1. Emirates offers festival package for Hyderabad

Emirates, a leading Gulf air carrier, has launched special holiday packages for the people of the city for the ongoing holy month of Ramzan and upcoming festival of Diwali. The carrier has also launched its signature complementary chauffeured service for first and business class passengers traveling to and from Hyderabad. Set against a backdrop of increased overseas trips by Hyderabad is, Emirates will extend its luxurious experience to passengers departing from and arriving in Samshabad international airport. K P Venugopal, Emirates’ sales manager, Andhra Pradesh, said that first and business class customers will be treated to a personal chauffeur service to whisk them to and from any Hyderabad home or business address within 50 km of the airport. Emirates holidays is offering packages to Dubai for three nights and four days from Rs 27,839 onwards, valid until October-end. The packages include economy class return airfare, assistance at Dubai international airport on arrival, private transfers to the hotel and back, buffet breakfast, room taxes and service charges. Accommodation is provided at leading 3-star and 4-star properties. It is also offering passengers attractive packages to Mauritius, Greece, Egypt, South Africa and Turkey, Venugopal said. Emirates will also be adding two additional flights to its current 16 flights-a-week-service from Hyderabad, bringing its total frequency to 18 weekly flights from October 1, 2008, Venugopal said. ‘We are delighted to offer our customers the convenience of additional flights from Hyderabad to Dubai, which will make it easier for them to meet their travel needs whether they are flying Emirates on business or pleasure,” Emirates’ vice president, India and Nepal, Orhan Abbas said. Meanwhile, the carrier has raised $265 million to finance two new Boeing 777 aircraft with an Islamic bank arranging the finances. Both the Boeing 777300 (extended range) aircraft have been delivered to the Emirates, which is now set to become the world’s largest B-777 operator with 63 of these planes in its fleet. The airline has another 39 of these planes on order at a total cost of over $10 billion. It has also last month received the first of the 58 Airbus A-380s it has ordered. In a statement, Emirates’ senior vice president (corporate treasury) Brian Jeffery said the Noor Islamic Bank arranged the mandated lead arranger group to finance the two B-777300s. The group of financers included Barclays Capital, CCB International Finance Ltd and Standard Chartered Bank. In another development, Emirates inked a 10-year pact with major global travel distribution provider Sabre Travel Network to provide easy access to its full content fares throughout Sabre’s global network for the next decade.

Source: September 16, 2008, Financial Chronicle

2. Ticket refund: DGCA issues notice to airlines
Taking exception to airlines breaching ticket refund norms, the Directorate General of Civil Aviation (DGCA) has issued notices to some carriers seeking explanation and has warned them of stern action if they continued to flout the guidelines. Without identifying the airlines, official sources said notices had been issued to some carriers against which the civil aviation ministry had received complaints. The sources said “affirmative action” would be taken against carriers flouting the refund guidelines. DGCA had in May issued a new set of rules or civil aviation requirement (CAR) on the issue. The sources said even though the government never interfered in the commercial practices of the airlines, the sheer volume of complaints in this regard forced DGCA to issue CAR in the interest of travelers. Despite several rounds of meetings held by the ministry with the airlines, there had been no improvement in the system adopted by the carriers for refunding, they said. As per CAR, refunds should be made within seven days of cancellation if the ticket is purchased with a credit card. In case of cash transactions, immediate refund should be made by the airline from which the ticket has been purchased. If the ticket has been bought from a travel agent, the refund arrangement should be left to the passenger and the agent. DGCA also asked the airlines to indicate in an “unambiguous manner” the amount of money admissible on cancellation of a ticket.

Source: September 16, 2008, Mint

3. Shell-MRPL starts India operations
Shell-MRPL Aviation Fuels and Services Pvt Ltd announced the start of commercial operations in India with the fuelling of Jet Airways and Lufthansa aircraft at the Bengaluru International Airport. The company recently signed a memorandum of understanding to supply aviation turbine fuel to Jet Airways at the BIA and Hyderabad airports, a Shell-MRPL release said. It had also signed an MOU with Lufthansa, to supply part of its ATF requirements at BIA.

