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<ul><li><keyword id="9875222" type="General" weightage="50" keywordseo="a-parliamentary-standing-committee" source="Orion">A Parliamentary Standing Committee</keyword> has taken note of the high air fares charged by some airline operators in the domestic sector.</li><li>The <keyword id="47865" type="General" weightage="80" keywordseo="committee" source="Orion">Committee</keyword> also pointed out the wrong information published by the private airlines on their websites, regarding the number of seats left in the flight and the prices of the tickets.</li></ul>New Delhi, A Parliamentary Standing Committee has taken note of the high air fares charged by some airline operators in the domestic sector, and held that they are misguiding the public and forcing passengers to pay more. The Committee also pointed out the wrong information published by the private airlines on their websites, regarding the number of seats left in the flight and the prices of the tickets. "The level of misinformation can be gauged from the fact that even after the last tickets have been sold, the same number of seats show on the website, as indicated before the tickets sale. This indicates that airline operators are misguiding the public and forcing passengers to pay more," the panel said in the Demand for Grants (2023-24) report of the <keyword id="58151" type="General" weightage="50" keywordseo="civil-aviation-ministry" source="Orion">Civil Aviation Ministry</keyword>. In view of the above, it recommended that the Ministry should formulate appropriate guidelines regarding rationalisation of fares and publishing the correct information on the website of the airlines. It also pointed out that 'Predatory Pricing' is being restored to by the domestic airlines sector. "A particular airline may sell its air tickets at such a low level, that other competitors cannot compete and are forced to exit the market. A company that does this will see initial losses, but eventually it benefits by driving competition out of the market and raising its prices again," said the report. The Committee desired to know whether aviation regulator, the <keyword id="6354787" type="General" weightage="50" keywordseo="dgca" source="Orion">DGCA</keyword> had at any point of time intervened to check the fares of air tickets. It also expressed concern at the fact that in the domestic sector, private airlines are charging different fares for the same sector, route and same direction of flights. This is specifically so for the northeastern region and hilly areas including Jammu &amp; Kashmir and Ladakh, where the prices of domestic sector tickets are, sometimes, even more than the international airline sector prices. The Committee took note of the fact that after the repeal of the Air Corporations Act, 1953, the airfare is market driven and depends on market fares, and is neither established nor regulated by the government. "It notes the DGCA's comments that the airfares were regulated for a fixed period during the Covid pandemic in compliance with <keyword id="1773277" type="General" weightage="50" keywordseo="aircraft-act" source="Orion">Aircraft Act</keyword>, 1934 and the regulation was withdrawn as the Covid pandemic abated and that airlines are free to fix reasonable tariffs under the Aircraft Rules, 1937, with regard to cost of operation, services, reasonable profit and generally prevailing tariff," said the report. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/how-is-gpt-4-different-from-chatgpt-and-what-makes-it-unique/articleshow/98688465.cms">How is GPT-4 different from ChatGPT, and what makes it unique?</a> <a href="https://www.businessinsider.in/tech/news/googles-new-ai-features-for-docs-gmail-and-more-to-rival-microsofts-workspace-toolsheres-what-it-means/articleshow/98657324.cms">Google’s new AI features for Docs, Gmail, and more to rival Microsoft’s workspace tools—here’s what it means</a>

Airlines misguiding people, forcing passengers to pay more, says Parl Panel

The Indian <keyword id="31907" type="COMPANY" weightage="100" keywordseo="Aviation">aviation</keyword> sector has been buzzing with activity over the last few months. First, the AirAsia debut (in partnership with Tata Group) and announcements stirred the low-cost airlines. Next, the Tata and the Singapore Airlines (SIA) tied up to launch a full-service airline called Vistaar. Jet, which runs the full-service airline Jet Airways as well as the low-cost carrier Jet Konnect, has announced to shut down its low carrier and focus only on full-service airline. But the question is: Is full service the way to go in the Indian airline industry? Are Indian consumers ready to pay that extra premium? 
 
