Indian Aviation goes Eco-friendly

Indian aviation industry has taken an initiative to work towards a green eco-friendly environment. The civil aviation regulator in India, also known as Directorate General of Civil Aviation (DGCA) has directed all the inbound domestic airlines and airports to open up Aviation Environment Cells through which measures can be taken to work on the aviation environmental issues which the aviation industry goes through on a daily basis. In a view of this, the Indian government has also setup an Aviation Environment Unit (AIU), which would be dedicated towards addressing environmental issues.

A notification was sent to all the airlines and airports and air traffic providers via a circular by the DGCA, and it speaks about the protocol they need to follow which includes up-gradation of the aircraft, use of biofuel in the place of aviation turbine fuel.

Pilots are being trained to practice best navigation skills to reduce fuel wastage and increase efficiency so as to reduce carbon footprint. There are some norms which needs to be in place, like getting rid of extra weight and maximum utilization of the passenger occupancy.

Norms have also been set for the airport authorities as they have been directed to use gas, electric or any other eco powered ground vehicles which reduces air pollution. CNG driven vehicles can be found in plenty in India especially at airports like New Delhi’s Indira Gandhi International Airport, though you can still find a few petrol or diesel run vehicles which means implementation work is in progress. Public utility vehicles have also been advised to be introduced so that the use of private vehicles is reduced.

As many airports in India face severe air traffic congestion, Airport Authority of India which manages air traffic has been advised to work on a stringent basis to avoid delays caused due to air traffic congestions which can reduce the wastage of aviation turbine fuel (ATF).

Mahindra Group becomes first Indian entity to grow wings

Mumbai: The Mahindra Group has become the first Indian conglomerate in the private sector to acquire the capability to build aircraft. Currently, most Indian firms only have the ability to make components and subsystems.

The $6.3 billion (Rs29,358 crore) by sales Mahindra Group has bought two Australian aerospace firms in a deal that could be worth as much as Rs175 crore over five years in a move that will give a significant fillip to its own aerospace ambitions—the group is already present in the business through Mahindra Aerospace.

Mahindra has, along with Kotak Private Equity Group, bought 75% in Gippsland Aeronautics Pty Ltd and Aerostaff Australia Pty Ltd. Gippsland makes aircraft and Aerostaff makes high precision metal components for companies in businesses such as aviation and defence equipment.

“As a result of this acquisition, we now have an opportunity to play in the offset space,” said Hemant Luthra, president, Mahindra Systech, of which Mahindra Aerospace is a part.

The government’s offset policy requires foreign military aircraft and defence equipment manufactures to source components worth 30% of contracts worth Rs300 crore or more that they have won in India. India may buy at least $100 billion worth of defence equipment over the next 15 years, according to estimates by the industry lobby Confederation of Indian Industry. Experts say the programme presents a lucrative business opportunity for conglomerates like the Mahindra Group and the Tata group, and companies such as Larsen and Toubro Ltd that already have the manufacturing expertise.

In a February interview to Mint, Luthra had said, the deals, once finalized, have the potential to deliver for Mahindra the same value that the Scorpio, a multi-utility vehicle, did five years ago for the group’s auto business.

Analysts say Mahindra’s acquisition of these firms would not just give them access to technology, but also certification procedures that is required to bid for large projects from global plane makers such as Boeing Co. and Airbus SAS.

“The acquistion helps them get more advanced knowledge in quality and standards, which otherwise takes time. This puts them in a different league when competing for projects,” said Chetan Kambi, senior research analyst at Frost & Sullivan India Pvt. Ltd. “If they get the rights for the planes to be sold in different markets, that is (for) an Indian brand in the skies.”

Mahindra Aerospace, which has a contract with National Aeronautics Ltd to make two to five seater planes, will manufacture (along with the two Australian firms) 475 aircraft in the two-to-twenty-seater range and expects a turnover of Rs650 crore from the segment in the next five years. The deal structure, Luthra added gives the Australian firms a choice of a stock option in Mahindra Aerospace. By the end of 2009, the combined turnover of Aerostaff and Gippsland will be Rs90-100 crore, said Arvind Mehra, senior vice-president, strategy Systech sector.

Source : Livemint.com

Air India asks Booz to cut fees for cost reduction consultancy

Mumbai: National Aviation Co. of India Ltd (Nacil), which runs national carrier Air India, has issued an ultimatum to management consulting firm Booz and Co. Inc. to lower its fee for advising the ailing carrier on cost reduction and revenue maximization techniques.

Air India may go with its own cost restructuring measures in case Booz is not willing to lower its fees, according to a senior government official who did not want to be identified.

Booz is one of the three consultants that have been working with the national carrier.

Nacil had appointed Accenture Plc in 2007 to advise on the merger of Air India and Indian Airlines, and oversee the integration process. The cash-strapped airline continues to pay Accenture for its services.

Reviving revenue: An Air India aircraft at the Mumbai international airport. The national carrier may go with its own cost restructuring measures in case Booz is not willing to lower its consultancy charges. Abhijit Bhatlekar / Mint

Investment bank NM Rothschild and Sons Ltd, too, is advising the national carrier. Both Booz and NM Rothschild have been appointed recently, but the Nacil board has not yet cleared the financial terms of the appointments.

An Air India spokesperson clarified that different advisers are needed for different roles. According to him, the roles of these advisers do not overlap. The spokesperson declined to discuss the fees of the consultants, claiming this was an internal issue.

