Financial Performance of Air India Improves

Financial Performance of Air India Improves

Air India has made substantial improvements in its financial performance. The main areas in which the company has registered improvements in FY 2014-15 in comparison to FY 2011-12 are as follows:

(i) The Operating Loss has consistently reduced since merger and in 2014-15, the same stands at Rs.2636.19 crores as compared to Rs.5138 crores in 2011- 12.

(ii) As per 2014-15, the Net Loss is Rs.5859.91 crores as against the loss of Rs.7559.74 crores in 2011-12 i.e. a reduction by 22.5%.

(iii) The Company has turned EBIDTA positive by Rs.337.77 crores in 2014- 15 as against the negative EBIDTA of Rs.2236.95 crores in 2011-12.

(iv) Total Revenue increased from Rs.14713.81 crores in 2011-12 to Rs.20606.27 crores in 2014-15 i.e. by Rs.5892.46 viz by 40.1% as compare to levels of 2011-12.

Earlier Air India (AI) had been suffering losses over the past few years and the details of the losses for the past 5 years are as follows:

Financial Year           Net Loss (Rs. Crores)

  2010-11                  6865.17

  2011-12                  7559.74

  2012-13                  5490.16

  2013-14                  6279.60

  2014-15                  5859.91

Losses were on account of a multitude of factors which include the following:

(i) High fuel prices

(ii) High interest burden

(iii) Increase in competition especially from low cost carriers

(iv) High Debt Equity Ratio

(v) High Airport User Charges

(vi) Liberalized bilaterals to foreign carriers

(vii)Adverse impact of exchange rate variation due to weakening of the Indian Rupee.

Government took cognizance of the deteriorating financial position of Air India and formulated a Turnaround Plan (TAP)/ Financial Restructuring Plan (FRP) with the aim of improving the operational and financial performance of the company which was approved by the Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 12th April, 2012. The TAP/ FRP envisages the following:

(i) Upfront equity of Rs.6750 cores in FY 2011-12.

(ii) Equity for Cash deficit support of Rs.4,552 crores till FY 2017-18.

(iii)Equity for guaranteed aircraft loan fill FY 2021 of Rs.18,929 crores.

(iv) For GOI guaranteed Non-Convertible Debentures (NCDs) an amount of Rs.11,951 crores towards interest and Rs.7400 crores towards principal. Till date, equity of Rs.22,280 crores has been released to Air India under TAP/FRP.

The TAP/ FRP also provides that equity would be infused subject to achievement of certain laid down milestones. The Company has achieved most of the targets set out in the TAP milestones, and has made progress in both Operational as well as Financial Areas.

This information was given by Minister of State for Civil Aviation, Dr Mahesh Sharma in a   written reply to a question in the Rajya Sabha today.

-Ministry of Civil Aviation, 08-December, 201

Consultative Committee of the Ministry of Civil Aviation discusses Draft National Civil Aviation Policy

Consultative Committee of the Ministry of Civil Aviation discusses Draft National Civil Aviation Policy

A meeting of the Parliamentary Consultative Committee of the Ministry of Civil Aviation was held in New Delhi last evening under the Chairmanship of Civil Aviation Minister Shri P. Ashok Gajpathi Raju to discuss the Draft National Civil Aviation Policy, 2015. Minister of State for Tourism and Culture (I/C) and Civil Aviation, Dr. Mahesh Sharma also attended the meeting.The Draft National Civil Aviation Policy, 2015 aims at providing a conducive environment and a level playing field to various aviation sub-sectors like Airlines, Airports, Cargo, Maintenance Repairs and Overhaul Services, General Aviation, Aerospace Manufacturing, and Skill Development. It also aims to bring air travel within reach of the common man by facilitating regional air connectivity at reasonable rates within the country. The draft policy was released by the Ministry on 30th October 2015, and stakeholders were given time till 30th of November, 2015 to give their feedback and suggestions.

A presentation bringing out the objectives and salient features of the draft policy was made before the members of the consultative committee. The committee lauded the draft policy for the thrust it lays on regional connectivity and on making air travel available for the common man in smaller cities at reasonable costs. The committee members also made suggestions for further streamlining the policy.

The Members of Lok Sabha who attended the meeting included Shri A.P. Jithender Reddy , Shri Chandrakant Raghunath Patil , Shri E. Ahamed , Shri Jitendra Chaudhury, Shri S. Rajendran , Shri Thupstan Chhewang and Shri Vinayak Bhaurao Raut . The Rajya Sabha Members who attended the meeting included Shri Praful Patel, Shri Vijay Jawaharlal Darda and Shri Vishambhar Prasad Nishad.