Rough skies 
India’s aviation sector has been going through rough skies. The last few years had the biggest names bleeding in the airline space in India. According to the Centre for Asia Pacific Aviation (CAPA) India Aviation Outlook report, the last seven years have been quite challenging for the Indian airline sector with its cumulative total loss (in these seven years) about $10.6 billion. In the FY 2013-2014, the combined loss of the industry stood at approximately $1.7 billion and the situation seems to stay the same with expected combined loss of the industry to be at Rs $1.3-1.4 billion, in FY 2014-2015. 
 
Rougher for <keyword id="2484870" type="UNKNOWN" weightage="100" keywordseo="Full-service-airlines">full-service airlines</keyword> It seems that the turbulent times in the aviation sector have affected the full-service carriers more. <keyword id="6360137" type="CITY" weightage="60" keywordseo="kingfisher">Kingfisher</keyword> Airlines’ fall is the first that comes to one’s mind. Jet Airways, too, has been in big trouble with its biggest ever loss net loss in the last few years climbing up to be at Rs 3667.65 crore (FY 2013-2014). The company accrued net loss of Rs 485.5 crore in FY 2012-2013 and Rs 1236.1 crore in FY 2011-2012. Another full-service airline, Air India, posted an annual net loss of Rs 5000 crore in the FY 2013-2014. 
 
And the year was challenging for the low cost airlines SpiceJet too, as it accrued its highest ever annual net loss of Rs 1003 crore this fiscal (FY 2013-2014). This is five times more than its annual net loss of Rs 191 crore in FY 2012-2013. 
 
The only two airlines that have posted profits over the last couple of years are low cost carrier GoAir and Indigo. GoAir has posted approximately Rs 100 crore profit in both financial years. Indigo Airlines posted whopping profits of Rs 787 crore in FY 2012-2013, its current fiscal profits are not available yet experts claim that it had stayed profitable this year too. Clearly, so far, the low cost carriers look to be in a better position over the full service ones. 
 
Not many takers for full-service carriers 
The numbers of various airlines over the last few years indicate that there are not too many takers for full-service carriers, certainly not enough to be profitable. According to the CAPA report, in 2014, so far about 6.1 crore flew domestically. Out of this, only one-third, i.e., 2.2 crore took the full-service carriers Air India and Jet Airways (Kingfisher is grounded for two years). The low-cost carriers flew about 3.9 crore (two-third of the total flyers). 
 
The economic downturn has made not only individual travellers cut costs, but the so-called suave corporate travellers too are cautious about spending. In most cases, companies prefer to book low cost carriers for their executive, barring only the senior most. This has impacted the occupancies of the full service airlines. Unfortunately, the trend is expected to go on meaning challenging times for the full service airlines. 
 
Value for money is what Indian consumers want 
Well, looking at the overall behaviour of Indian consumers across sector, one can easily say that value for money is a key focus for them, especially in the service sector. This means that while a segment of consumers often prefer the cheapest option available, there is a huge segment of consumers which weighs what is it that they are getting out of their money. So they may want a specialized service, better seats, meals, lounge access, etc. and they might be inclined to pay premium for it. But the question is how much premium? And do they really see value out of that premium. 
 
If the Tata-SIA’s Vistaar and the other two full service carrier Jet Airways and Air India can work that equation well along with the right cost structure, they can make space for themselves in this cost driven airline industry.

Is Full Service The Way To Go In Indian Airline Industry?

Ever since most private Indian carriers hiked their ticket cancellation charges, the Directorate General of Civil Aviation (<keyword id="6354787" type="ORGANIZATION" weightage="80" keywordseo="DGCA">DGCA</keyword>) has been receiving complaints from flyers and passenger organisations. 
 
The flyers approached the DGCA to stop this fleecing by the airliners and taking note of the matter, DGCA Chief M Sathiyavathy is now studying the complaints and may come to rescue of the passengers. 
 
"We have got several complaints on the issue of cancellation charge being hiked by airlines. We are examining them," a senior DGCA official told Economic Times. 
 Airlines hiked cancellation charges of a domestic ticket up to Rs 4,000. A senior <keyword id="2573" type="CITY" weightage="60" keywordseo="Air-India">Air India</keyword> official told the financial daily that their cancellation charges started at Rs 1,000 and were unchanged for a long time. 
 
"While ticket prices have been slashed in lean season, or to improve airline loads..., most or all carriers have raised cancellation prices by 50-100%,” Thomas Cook India Ltd's COO (corporate travel) Indiver Rastogi told ET. 
 
