Neha Jain: http://indianairlinesnews.blogspot.com/ m 6

1. Unions' days of monopoly are over: DGCA director general

The Directorate General of Civil Aviation (DGCA) recently cancelled a woman pilot's licence because she had reportedly faked her papers. This merely illustrates the ambit, importance and wide arc of the DGCA's responsibilities, which include implementing, controlling, and supervising standards of airworthiness, safety and crew training. The man who is meant to oversee all of this — DGCA director general E K Bharat Bhushan — has no technical knowledge of flying other than taking a plane. He talks about lobbying, corruption, expat pilots with Shobha John. Excerpts:

Air India has delayed employee salaries. As financial adviser to the aviation ministry, what do you think is wrong with the national carrier?

There is clear gap between expenditure and revenue. It's not doing well on the operational side. Don't blame the government for one's own ineptitude, service and on-time performance. But there is a revival plan; we are all fond of the Maharaja and it'll not be allowed to sit on the ground. But that shouldn't be taken as a licence for splurging. We need to be cost-conscious and tighten our belts. The unions and management should realize the days of monopoly are over. But the employees cannot be blamed for everything. I have seen some outstanding people in AI but it's the job of the management to produce results from them. And though there was a merger, it never took place. An excellent concept but still untested. The management will have to answer why.

There is a perception that the DGCA serves the interests of airline owners. For example, the deadline for expat pilots to leave India has been repeatedly extended even though India has more than 5,000 unemployed pilots.

There is a shortage of 400-500 commanders, so we need them (expats). But yes, we need a proper training schedule from airlines about phasing them out and I will be meeting them in this regard. But unemployed pilots needn't despair as more planes are being inducted.

There is a perception that the DGCA is corrupt, with pilot licences going for as much as Rs 8 lakh. What do you have to say about this?

I have heard of agents in the DGCA but who are these mysterious people? I am all for a transparent system but someone will have to come forward and identify them. No one has, that's the sad part. If anyone does, his name will be kept confidential. I will take action.

Are you under pressure from airline lobbies, etc?

I have always been firm and have the ability to say 'no'. Yes, it works in Delhi. I have also instilled in my officers that with great power comes great responsibility. We have matured as a sector and I think people [airlines] realize safety cannot be compromised; you can't play with people's lives.

2. Union Budget 2011: IATA opposes new taxes on air travel
NEW DELHI: As Indian carriers protest the proposed hike in service tax on air travel, global airlines body IATA has said such taxes would compromise the industry's ability to maintain margins in the wake of rising fuel prices.

In the last few weeks, additional taxes have been proposed on air travel in India, South Africa and Iceland, while new and increased taxes of 3-5 per cent of ticket prices were imposed in the UK, Germany and Austria last year, the International Air Transport Association (IATA) has said.

"This is a price-sensitive business. Aviation has the power to stimulate economies. But that ability is being compromised by adding taxes at a time when we are struggling to cope with high fuel prices just to maintain anaemic margins," IATA Director General Giovanni Bisignani said.

Maintaining that oil price hike due to the unrest in the Middle East posed a major risk to aviation business, he said, "This year we have seen proposals to increase taxes in South Africa, Iceland and India."

"Adding taxes, which in some cases are 3-5 per cent of the cost of a ticket on top of the rise in oil prices, is also a big risk" especially in the leisure travel market, he said.

Opposing the imposition of 10 per cent service tax in business class on domestic flights and business and first classes on international flights, the Federation of Indian Airlines (FIA), representing all Indian carriers, yesterday told the government that this charge will cut into the "already thin margin of the airline business".

The service tax and other cess, proposed in the budget, would raise the total ticket value by at least 10.3 per cent and, consequently, the price of a domestic business class ticket would cost Rs 3,000-3,500 more, the FIA said.

In its financial forecast, the IATA said the largest collective profit globally at USD 3.7 billion would be registered by airlines in the Asia-Pacific region.

But this is "down substantially from the USD 7.6 billion that they made last year", Bisignani said, adding, the key reason was that the region was more exposed to higher fuel prices.

IATA's 2011 industry outlook estimated a global profit of USD 8.6 billion, a 46 per cent fall in net profits compared to the USD 15.1 billion earned in 2010.

Following their Asia-Pacific counterparts, North American carriers are expected to deliver USD 3.2 billion profit this year, which is down from the USD 4.7 billion profit they made last year, the IATA's financial study said.

European carriers were expected to make a USD 500 million profit only, which is much below USD 1.4 billion the region's carriers made in 2010, while Middle Eastern airlines are likely to return a profit of USD 700 million, lower than USD 1.1 billion posted last year.