Source: September 16, 2008, The Financial Express

4. Nambiar appointed civil aviation secy
M. Madhavan Nambiar, presently Special Secretary Information Technology has been appointed Civil Aviation Secretary in place of Ashok Chawla who will take over as Secretary Department of Economic Affairs. Meanwhile, Rahul Sarin, currently Secretary Food Processing Industries will take over as Secretary of the Department of Personnel and Training

Source: September 16, 2008, Hindustan Times

5. Alitalia’s main unions accept plan for rescue
Alitalia’s biggest labor unions clinched an initial deal with the airline’s potential buyers Monday, raising hopes that it could avoid collapse, but pilots balked and flights risked being grounded for a lack of cash to buy fuel. The four main Italian unions — CGIL, CISL, UIL and UGL—and a consortium offering to buy Alitalia agreed on the rough outline of a rescue plan that would cut about 3,000 jobs but leave 12,500 workers at the slimmed-down airline. Thousands of other employees are in units that would be spun off. ‘‘It’s a first, important step,’’ said Raffaele Bonanni of the CISL union. But it was not clear whether other, smaller unions representing pilots and cabin crews would agree to the deal being negotiated by their peers. They initially scoffed at the agreement and questioned why they were excluded from talks. Industry Minister Claudio Scajola warned there were ‘‘only a few hours left’’ to save Alitalia, whose shares have been suspended from trading since June. Negotiations on tricky issues like salary cuts were set to continue Monday, with no guarantee of success. ‘‘The persistent problem which could, if not resolved, cause this initiative to fail is the new job contracts,’’ said Labor Minister Maurizio Sacconi, confirming the figures on expected job cuts. The civil aviation authority said over the weekend that Alitalia’s operating license was at risk after the airline confirmed it was having trouble buying jet fuel from wary suppliers. Still, traffic at the main international airports in Rome and Milan was normal Monday morning, airport officials said. Paolo Scaroni, chief executive of the Italian oil company Eni, said the company would not supply Alitalia with fuel unless it receives cash up front. ‘‘Not even if Berlusconi or the Pope asks me to,’’ Scaroni told La Repubblica newspaper, adding, ‘‘There is no moral suasion — international agreements are clear.’’ Alitalia, which is operating under a bankruptcy commissioner, has not generated a profit since 1999 and had nearly ¤1.2 billion, or $1.68 billion, in debt as of July. A collapse of the airline would be a huge political blow for Prime Minister Silvio Berlusconi, who promised voters he would use his business contacts to find an Italian buyer for Alitalia. The state holds a 49.9 percent stake in the company. In April, Alitalia’s unions sank a deal agreed under the previous, center-left government to sell the airline to Air France-KLM.