Rastogi informed that in the last 20 months, not only have cancellation charges tripled (from Rs 750, charges are now anything between Rs 1,500 and Rs 2,250) but also many compartments were created by the airline in order to make this a revenue generating model. 
 
"The cancellation percentage is anything between 15% and 17% of the overall transaction count, one can imagine the impact on the travel budget if a penalty of Rs 2,250 is applied on every ticket bought within three days of travel and cancelled in the same time frame," Rastogi told the financial daily. 
 
Meanwhile, in compliance with DGCA's recent nod, airlines have offered all their seats for pre-booking at a charge and some private airlines have even put a price tag on all window, aisle and extra legroom seats, ranging from Rs 200 to Rs 600. 
 
Now passengers, especially travelling in a group and wanting to sit together, would pay extra in advance to get desired seats or would take whatever is available while checking-in at airports. 
 
Flyers are upset by this move as well and want the DGCA to act on this too. 
 
The Air India official said passengers are not charged anything for seat selection and they can select any seat they want - window, aisle or extra legroom - at time of booking ticket. 
 A senior <keyword id="6354706" type="CITY" weightage="80" keywordseo="Indigo">IndiGo</keyword> official told ET, "Our cancellation charges used to be Rs 1,500 earlier. Now, we have four slabs from Rs 1,250 to Rs 2,250. 
 
People who cancel way in advance will be charged less now and charges have, in fact, been lowered for them. Also, we offer free seat assignment at the time of booking. Only if someone does not like the assigned seat and wants to change that, would he or she be required to pay for seat selection." 
 
(Image:Reuters)

Airlines are pissing off the sectoral authority. Know why

ReutersFILE PHOTO: A United Airlines passenger jet taxis at Newark Liberty International Airport<ul class="summary-list"><li>Global stocks plummeted after President Donald Trump imposed travel restrictions from several European countries.</li><li>The European travel and leisure index was down nearly 10%, while US airline stocks dropped more than 10% in pre-market.</li><li>One analyst said the global airline industry has lost $41 billion in just one month due to the growing risk surrounding coronavirus. </li><li><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</li></ul>Airline stocks across the globe are plunging after US President Donald Trump announced travel restrictions from several countries in Europe in order to curb the growing risk of coronavirus. On Wednesday, <a href="https://www.businessinsider.com/europe-blindsided-by-trump-coronavirus-pandemic-travel-ban-report-2020-3?r=US&amp;IR=T">Trump announced that the US will ban all travel</a> from 26 European countries by non-US citizens and permanent residents. While global stocks slipped into turmoil, individual airline stocks nosedived on the news. On Thursday, the European travel and leisure index was down 10% with major airlines such as Air France-KLM, Lufthansa and British Airways-owned IAG down more than 10%. Shares in plane-maker Airbus dropped 9% in the morning trading. "The real blood bath is going to be in the travel and leisure industry. I am expecting this industry to fall as much as 30% to 50%," Naeem Aslam, chief markets analyst at AvaTrade told Business Insider on Thursday. "Out of all the other sectors, this could be the most fruitful short trade for investors given the global lockdown situation that we are facing because of coronavirus. I expect bigger companies to take advantage of the available credit lines now and buy smaller players. So, towards the end of this year or third quarter, we are likely to hear more mergers and acquisition news."Stateside, Boeing shares dropped 42% in pre-market trading. Meanwhile, major airlines were also down across the board. United Airlines dropped more than 10%, while Delta was down more than 6% in pre-market trading. "Coming after such a torrid time for airline stocks the ban is a real killer blow. We don't know how long it will last, and the Transatlantic business is so huge. Those with good balance sheets will be ok, but there are plenty of airlines that are not in good shape and will go under," Neil Wilson, chief markets analyst at Markets.com, told Business Insider on Wednesday. <h2>Airlines have lost $41 billion of value in one month</h2>The global airline industry has been on a rollercoaster ride since the start of the coronavirus pandemic. According to Russ Mould, Investment Director at AJ Bell, the global airline industry has lost more than $40 billion of its value in one month. Source: Refinitiv dataGlobal airline stocks lose $41 billion of value in one month - AJ BellIn a note last week, AJ Bell's Mould said that as investors try and work out the impact of coronavirus on the global economy, the global airline sector has taken a "fearsome battering." "The global airline sector's market capitalization has dropped by $40.6 billion, or 25%, in the last month alone. The sector's valuation now stands at a five-year low and 45% below its January 2018 peak of $205 billion, as benchmarked by the S&amp;P Global 1200 airlines index," he wrote. <h3>NOW WATCH: <a href="https://www.businessinsider.com/what-creatures-can-survive-mariana-trench-2020-2">What's inside the Mariana Trench</a></h3>