3. Better deals in offing for those flying abroad
New Delhi, March 6 (IANS) After making the skies more affordable for millions of Indians in the domestic aviation space, India’s low-cost carriers are now promising the same in international travel.
Come August, air travellers from India will have the option to choose from three budget carriers to fly overseas, with privately-run IndiGo set to join SpiceJet and the state-run Air India Express in the international circuit.
SpiceJet has already started the process for expanding its operations in the overseas segment, while IndiGo is gearing up for a grand entry, according to analysts, who say this may prove to be a game-changer in India’s international civil aviation segment.
‘Yes, it will have an impact on the market,’ said Amber Dubey, director for defence and aerospace with global consultancy KPMG, referring to the current scenario, where Indian carriers transport up to 40 percent of Indian passengers travelling overseas.
‘This is an extremely positive development. It will certainly boost competition, improve the operational efficiencies of carriers and, more importantly, offer better deals for the Indian passengers flying abroad,’ Dubey told IANS.
With the norms governing Indian carriers to fly abroad requiring minimum five years of operations and 20 aircraft, IndiGo is set to get the necessary regulatory approvals in August. SpiceJet, on the other hand, got the approvals from October.
‘It is a great thing for our company to provide services in the international segment. I feel we will be able to give good value to passengers who were paying astronomical fares to international players,’ Aditya Ghosh, IndiGo’s president, told IANS.
According to officials at the Directorate General for Civil Aviation (DGCA), the civil aviation watchdog, IndiGo’s international rights will allow operations from many cities in India to Singapore, Bangkok, Dubai and Muscat to begin with.
The budget airline had stunned the Indian aviation space in January when it announced a $15-billion deal with the European aircraft manufacturer Airbus Industrie for buying 180 A-320 aircraft.
SpiceJet, on the other hand, was granted permission to fly abroad from last October, and started its first international flight from New Delhi to Nepalese capital Kathmandu Oct 7, 2010, followed by flights from Chennai to Sri Lankan capital Colombo Oct 9.
Air India Express flies to 13 international cities, mainly in the Gulf and East Asia.
SpiceJet, which was acquired last year by Tamil Nadu-based media and entertainment giant Sun Group, has also signed up with US aircraft manufacturer Boeing for buying 30 B-737 planes in a deal worth $2.7 billion.
Analysts believe the planned fleet expansion by low-cost carriers was in line with their long-term goal of joint focus on the international segment, but said it was early days to predict the number of aircraft that would be deployed for international operations.
‘In the medium term, my understanding is Indian carriers will look forward to a market share of 50 percent in the international circuit. So the fleet deployment will largely depend on this factor,’ Dubey said.
Another boost for the growing budget segment and its international foray could come from Delhi International Airport Ltd. The company is expected to take a decision in April on an integrated domestic-cum-international terminal complex for low-cost carriers.
‘We will definitely take a decision on it next month,’ said P.S. Nair, chief executive-corporate, for the airport business of the Bangalore-based GMR Group, which has majority stake in the Delhi airport project. ‘The plans will be ratified next month.’
The proposal includes linking existing terminals such as 1A and 1C, which are no longer operational, to the new low-cost carriers’ domestic terminal 1D. This will give budget carriers in the national capital a facility on the lines of London’s Stanstead airport.

4. Air India plans to rejig top management structure

MUMBAI/NEW DELHI: Air India plans to rebuild its top management team as three high-profile executives, including its expat chief operating officer Gustav Baldauf, called it a day following differences with the civil aviation ministry.

The airline's chairman and managing director Arvind Jadhav, who faces the flak for bringing executives from outside on exorbitant salaries, will make a presentation on the new management structure at the forthcoming board meeting. The airline's board is slated to meet on March 15.

"The CMD is expected to present his plan on what the new management structure should be in the forthcoming board meeting. However, changing management structure at the top won't make any difference unless the employees cooperate," said a top civil aviation ministry official.

Though recent resignations have raised questions about Jadav's ability to achieve a turnaround, he has the support of the new civil aviation minister Vyalar Ravi

"I'm happy and satisfied with Arvind Jadhav's performance and have no problems with him," said Mr Ravi. Jadva's term saw Air India slipping to the fourth position in terms of domestic market share.

Jadav, however, will have to convince the board if he wants to retain the post of COO for Air India and its low-cost arm Air India Express. The airline's CMD will take a conservative approach this time, according to aviation industry officials.

"There was no framework of job requirement or no definite role and accountability for the selections that were made for people who were got from outside and made as Air India honchos," said a senior Air India official who had opposed the selection process.

The chief operating officer of Air India Express, Pawan Arora, was sacked last month and Air India's chief training officer, Stephan Sukumar, resigned last week.

Civil aviation minister feels it is tough to induct people at the top. "The question of inducting new people at the top is not easy and I can't talk about these plans in public like this. I have to consult my ministry and experts before deciding on that," Ravi added.

The board meeting is also likely to approve the turnaround plan, which is being finalized by consultancy firms Deloitte and SBI Caps. Air India will get an equity support of 1200 crore from the government. It will also restructure its debt ( 40,000 crore) and is likely to go aggressive to regain market share.

By
Neha Jain

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