Source: September 16, 2008, Financial Chronicle

6. Airlines seek nod to import fuel directly
With the aim to escape paying sales tax that can be as high as 30% on aviation fuel that is levied by states, domestic airlines are examining the possibility of importing fuel directly. At a time jet fuel prices are falling, the Federation of Indian Airlines, or FIA, an airlines lobby, has sought permission from the Directorate General of Foreign Trade or DGFT to directly import jet fuel, a senior civil aviation ministry official, who did not wish to be identified, said on Tuesday. DGFT, on its part, has sought a no-objection certificate from the ministry of petroleum. Currently, most of the fuel, which accounts for over 40% of an airline’s operating cost, is supplied by public sector oil companies such as IndianOil Corp. Ltd and is levied state taxes ranging from 4% to 30%. Airline companies now want to take advantage of rules that permit a bulk consumer to directly import fuel as long as it is for its own consumption and escape state governments taxation. This could amount to savings of 10% in operating costs, the same official said, adding, that while “theoretically” such an arrangement was permitted, it would be difficult logistically. Reacting to this, low-fare carrier SpiceJet Ltd’s chief commercial officer Samyukth Sridharan said his airline has no plans to import jet fuel as of now because its current scale of operations will not justify the complex logistics that include huge storage tanks at airports where planes refuel. “Perhaps, some of the larger carriers (that) have been pursuing it, and they may be keen on it,” he said. With the aim to escape paying sales tax that can be as high as 30% on aviation fuel that is levied by states, domestic airlines are examining the possibility of importing fuel directly. At a time jet fuel prices are falling, the Federation of Indian Airlines, or FIA, an airlines lobby, has sought permission from the Directorate General of Foreign Trade or DGFT to directly import jet fuel, a senior civil aviation ministry official, who did not wish to be identified, said on Tuesday. DGFT, on its part, has sought a no-objection certificate from the ministry of petroleum. Currently, most of the fuel, which accounts for over 40% of an airline’s operating cost is supplied by public sector oil companies such as IndianOil Corp. Ltd and is levied state taxes ranging from 4% to 30%. Airline companies now want to take advantage of rules that permit a bulk consumer to directly import fuel as long as it is for its own consumption and escape state governments taxation. This could amount to savings of 10% in operating costs, the same official said, adding, that while “theoretically” such an arrangement was permitted, it would be difficult logistically. Reacting to this, low-fare carrier SpiceJet Ltd’s chief commercial officer Samyukth Sridharan said his airline has no plans to import jet fuel as of now because its current scale of operations will not justify the complex logistics that include huge storage tanks at airports where planes refuel. “Perhaps, some of the larger carriers (that) have been pursuing it, and they may be keen on it,” he said.

Source: September 17, 2008, Mint

7. Jet's overseas expansion pans come back on track
Jet Airways has put its overseas expansion plans back on the rails. The country's largest private airline has also revised its earlier plan of de­ferring the delivery schedule. Now, it has decided to take delivery of two A330s in December to use them on the India-Saudi Arabia route. Con­firming this, Jet Air­ways' chief com­mercial officer Sud-heer Raghavan told ET: "We are consid­ering launching services to Africa and increasing our presence in Asia."An analyst said that Jet Airways, which is aggressive­ly expanding on the short-haul interna­tional routes and increasing fre­quencies on domestic routes, will need more aircraft. Jet, which operates over 385 flights daily, has launched its daily direct services between Thiruvanan-thapuram and Muscat on Monday. It has now three daily services to Muscat from Thiruvananthapuram, Kochi and Mumbai, and flies to six destinations in the Gulf (Kuwait, Bahrain, Muscat, Doha, Abu Dhabi and Dubai) from five gateway points in India—Kozhikode, Kochi, Thiru­vananthapuram, Mumbai and Delhi. It has also expanded its domestic network with three new daily services from Hyder­abad to Visakhapatnam, Goa and Pune. It has also decided to take other deliver­ies of 20 737NG over the next few years, in addition to 10 737NG for JetLite, indicating that its ex­pansion is on sched­ule. Also, the deliv­ery of new wide bodies, five 777-300ER and five A330-200 will come by 2011. Jet now flies to 20 overseas destinations in the US, West Asia, Hong Kong, Singapore, China and Malaysia.

Source: September 17, 2008, The Economic Times

8. Singapore Airlines offer
Singapore Airlines has announced exclusive offers for its customers in Hyderabad. Starting from now till the end of the year, its customers will get 10 per cent off on select items at the departure and arrival terminal's duty free shops among other offers.

Source: September 17, 2008, Business Standard

9. Air traffic declines in China over security
Passenger traffic at China’s three major airlines, including the flag carrier, Air China, fell sharply in August from a year earlier as strict security measures for the Olympic Games deterred travel, the carriers said Tuesday. The airlines began posting year-to year traffic declines in May, hit by a devastating earthquake in southwest China and security steps before the Games. Those reversed a steady record of growth fueled by China’s booming economy. Although many industry executives have said air traffic was likely to recover after the Games, Air China also cited a weaker tone in the overall economy as a factor weighing on its weak August data. Air China said its passenger volume in August sank 16.6 percent in August from a year earlier to 2.77 million, while China Southern Airlines posted a 16.2 percent drop to 4.88 million. China Eastern Airlines said its passenger volume slumped 23.06 percent to 2.92 million.