'Real killer blow': Global airline stocks plunge on Trump's travel ban and analysts expect a '30%-50%' drop

<ul><li>In just one day, traders betting against <keyword id="44023" type="ORGANIZATION" weightage="60" keywordseo="airlines">airlines</keyword> made $188 million in mark-to-market profits, <a href="https://www.shortsight.com/buffett-crashes-the-u-s-airline-sector/">according to a Monday note from Ihor Dusaniwsky</a>, the managing director of predictive analytics at <keyword id="299884" type="COMPANY" weightage="60" keywordseo="S3-Partners">S3 Partners</keyword>, a financial analysis firm. </li><li>The airline sector slumped nearly 5% after <keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword> said that he'd sold all holdings in the industry during Berkshire Hathaway's annual meeting Saturday. </li><li>"We should see continued <keyword id="155669" type="PERSON" weightage="60" keywordseo="short-selling">short selling</keyword> in AAL, UAL and DAL and a resumption of short selling in LUV after Buffett's comments and today's price action," Dusaniwsky wrote. "Shorts, who are already deep in the money, should be letting their profits run as long as the airline stock prices trend downward."</li><li><a href="https://www.businessinsider.com/">Read more on Business Insider</a>.</li></ul>Warren Buffett's comments on the "big four" airlines over the weekend fueled lucrative trades for those betting against the industry. In just one day, traders betting against airlines made $188 million in mark-to-market profits as the sector sank nearly 5% Monday on Buffett's remarks, <a href="https://www.shortsight.com/buffett-crashes-the-u-s-airline-sector/">according to a Monday note from Ihor Dusaniwsky</a>, the managing director of predictive analytics at S3 Partners, a financial analysis firm. The gains came after Buffett said on Saturday, during the <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-2020-annual-meeting-highlights-2020-5-1029156864?utm_source=markets&amp;utm_medium=ingestgest">Berkshire Hathaway annual shareholder meeting,</a> that his company had sold all of its holdings in <a href="https://markets.businessinsider.com/stocks/aal-stock?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">American Airlines</a>, <a href="https://markets.businessinsider.com/stocks/dal-stock?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">Delta Air Lines</a>, <a href="https://markets.businessinsider.com/stocks/ual-stock?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">United Airlines</a>, and <a href="https://markets.businessinsider.com/stocks/luv-stock?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">Southwest Airlines</a>. Buffett called holding the shares a mistake, and said he isn't sure how the industry will cope following being crushed by the coronavirus-pandemic. "The world has changed for the airlines," said Buffett. "The future is much less clear to me about how the business will turn out." So far in 2020, betting against the airline industry has been a lucrative trade — the entire sector is up $4.13 billion in net-of-financing mark-to-market profits, or 91%, on the year, <a href="https://www.shortsight.com/buffett-crashes-the-u-s-airline-sector/">according to S3 data.</a> Short-sellers make profits when the stocks they bet against decline. "We should see continued short selling in AAL, UAL and DAL and a resumption of short selling in LUV after Buffett's comments and today's price action," wrote Dusaniwsky. "Shorts, who are already deep in the money, should be letting their profits run as long as the airline stock prices trend downward."Read more: <a href="https://www.businessinsider.com/stock-picks-to-buy-best-travel-coronavirus-recovery-tom-lee-2020-5">Renowned strategist Tom Lee recommends 12 beaten-down travel stocks to buy now for an average profit of 32% during the pandemic recovery</a>Traders have $3.14 billion of short interest in the airline sector, and have added $635 million of new short selling in the last month, according to S3.If airline prices start to rebound, "we can expect a quick rush to cover some of their short exposure in order to realize their mark-to-market profits," Dusaniwsky said. In the last week, traders covered about $60 million of their short positions in the airline industry, he said. Delta had the largest amount of short covering last week, according to the note — $140 million of "buy-to-covers" decreased short exposure by 20%, S3 said.Read the original article on <a href="https://www.businessinsider.com/airline-stocks-short-sellers-millions-day-buffett-comments-sold-shares-2020-5">Business Insider</a>

