Kingfisher Airline summoned by DGCA

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DGCA summons KF CEO, says passengers first

The Directorate-General of Civil Aviation (DGCA) summoned the CEO of Kingfisher Airlines, Sanjay Aggarwal, and ordered the airline to accomodate passengers, affected by cancelled flights, with other airlines.

DGCA summons KF CEO, says passengers first

The DGCA response came after Kingfisher cancelled 17 flights on Monday, for a third day in a row, from Bangalore and Mumbai and also rescheduled two flights. The airlines had also cancelled 28 flights on Sunday, February 19.

Meanwhile, Civil Aviation Minister Ajit Singh said in response to the crisis that there were no plans to bail out the troubled airline. The airline must talk to the banks and sort the issue out, he added.

Earlier, Kingfisher Airlines (KFA) officials, despite repeated attempts, declined to confirm or deny the developments. Instead, they repeatedly said that “we shall issue a statement when required” and refused to comment on the potential action by the DGCA.

The cancellations have affected incoming or outbound flights in Mumbai, New Delhi, Chennai and Bangalore.

The abrupt flight cancellations had created major problems for passengers waiting to travel after having booked their tickets months in advance, an official at the Chhatrapati Shivaji International Airport said.

However, Sunday, the beleaguered carrier reeling under financial losses had claimed that despite flight disruptions since the past couple of days, it has not shut down any stations from its schedules, an official said.

The developments have also worried passengers intending to travel on KFA flights in the next few days or weeks.

“Last minute cancellations jeopardize our travel and onward plans, while other carriers charge heavily for the same sector if we try to cancel and make alternate bookings,” said A.A. Kinariwalla, a manager with a multinational in Mumbai, who is a frequent flier on domestic and international sectors.

A KFA spokesperson blamed the flight disruptions on certain unexpected incidents like ‘bird hits’ which rendered its aircraft out of service.

The flight disruptions are expected to continue for another three to four days with only 208 flights in operations, but the carrier has not shut down nor does it plan to close down any stations, the official said.

‘The speculation that we are reducing our operating schedule from 240 flights a day are ill-founded, as we will operate the full schedule on our booking system within the next four days,’ the spokesperson added.

While admitting that its bank accounts have been attached by the Income Tax Department, KFA said in the past also similar issues have happened and they have been resolved.

‘We have had a good meeting with our consortium of Banks who have accepted, in principle, the viability study prepared by SBI Capital markets and independent consultants. Our request for additional working capital has been acknowledged by the consortium and is subject to individual bank approvals,’ the spokesperson said.

The developments come after high fuel costs and falling revenue resulted in KFA losses in the third quarter of the current fiscal mounting to Rs.444 crore from a net loss of Rs.254 crore suffered in the like quarter of 2010-11.

Source: India Syndicate

Policy on import of jet fuel silent on logistics

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Wed, 08 Feb 2012 08:18:39 GMT

Policy on import of jet fuel silent on logistics: Experts

Airlines welcomed the decision of a ministerial panel to allow direct import of fuel, but aviation experts said several questions remained unanswered, particularly on logistics, as airports don’t have private fuel storage facilities.

“The news is very positive for the airline industry. But we have to see how the airlines will import the fuel. Do they have the cash to do so,” said Sharan Lillaney, aviation analyst at Angel Broking, reacting to the decision Tuesday.

“There are other questions as well: Where will they store the fuel? Will they use the infrastructure of oil marketing companies? Will oil companies allow that? So, there needs to be clarity on these things first,” Lillaney told IANS.

A group of ministers headed by Finance Minister Pranab Mukherjee Tuesday decided to move the cabinet with a proposal to allow airlines to directly import aviation turbine fuel to help them save on taxes and thereby cut their operational costs.

Several airlines have been facing one of the toughest times and wanted the government to help them out by permitting direct import of jet fuel that was now accounting for close to 50 percent of their operational costs.

‘We have applied officially to the commerce ministry for direct import of fuel. If we import fuel directly for our own use we become an actual user. Therefore, we won’t have to pay sales tax and other levies,’ Kingfisher Airlines chairman Vijay Mallya had said.