In November, Booz proposed at least 70 cost-cutting and revenue enhancement measures that could generate up to Rs5,000 crore for Air India in the next 18 months. The plan is yet to be implemented.

Air India chairman and managing director Arvind Jadhav confirmed that the company has asked Booz to lower its fees. Under a non-disclosure agreement signed with Nacil, Booz will “not be able to share information regarding any matter related to the said assignment”, Booz said in a statement.

“We have asked Booz to slash the fees. Also, the fee would be directly linked to cost savings that we will derive by implementing its suggestions,” added the government official cited in the first instance.

Air India is the country’s largest loss-making state-owned firm, posting a Rs5,548 crore loss in 2008-09, the biggest among domestic airlines.

The national carrier, which has posted an accumulated loss of Rs7,774 crore till now, appointed Booz in October.

“Cost-cutting measures should not be at the cost of quality of service,” Jadhav said.

Jadhav heads the panel that has been chalking out the strategy for turning around the carrier.

“Slowly, things are changing at Air India. In the first eight months of the current fiscal, between April and November, passengers carried by Air India increased by 10.1% over the corresponding period last year,” he added.

Air India’s domestic market share in November rose to 18.8%, from 16.6% in August.

Jadhav said Air India will soon enter the largest operating grouping of global carriers, Star Alliance. This is expected to increase its international revenue by 3-4%, to Rs400 crore—after a complete integration of its operations with the alliance’s member airlines.

Air India passengers will be able to redeem passenger miles on any of the other 19 member carriers, including Deutsche Lufthansa AG, Singapore Airlines Ltd and US Airways Group Inc.

Air India’s Star Alliance entry has been on the cards for some time, but has got delayed due to operational issues.

“There is not much of a significant airline operations’ value-add (that) consultants can give except, may be, build efficiencies and, therefore, Air India needs to look more inward in how they will manage the airline, to being more focused on being profitable, efficient, traveller-centric and aggressive in terms of competition,” said Mark D. Martin, former head of the aviation practice at audit and consulting firm KPMG.

“Since entering Star Alliance is round the corner, Air India should be more focusing on how it can change its operations to the standard of other Star Alliance members,” added Martin, who is now chief commercial officer of RwandAir, the national carrier of Rwanda, and was most recently SpiceJet Ltd’s head of airline strategy, planning and operations.

Source : Livemint.com

Airlines lose Rs 25-30cr to fog

The New Year began on a foggy note for the Indian aviation sector. The fog that started on Saturday engulfed many airports like Delhi, Jaipur, and Lucknow and set back the aviation industry by a whopping Rs 25-30 crore, reports CNBC-TV18's Mehak Kasbekar and Isha Dalal.

Airports across the country failed the fog test over the last three days. It all started with the failure of the fog fighting equipment at Delhi airport. The Delhi airport remained shut for close to nine hours as visibility dropped to less than 50 meters and a glitch in the cables connected to the Runway Visual Range measuring machine forced air traffic controllers to suspend operations.

According to data from various airlines, nearly 100 flights were delayed across the country. About 30 flights were cancelled between January 2 and January 4. Another 20 flights had to be rescheduled.

Experts say airlines lost close to Rs 30 crore in operational costs alone and this is just the provisional estimate. Additional losses have occurred on account of excess fuel consumption due to diversion and flights hovering over airports, holding aircrafts over and the deployment of extra air staff reserves.

More troubling are the financial implications of the delays on a sector that is pitted in a race against time to turn the corner. Last year, cancellations due to fog resulted in losses of over USD 5-7 million to the industry. Experts say that this year a relatively fog free December may just help in curbing losses.

Source : Moneycontrol.com

Air India to make Delhi new network hub

NEW DELHI: Loss-laden Air India plans to develop Delhi as an additional network hub as its main center of operation Mumbai has become too. The move will help the carrier provide direct connectivity to international customers on its domestic network. The airline operates international flights to London, Frankfurt, New York, Tokyo and Singapore among others.

In a major operational overhaul, the carrier has decided to take a re-look at its international hub in Frankfurt, company CMD Arvind Jadhav is believed to have informed the civil aviation minister Praful Patel in a review meeting of airline in the capital on Tuesday.

The airline has said Frankfurt airport is very expensive and indicated that it would, for the time being, focus on point-to-point traffic. In a presentation to the Union minister Mr Jadhav said that the airline has achieved a higher load factor in the past few months. Air India also said that it will defer the delivery of three B777-300 ER (extended range) as part of fleet rationalisation plan. While the airline chief talked about cost cutting and revenue enhancement measures, the minister asked the company to improve its fleet utilisation.

“The minister has asked for a detailed report in the next 10 days on how it plans to improve capacity utilisation,” a person familiar with the development said. Mr Patel wanted to know as to why the airline’s average fleet utilisation was 8.5 hours while the private carriers managed to fly their aircraft for 12 hours a day. The aviation minister also sought to know the airline’s plan to clear off dues. The Air India top boss said it owed Rs 2,636 crore to oil companies, and its vendors among others. He, however, added that the company would clear the dues shortly. The government recently cleared a proposal to give Rs 800 crore as financial help to the national carrier.

Mr Jadhav said that the airline’s load factor had recently gone up and revenue improved.

“Passenger numbers went up because airline sold tickets at very low rate. The company sold 70% tickets at lower rate,” an airline official said on condition of anonymity. The airline is expected to lose nearly Rs 5,000 crore in the current financial year. It lost a similar amount in 2008-09.

Meanwhile, the Air India board is expected to meet in the next week to consider extension to its consultant Accenture.