capacity share of over 70%.

12) Nepal registered 8% growth in International traffic in 2012 to reach three million passengers.

13) The Pakistan Federal Cabinet’s Economic Coordination Committee (ECC) reportedly

approved an interim business plan presented by struggling Pakistan International Airlines

(PIA) for the next five years. The ECC allowed the Ministry of Finance to issue continuing

fresh guarantees amounting to PKR49 billion (USD500 million) during the current year. The

ECC also agreed to the request of the Ministry of Defence for USD46 million of funding to

enable the carrier to lease five narrowbody aircraft in 2013 to address its capacity shortage. At

present the airline is operating only 24 of its 38 aircraft with eight aircraft grounded

temporarily for maintenance and six permanently.

14) South Asia remains a market with huge potential, but is encumbered at present by weakness

across its policy, regulation and fiscal frameworks. Policy settings are in many cases

negatively influenced in an effort to support struggling government-owned flag carriers. India,

as by far the dominant market in the region, has the potential to present itself as a case study

to emulate. The decision to allow foreign airline investment will deliver greater integration

with the global aviation industry and exposure to best practice. As a result, there will be much

needed additional pressure to address structural challenges, paving the way for a more

efficient, professional and viable industry.

15) However, until a host of bureaucratic and political issues are squared away, investing in such

a market can be a lottery. That is a fundamental issue for any government serious about

encouraging measures which will generate consumer (and corporate) benefits.

Page 31 of 35

CAPA’s report has shown top 10 airlines and airports according to seat capacity. IndiGo with

50,580 seats topped the list. Similarly, Delhi International airport with 919,165 topped the list

followed by Mumbai International airport with a seat capacity 831,365.

CAPA yearbook also shows most popular aircraft type in South Asian Countries with A320

having 29.6% topped the list.

Page 32 of 35

The report also shows the share of LCC capacity in South Asian countries. During 2012 the LCC

capacity was 57%.

CAPA report has also given comparative statement of largest international operations. Jet

Airways having maximum weekly seats topped the list.

Page 33 of 35

2. CAPA World Aviation Year Book 2013 Global Overview

CAPA in their world aviation year book 2013 has done the analysis of aviation industry with

global perspective. A brief review of the report is furnished below:

1) Uncertainty has become the new normal – and risk reduction takes on a high priority for

many airlines as Europe’s economy stutters and the US struggles for traction

2) The Gulf carriers have changed the world, seemingly impervious to the pressures of most

other airlines

3) Asia is rising – particularly China – and will dominate within five years. The impact may be

greater and more rapid than forecasts suggest. Some of the aviation industries of fast

economic growth nations, in Latin America, Eastern Europe, India and Africa are

performing well, but need to consolidate their base.

4) The ingredients of this uncertain world are not hard to isolate:

(i) The most significant are external risks. These are uncontrollable and are potentially the

most serious:

a) The threat of rising fuel prices

b) A weak economy, undermining demand

There are others, but the double of fuel (cost) and weak demand (revenue) are, by a large

margin.

5) Over a year ago, fuel prices climbed to and remained stubbornly around USD100 a barrel

for Brent Crude – and this despite a soft international economy and relatively weak demand

for oil. At the IATA AGM in 2012, a straw poll of airline CEOs on what kept them awake

at night indicated overwhelmingly that fuel prices and the economy – each non-controllable

– were the two leading concerns, followed closely by over-capacity. Where profitability

depends on static capacity combined with higher load factors and yields (and a bit of non-

fuel cost reduction), any decline in demand offers few levers left for airline managers to

pull.

6) Today’s heightened levels of competition are prompting a greater focus on the short term

bottom line. The long term has become a luxury few airlines can afford.

7) The ancillary revenues from the baggage charges that US legacy airlines added in recent

years have been larger than their aggregated profits. This unbundling of pricing, learned

from LCCs in a different context, is spreading quietly across the world;

8) The new aviation countries are expanding exponentially faster than the established world,

whose orders often suggest little more than replacement; the US for example has a very

elderly fleet, which is increasingly sensitive both to fuel costs and growing environmental

pressures.

Page 34 of 35

9) Despite the more competitive territory on short-haul markets, European and North

American airlines are buying predominantly single aisle aircraft; long-haul aircraft are

mostly the domain of the Gulf carriers.

10) The surge in growth of the Asian short-haul low-cost airline market could not be more

apparent.

11) The environment was relegated to the back burner in late 2012 as the European Commission

predictably (in retrospect) delayed implementation of its punishing threats included in its

extra-territorial environmental tax and as economic pressures diverted attention.

12) The rising middle classes of countries across the Asian region are creating demand levels

that influence policy changes, hastening liberalisation and encouraging new airlines to order

aircraft – a potentially self fulfilling cycle.

13) China can become the most powerful transit country in the region – and probably in the

world. With the added advantage of high levels of end-to-end traffic flows, the sixth

freedom opportunities mean Chinese airlines will be able to price very competitively on

their transfer routes.

14) The realities of financial markets and a host of new airlines has refashioned the market

place.

CAPA report also shows top ten system arrivals by airports and comparison with Singapore

Airport. The table shows Delhi have an arrival of 3,19,637 followed by Mumbai of 305,745 for a

week starting from 8th

April 2013.

Page 35 of 35

Association of Private Airport Operators (APAO), 710, 7th Floor, Surya Kiran Building, 19 Kasturba Gandhi Marg,

New Delhi, India.

Ph: +91-11-41510916, Fax: +91-11-23329153

Web: www.apaoindia.com, e-mail: snayar@apaoindia.com

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.