According to Amber Dubey, director aviation at global consultancy firm KPMG, airline companies may initially need to depend on oil marketing companies for infrastructure and expertise, since the business of jet fuels is a complex one.

‘Plus, an airline cannot get into trading business and sell the same to other airlines. We are likely to see new models of collaboration between airlines, oil companies and providers of logistical service providers in the near future,’ Dubey told IANS.

At some airports like in Mumbai, there is no scope for private firms, or airlines, to set up additional facilities to store and vend jet fuel due to space constraints. But land is available in some others like in Hyderabad and Delhi, experts said.

At present, the government’s foreign trade policy holds jet fuel as a restricted item for private import, which can only be brought in through authorised companies. It was also not clear if domestic oil retailers can sell jet fuel at international rates.

Source: IANS

Aviation stocks rally after direct jet fuel import allowed

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Tue, 07 Feb 2012 16:03:26 GMT

Aviation stocks rally after direct jet fuel import allowed

Mumbai: Scrips of three listed domestic carriers — Jet Airways, Kingfisher Airlines and SpiceJet — rallied after the government Tuesday allowed airlines to import jet fuel directly.

Aviation stocks rally after direct jet fuel import allowed

The decision on direct jet fuel imports was taken by an empowered group of ministers (EGoM) headed by Finance Minister Pranab Mukherjee.

Analysts said the move, announced by Civil Aviation Minister Ajit Singh, would help airlines to cut 10-15 percent of their operating cost.

The move will enable airlines to directly import jet fuel as an end user, thereby saving sales tax, which ranges between 20-35 percent and is levied by state governments.

The Indian aviation sector been reeling under rising aviation turbine fuel (ATF) prices caused by high sales tax and other levies. Domestic airlines are estimated to have lost around Rs.3,000 crore in the first six months of this fiscal.

Mumbai: Scrips of three listed domestic carriers — Jet Airways, Kingfisher Airlines and SpiceJet — rallied after the government Tuesday allowed airlines to import jet fuel directly.
This is very positive news for the industry. The airlines can be able to save up to 10-15 percent of their operating cost as jet fuel accounts for nearly 50 percent of the cost,’ Sharan Lillaney, aviation analyst, Angel Broking told IANS.

‘The decision will help the airlines to break-even, pay back the oil marketing companies.

The scrip of Vijay Mallya-led Kingfisher Airlines hit an intra-day high of Rs.30.90, up 20 percent from Monday’s close of Rs.25.75 at the Bombay Stock Exchange. The stock was hovering around Rs.28.50 in afternoon trade.

The Jet Airways stock too gained 18.06 percent and touched a high of Rs.351.90 from the previous close of Rs.298.05. The stock was Rs.336.90 around 2.30 p.m.

Budget carrier SpiceJet also gained 19.51 percent at BSE and touched an intra-day high of Rs.29.40 from the previous close of Rs.24.60

Analysts, however, said more clarity was required as to how airlines would manage the logistics of storing and importing fuel.

‘We have to see how the airlines will import the fuel, do they have the cash to do so, where will they store the fuel, will they use the oil marketing companies’ infrastructure or not. So there needs to be clarity on these things first, besides this, the news is very positive,’ said Lillaney.

Airlines have not yet come out with any logistics plan for storing and importing the fuel. This was one of the arguments by the three oil marketing companies Hindustan Petroleum, Indian Oil and Bharat Petroleum, who were opposing the move.

ATF is currently sold at Rs.71,155.22 per kilolitre (kl) in Kolkata, at Rs.67,702.21 per kl in Chennai, at Rs.63,864.31 per kl in Mumbai and Rs.62,907.82 per kl in New Delhi.

The average fuel price in cities like Kuala Lumpur is around Rs.41,000 per kilo litre, followed by Singapore at Rs.42,000 and Dubai at Rs.43,000.

Source: IANS


Oil firms resume fuel supplies to Air India

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Fri, 03 Feb 2012 10:10:51 GMT

Oil firms resume fuel supplies to Air India

New Delhi: State-owned oil companies have resumed jet fuel supplies to Air India after the national carrier promised to pay Rs 268 crore in dues on Friday.