-Ministry of Civil Aviation, 01-December, 2015

Civil Aviation Minister releases Revised Draft National Civil Aviation Policy (NCAP 2015)

Civil Aviation Minister releases Revised Draft National Civil Aviation Policy (NCAP 2015)

Minister of Civil Aviation Shri P. Ashok Gajapathi Raju released the Revised Draft National Civil Aviation Policy (NCAP 2015) in New Delhi today. Speaking on the occasion Shri Raju urged all stakeholders to participate in the process of firming up the policy by giving their valuable suggestions to the Ministry.  He said that the Civil Aviation Policy should be a dynamic one which can keep pace with the ever changing demands of the sector.

Minister of State for Civil Aviation and MoS (I/C) Tourism and Culture Dr Mahesh Sharma was also present  at the function.  Dr. Sharma  underscored  the importance of bringing air travel within reach of the common man and  facilitating regional air connectivity within the country.

Secretary Civil Aviation Shri Rajiv Nayan Choubey gave a presentation highlighting the salient features of the draft policy, which are as follows :

Aim of the Policy

Ø      To provide a conducive environment and a level playing field to various aviation sub-sectors, i.e  Airlines, Airports, Cargo, Maintenance Repairs and Overhaul services, General Aviation, Aerospace manufacturing, Skill Development, etc

Ø      To create an eco-system to enable 30 crore domestic ticketing by 2022 and 50 crore by 2027. Similarly, international ticketing to increase to 20 crore by 2027.

Draft Policy covers:-

  1. Regional Connectivity Scheme (RCS)

Ø      Scheme will come into effect from 1 April 2016

Ø      Airfare about Rs 2500 for a one-hour flight in RCS

Ø      This will be implemented by way of:

ü      Revival of un-served or under-served airstrips.

  • Only 75 out of 476 airstrips/airports have scheduled operations. Revival of these depending on demand.
  • Build ‘no-frills’ airports at a cost of Rs 50 crores.

ü      Viability Gap Funding (VGF) for scheduled commuter airlines.

  • VGF indexed to ATF prices and inflation.
  • VGF to be shared between Centre and State at 80:20.
  • Creation of Regional Connectivity Fund (RCF) for VGF.
  • Levy of 2% on all domestic and international tickets on all routes, other than CAT IIA and RCS.

ü      Concessions by different stakeholders:

  • State Government-

o       Provide free land and multimodal hinterland connectivity.

o       Concessional rates of power, water and other utilities.

o       VAT on ATF  1% or less in RCS airports.

  • Central Govt-

o       Service Tax on tickets under RCS will be exempted.

o       ATF drawn by SCA’s from RCS airports exempt from excise duty.

o       SCA’s to be treated at par with SOPs for customs duty.

ü      Cost-effective security solutions by BCAS and state government.

  1. Scheduled Commuter Airlines (SCA)

 

Ø      Eligibility criteria in terms of paid-up capital to be kept at Rs 2 crore.

Ø      Aircraft with capacity of 100 seats or less.

Ø      No restrictions on number of aircrafts.

Ø      Minimum movements per week to RCS destinations as prescribed.

Ø      SCA can enter into code share with other airlines

Ø      Will be allowed self- handling.

Ø      No airport charges on  SCA  for their operations under RCS. Rationalise in other non- RCS airports

  1. Maintenance, Repair and Overhaul (MRO)

Ø      Develop India as an MRO hub in Asia.

Ø        Service Tax on output services of MRO will be zero-rated.

Ø        Aircraft maintenance tools and tool-kits will be exempt from Customs Duty.

Ø       Tax- free storage period of spare parts imported by MRO’s extended for 3  years.

Ø      To allow import of unserviceable parts by MROs by providing advance exchange.

Ø      Procedures for custom clearance to be simplified.

Ø      Clearance of the parts  by allowing for self -attestation by the MROs.

Ø      Foreign aircraft brought to India for MRO work will be allowed to stay for 6 months. Beyond this, with  DGCA permission .

Ø      Persuade State Govt to make VAT zero-rated

Ø      Airport royalty and additional levies to be rationalised in consultations with Airport Operators.

 

 

  1. Fiscal incentives

Ø      MRO, ground handling, cargo and ATF infrastructure co-located at an airport will also get the benefit of  ‘infrastructure’ sector, with benefits under Section 80-IA of Income Tax Act.

  1. Rule 5/20

 

Ø      The government invites suggestions on three possible policy options:

                                         5/20 Rule may continue as it is,

                                                            OR

                          5/20 Rule will be abolished with immediate effect,

                                                           OR

ü        Domestic airlines will need to accumulate 300 DFC before commencing flights to SAARC countries and countries beyond 5000 km radius from New Delhi.