Traders betting against airlines made $188 million in a single day after Warren Buffett said he sold all his shares

By Quaid Najmi The tottering <keyword id="528556" type="General" weightage="20" keywordseo="Indian-aviation-sector" source="Orion">Indian aviation sector</keyword> hit fresh turbulence when early this month, another flourishing private airline was suddenly grounded owing to various problems, making it the 11th in a decade to �fall from the skies. Throwing their hands up, the <keyword id="11252024" type="General" weightage="20" keywordseo="go-first" source="Orion">Go First</keyword> budget airline's owners -- the Wadia Group -- filed voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT) sending shockwaves through the entire <keyword id="34990" type="General" weightage="20" keywordseo="airline-industry" source="Orion">airline industry</keyword>. Go First was plagued by a peculiar problem -- the purported failure of the jet engine manufacturer, Pratt &amp; Whitney, USA, to supply engines/spares for its aircraft that grounded nearly 40 percent of the fleet for several months before it was compelled to totally suspend operations from the first week of May 2023. While the <keyword id="6354787" type="General" weightage="20" keywordseo="DGCA" source="Orion">DGCA</keyword> slapped a show-cause notice on the carrier for its abrupt actions that created havoc with thousands of flyers, Civil Aviation Minister Jyotiraditya Scindia seemed sympathetic to Go First grappling with the engine problems. While assuring that the government was helping out as best as possible, Scindia also called upon Go First to make alternative travel arrangements for its flyers to avoid inconveniencing them. According to Go First the application under the IBC came after the "ever-increasing number of failing engines supplied by PW" which led to the grounding of around 25 of its 61-strong Airbus A-320neo aircraft, or almost 40 percent of its fleet by April 30, 2023. Go First said in a statement that the groundings due to faulty PW engines increased from 7 percent of its fleet in December 2019 to 31 percent in December 2020 and 50 percent in December 2022, and blamed PW for giving assurances but failing to meet them. In view of this, the beleagured carrier suffered a whopping loss of nearly Rs 10,800 crore and even demanded Rs 8000 crore as compensation from the PW which could help Go First to meet its financial commitments/obligations. Besides, Go First had also coughed up Rs 5,657 crore to its lessors in the past couple of years comprising Rs 1,600 crore as lease rent for the non-operational grounded aircraft. Go First was also hampered by the PW reportedly not honouring the March 2023 award of the Emergency Arbitrator in Singapore to immediately provide the airline with at least 10 serviceable spare leased engines by April 2023 and 10 more per month till December 2023 to enable the carrier to resume full operations, financial rehab and survival. An aviation official said that after the NCLT processes the Go First application, it could appoint an interim Resolution Professional to take over and re-start operations, adding that a similar exercise in 2019 with another grounded private carrier failed to take-off. Though Go First's promoters have pumped in around Rs 3,200 crore in the past three years, coming to a total investment of nearly Rs 6,500 crore, plus support from the government's emergency credit line guarantee, all this failed to help as the airline kept incurring 100 percent of its operational costs and with a total loss of Rs 10,800 crores, it �succumbed'. In the NCLT plea, the 17-year-old airline which operated over 32 flights to 29 domestic and 10 international destinations, has sought several interim directions including restraining the lessors from taking back their aircraft, any adverse action by the DGCA, suppliers of essential goods-services, etc. Since launching low key operations in November 2005 as �GoAir', Go First gradually climbed up to become the fifth largest private carrier, consistently profitable and expanding till the PW �engine troubles' started from December 2020, hitting its operations and forcing it to ground in May 2023. However, the owner-promoters have already made it clear that they are keen to revive and not sell the venture or even exit this sector, which has witnessed many ups and downs with the practical �demise' of another 10 airlines in the past 10 years - or average one per annum! The Go First imbroglio came at a crucial juncture for the country's aviation sector which was soaring to pre-Covid 19 levels after the harsh pandemic and the ongoing peak summer holidays - and its full impact on the industry remains to be seen. (Quaid Najmi can be contacted at q.najmi@ians.in) SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sustainability/news/buried-toxic-waste-from-old-mining-operations-could-destroy-ecosystems-as-warming-thaws-the-arctic-permafrost/articleshow/100394167.cms">Buried toxic waste from old mining operations could destroy ecosystems as warming thaws the Arctic permafrost</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sustainability/news/53-of-largest-lakes-worldwide-losing-water-storing-capacity-due-to-global-warming-and-unsustainable-human-consumption/articleshow/100394475.cms">53% of largest lakes worldwide losing water storing capacity due to global warming and unsustainable human consumption</a>