Source: September 17, 2008, Financial Chronicle

10. Old aircraft to freighters: AI set to fly on cargo business
The National Aviation Company of India Limited (Nacil) is all set to make a pretty penny from its old aircraft by converting them into cargo freighters operations. The carrier, which will have a fleet of eight freighters ready by the end of this month, started converting its old aircraft after they were considered too unsafe or too old to ferry passengers. So far Air India has converted six B737-200 passenger aircraft into freighters and is in the process converting two Airbus A310 passenger aircraft. “The conversion will be done by the end September,” Air India spokesperson Jitender Bhargava said. The national aviation company will soon invite global bids for leasing out two of its A310 freighters. It already has leasing agreements with the department of post and logistics major Gati for the rest of the aircraft. “We will soon put out a Request for Proposal (RFP) to lease out the two A310 freighters aircraft,” an official said. Air India had earlier planned to deploy these configured aircaft in its cargo service but it could not find a profitable route for these freighters and therefore decided to lease them out. The leasing deal is working so well for the carrier that the department of post has requested Air India to give it more aircraft so as to raise the number of freighters to four aircraft. The DoP mainly uses the aircraft for its air mail operations to the northeastern part of the country. “The decision to lease them out follows the lack of a profitable route where they could be deployed,” the official said. The company is, however, yet to decide on their pricing, the official added. “The per-hour flying cost of these aircraft is quite high,” he said. The revenues from cargo operations are expected to rise by 10% in this fiscal taking the total revenues from cargo of the carrier to within a earshot of Rs 1,000 crore. The national carrier made around Rs 412 crore from cargo operations in 2000-01. This has more than doubled to Rs 834 crore for the fiscal year 2007-08. The revenues from cargo contribute nearly 10% of the total revenues of the carrier. “At present, the only real problem affecting cargo operations is the manpower problems. That is a problem being faced by the carrier as a whole and is expected to be resolved soon,” an official said. The civil aviation ministry has said the country needs around Rs 700 crore to expand basic network in order to increase air cargo over the next five years. Air India Cargo (AIC) tied up with express delivery major Gati late last year allowing the latter to charter five or more aircraft over the next five years. AIC is also actively considering bidding for the postal business of the postal departments of many other countries including the US Postal Mail department and some east European countries, sources said. According to the ministry, total cargo traffic in all airports in the country increased 21.5% in 2006-07 from 15.6% in the year-ago period. In this, air cargo has grown by around 19%, as against 10.3% and 9.2 % growth witnessed by the shipping and railways cargo sectors respectively over the last three years. Express delivery major Blue Dart has estimated that the total domestic cargo industry in the year 2006 is worth Rs 2,770 crore while the domestic organized cargo was worth around Rs 1,260 crore. The industry has been growing at a 17.2% CAGR so far and is therefore expected to be worth Rs 5,256 crore by 2015, data from Blue Dart said. AIC is a strategic business unit (SBU), created after the merger of the erstwhile national carriers Air India and Indian, dedicated to cargo operations of the carrier. The carrier already has dedicated cargo flights to France, Germany and Saudi Arabia. Other private airlines like Jet and Spicejet are actively looking at expanding their cargo business in order to increase the share of ancillary revenues to their overall balance sheet. These carriers carry cargo in the aircraft hold during passenger flights and their scale of business is much lower than the national carriers.

Source: September 17, 2008, The Financial Express

 

Prepared by
Jennifer Kumar, BBA (NAU) Alumni
Skyline Business School
Hauz Khas Enclave, New Delhi 110 016
Tel: 2686 4848, 2652 4399
http://www.skylinecollege.com