ü      They will need to accumulate 600 DFC before starting flights to the remaining parts of the world.

ü      The DFC earned will be equal to the Available Seat Kilometer (ASKM) deployed by the airline on domestic routes divided by 1 crore.

ü      All domestic airlines will required to earn at least 300 DFC per annum in order to maintain their international flying rights.

ü      Free to re-deploy their excess capacity (above 300) between domestic and foreign operations and also trade them.

  1. Bilateral Traffic Rights

Ø      Liberalise regime of bilateral rights.

Ø      Open sky on reciprocal basis with SAARC countries and countries beyond a 5000 km radius from New Delhi.

Ø      For countries within 5,000 kms where domestic airlines have not fully utilised their quota, additional seats above existing rights would be allotted by bidding for a three year period, proceeds of which will go to RCF.

Ø      Open skies for countries within 5000 kms will be considered with effect from 1 April 2020.

Ø      Increase in FDI in airlines from 49% to above 50% if the government decides to go in for open skies

  1. Code Share

 

Ø      Indian carriers will be free to enter into code-share agreements with foreign carriers for any destination within India on a reciprocal basis.

Ø      International code share between Indian and foreign carriers will be completely liberalised, subject to ASA between India and the country.

Ø      No prior approvals from MoCA will be required. Indian carriers need to simply inform MoCA 30 days prior to starting the code-share flights.

Ø      A review will be carried out after 5 years to consider the requirement of further liberalisation in code-share agreements and to drop the requirement of reciprocity.

  1. Route Dispersal Guidelines (RDG)

 

Ø      Category I will be rationalized by adding more routes based on transparent criteria, i.e., flying distance of more than 700 km, average seat factor of 70% and annual traffic of 5 lakh passengers.

Ø      The percentage of Cat. I traffic to be deployed on Cat. II, IIA and III will remain the same.

Ø      Revised categorization will apply 12 months after date of notification.

Ø      Review of routes under different categories will be done by MoCA once every 5 years.

Ø      Airlines may change routes in Cat II and III with a 30 days prior intimation to MoCA and DGCA.

Ø      Prior permission of MoCA required for withdrawal of existing operations to and within N.E region, Islands and Ladakh.

 

  1. Airports

Ø     MoCA will continue to encourage development of airports by the State Government or the private sector or in PPP mode.

Ø     MoCA will endeavour to provide regulatory certainty.

Ø     The capital expenditure of all future greenfield and brownfield airport projects promoted by AAI in PPP mode will be monitored closely by AAI.

Ø     Tariff at all future airports will be calculated on a ‘hybrid till’ basis.

Ø     MoCA will explore ways to unlock the potential land use by liberalising the end-use restrictions for existing (excluding PPP) and future airports of AAI and future airport projects under PPP.

 

  1. Airport Authority of India

Ø     AAI will continue to modernize airports and upgrade quality of services.

Ø     AAI will maintain an ASQ rating of 4.5 or more across all airports with throughput above 1.5 mppa and ASQ rating of 4.0 or more for the rest.

Ø     AAI may be suitably compensated in case a new greenfield airport is approved in future within a 150 km radius of an existing operational AAI airport (not applicable to civil enclaves). Alternatively, give option to have the right of first refusal or equity participation upto 49% in the new airport at its discretion.

Ø     AAI will continue to provide necessary financial support and facilitate technological upgradation of ANS to keep pace with the global best practices.

  1. Ground handling

 

Ø      There will be at least three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at an airport.

Ø      Domestic airlines and charter operators will be free to carry out self-handling themselves or through their subsidiaries or to outsource the same to other airlines or to a GHA.

Ø      Ground handling staff will have to be on the rolls of the airlines or their subsidiaries or the GHA. Domestic airlines (including subsidiaries) and GHAs will be permitted to take contract employees on their rolls.  Such employment contracts will be for a period of at least one year.

  1. Aviation Security

 

Ø      MoCA will develop ‘service delivery modules’ for aviation security, Immigration, Customs, quarantine officers etc in consultations with respective Ministries/Departments.

Ø      The Government will encourage use of private security agencies at airports for non- core security functions which will be decided in consultation with MHA.

Ø      Private security agencies will comprise retired personnel from military and para-military forces. BCAS will provide scope of work and norms.

Ø      Security auditors of  BCAS will carry out regular and surprise audits with the power to penalize and blacklist the errant agencies

  1. Helicopters

Ø     Government will support growth of helicopters for remote area connectivity, intra-city movement, tourism, law enforcement, disaster relief, medical evacuation, etc.