Oil firms resume fuel supplies to Air India

Oil company officials said the supplies are being resumed after Air India promised to clear dues by on Friday evening. All the three oil companies – Indian Oil, Bharat Petroleum and Hindustan Petroleum – had jointly stopped Air Turbine fuel (ATF) supplies to Air India at Delhi, Mumbai, Kolkata, Chennai, Trivandrum and Kochi from 1600 hours on Thursday.

The carrier had failed to honour payments even after 90-day credit period.

Earlier in the day, Civil Aviation Secretary Nasim Zaidi said that he had asked the petroleum secretary to not stop the jet fuel supply to the carrier. “I have spoken to the Petroleum Secretary not to disrupt (aviation turbine fuel) supplies and he has assured,” Civil Aviation Secretary Nasim Zaidi said.

Senior Air India officials have claimed that the airline owed Rs 260 crore to the oil companies for the credit period and “we are well within the credit limit.” Overall, Air India owes over Rs 4,170 crore to public sector oil companies in unpaid jet fuel bills, according to figures tabled in Parliament.

The oil companies decided to stop ATF supplies saying Air India had not honoured its commitment to make payments for jet fuel it bought from the oil companies even after expiry of 90 day credit period.

Source: PTI

Image Source: Reuters

Major hike in air fares expected

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Get set for major hike in airfares

India’s state-owned airport developer Airport Authority of India (AAI) that operates 125 airports – with 86 operational airports – has filed a tariff proposal before AERA, demanding a hike in airport charges ranging between 100 and 400 per cent

New Delhi: India’s aviation sector is heading for a major hike in airfares as the Airports Economic Regulatory Authority (AERA) is consulting with stakeholders of major airports for revising airport charges, such as navigation, parking and fees for various airport facilities used by airlines, that have not been reworked since 2001.

India’s state-owned airport developer Airport Authority of India (AAI) that operates 125 airports – with 86 operational airports – has filed a tariff proposal before AERA, demanding a hike in airport charges ranging between 100 and 400 per cent.

Earlier this week AERA recommended a 340 per cent hike in airport tariffs for the Delhi airport, which is operated by Delhi International Airport Ltd (DIAL) – a GMR-led consortium.

A top industry official said that AERA is recommending a three-fold hike in airport charges at the Delhi airport, which will set the trend for other major airports as well and push up airfares further.

“It is not only the greenfield projects (new airports) at Bangalore and Hyderabad and the Mumbai airport that will see multi-fold hike in tariffs, other major airports operated by the Airports Authority of India (AAI) will also witness multifold increase in airport charges that have not been hiked since 2001,” said the official on conditions of anonymity.

Top civil aviation ministry officials said they have no jurisdiction over AERA’s recommendations or decision on airport tariffs.

AERA chairman, Yashwant S. Bhave told Mail Today on Friday that all airports have filed their tariff proposal with it.

“AERA will analyse the issues of the consultation paper, hold meetings with stakeholders and finally determine the tariff. If any operator is not happy he can go to the appellate authority of the AERA. Each airport has different aeronautical charges, capacity, investment and equity are different. Each airport will be taken one by one. It is a continuing process,” he said.

Under the Airports Economic Regulatory Authority of India Act, 2008, AERA determines the tariff for the aeronautical services, airport charges, ground handling services, passengers service fee and cargo at an airport, access development fee (ADF) and user development fee (UDF) at major airports.

Airport charges in India are among the lowest in the world and the charges constitute less than four per cent of an airline’s total operating cost, according to Association of Private Airport Operators (APAO), a global airport and aviation consultancy.

Airport charges in India currently constitute only about 3.25-3.5 per cent of total operating cost of airlines as compared to jet fuel, which constitutes 40 per cent of airline’s operating costs.

Foreign airlines have opposed the hike in airport charges at Delhi airport. British Airways, Air France-KLM and Lufthansa have said they would have to rethink their expansion plans, if the charges were increased. AirAsiaX, which recently discontinue few of its flights out of India and said the hike would impact its plans to make Delhi airport its aviation hub.