Ø     Separate regulations for helicopters will be notified by DGCA by 1 April 2016, after due stakeholder consultation.

Ø     The government will facilitate the development of four heli-hubs initially.

Ø     Helicopters will be free to fly from point to point without prior ATC clearance in airspace below 5000 feet and outside ATC control areas and areas other than prohibited and restricted ones, after filing the flight plan with the nearest ATC office.

  1. Cargo

Ø      The Air Cargo Logistics Promotion Board (ACLPB) will submit a detailed action plan with the objective of reducing dwell time of air cargo from ‘aircraft to truck’ which should also ensure shift to paperless processing.

Ø      ACLPB will develop ‘service delivery modules’ for all elements of air cargo value chain.

Ø      Advanced Cargo Information system to be implemented by 1 April 2016.

Ø      ACLPB to propose specific action steps to promote transhipment.

Ø      ACLPB will work with AERA and AAI to ensure are competitive vis-à-vis competing aviation hubs.

Ø      ACLPB will lay down norms for time slots and parking for freighter aircraft.

Ø      Optimum use of 24×7 Customs operations to spread out cargo handling.

Ø      AAI to provide space on10 year lease for express cargo and freighters.

  1. Aeronautical ‘Make in India’

 

Ø      MoCA will be nodal agency for developing commercial aero-related manufacturing and its eco-system in India.

Ø      MoCA and MoD will work together to ensure that commercial aero-manufacturing is covered under defence offsets requirements.

Ø       Area where aero-manufacturing takes place will be notified as SEZ.

 

  1. Other policy reforms

 

  • Greater de-regulation, transparency and e-governance
  • Aviation education and skill building
  • Promotion of sustainable aviation practices

Streamlining Charter Operations

The Ministers and the Secretary also addressed the media on the occasion and answered their  queries. The Draft Policy has been uploaded  on the website of the Ministry and details are  available athttp://www.civilaviation.gov.in/.  The Ministry has sought feedback from stakeholders, which can be sent to the following email-id:  feedback-avpolicy@gov.in

-Ministry of Civil Aviation, 30-October, 2015

Fourth International Tourism Mart to be held in Gangtok from 14th-16th October, 2015

Guwahati being developed as a hub to provide improved connectivity to the North-eastern states: Dr. Mahesh Sharma

The 4th International Tourism Mart(ITM)  will be held in Gangtok from 14th – 16th October, 2015. This was announced by the Minister of State for Culture (Independent Charge), Tourism (Independent Charge) and Civil Aviation, Dr. Mahesh Sharma at a press conference in New Delhi today. International buyers and media delegates from 27 countries are participating in this year’s ITM.

Addressing the mediapersons, Dr. Mahesh Sharma said that the ITM will showcase the rich tourism potential of the North East States. The Minister said that the Prime Minister, Shri Narendra Modi gives utmost priority to the North-east and promoting tourism in the region has been the emphasis of the Ministry. It is due to these efforts that the number of Foreign Tourist Visits (FTVs) to North Eastern States during 2014 grew by 39.8% , revealing a significant improvement in the growth of 27.9% in FTVs registered during 2013 over 2012, the Minister explained.

Dr. Mahesh Sharma said that improving connectivity is the key to promoting tourism in the North-east for which the Government has taken new initiatives. One of the major steps in this direction is creating Guwahati as a hub to provide improved connectivity to the North-East. For this purpose, the Government has sanctioned  funds to the tune of  Rs 1200 crore for development of Guwahati Airport. Similarly, Guwahati has already started working as a heli-hub with the help of Pawan Hans services to the North-eastern states, which started working more than two months ago.

Dr Mahesh Sharma informed that  Rs 484 crore have also been sanctioned  for up gradation of Agartala Airport and  Rs 90 crore for Tezu Airport (Arunachal Pradesh). The Ministry of Tourism is working on  3 projects in Majuli, Tawang & Kamakhya  for promoting Tourism in North East States. Rs 250 crore have already been sanctioned for the projects under the Swadesh Darshan(North-east Circuit)  and PRASAD schemes of the Ministry of Tourism.

Dr Mahesh Sharma said that we need to increase India’s share in world tourism from 0.68 to 1 % by 2020 to realize the full potential of this sector. Tourism helps in women empowerment and youth employment. He reiterated the motto of the Ministry of Tourism ‘Cleanliness, Safety and  Hospitality’.  Dr. Mahesh Sharma also said that the facility of e-visas have been extended to 113 countries and the government will extend it to 150 countries by March next year.