Go First Gone: 11th private airline to 'drop' out of skies in a decade

We still remember, a decade ago return flights from Delhi to Mumbai were available for less than Rs 4,000 on budget carriers such as indigo (these are now three times the amount). The budget carriers were really good options as they were super cheap when compared to <keyword id="6360137" type="CITY" weightage="40" keywordseo="kingfisher">Kingfisher</keyword>, <keyword id="6358200" type="CITY" weightage="40" keywordseo="Jet-Airways">Jet Airways</keyword>, <keyword id="4637" type="ORGANIZATION" weightage="40" keywordseo="Sahara">Sahara</keyword> and Air India. However, the segregation between a budget airline and a luxury one became thinner and thinner as the years passed by. 
 Another reason why the budget players flourished hard is because the upper class of airlines (such as Sahara and Kingfisher) either shut down or got acquired by someone else. This enabled the budget airlines to expand further and in the process increase prices as other airlines were biting the dust. Fuels costs are also a problem and the direct impact was and is being borne by the consumers. But, things are changing rapidly. More international players such as <keyword id="86568" type="COMPANY" weightage="40" keywordseo="Air-Asia">Air Asia</keyword> have stepped onto the Indian turf to begin a fresh round of price wars. 
 
Air Asia has started operation in 5-6 cities in India including Goa, Bangalore and Chennai. And the prices they are offering are quite low. In many cases cheaper than the closest Indian budget airlines. This has forced the others to follow suite and lower their respective prices as well. For the consumers it is a victory as the charges have been increasing at a steady pace. 
 
This will make air travel a little better. Many reports suggest, Indian budget airlines will try to woo the customers with cheaper airfares and perks such as extra baggage allowance. The industry and carriers do deny these reports. Air specialists and check-in experts on the other hand do say, one cannot refute that these things have happened in the past and can possibly happen again. Priority check-in and preferential seating for regular travellers can also come to light. 
 After Air Asia, budget airlines such as <keyword id="204033" type="COMPANY" weightage="40" keywordseo="Tiger-Airways">Tiger Airways</keyword> and few gulf carriers are also looking at India as a lucrative market to expand business. Moreover, getting a ticket on trains is becoming harder by the day, flights become an easy way to travel. With increasing demand the south-east Asian and Gulf air operators can easily eat in to the swelling pie. 
 
The challenge and way ahead for Indian players is seeming slightly tough. They need to wake up and smell the reality. They are not alone anymore and with relaxed norms in India for multi-nationals they can lose a lot of business if they are not ready.

Air Asia Sparked A Price War. The Airline Sector Is Heating
Up.

<ul><li>Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> announced measures that will benefit both airline operators like IndiGo and SpiceJet, as well as developers like GMR, GVK, and Adani Group.</li><li>India opened up more of its airspace for airlines to ply, decided to put up more airport development projects for bidding. </li><li>Another major investment was Sitharaman’s bid to make India an MRO hub – Maintenance, Repair and Overhaul.</li></ul>India opened up more of its airspace for airlines to ply, decided to put up more airport development projects for bidding, and ease taxation as well as restrictions on maintenance and repair to bring down costs for aviation firms. These reforms announced by Finance Minister Nirmala Sitharaman will benefit both airline operators like IndiGo and SpiceJet, as well as developers like GMR, GVK, and Adani Group. <div type="image" title="indigo." msid="75775924" hostid="261"></div> <div type="image" title="spicejet." msid="75775928" hostid="261"></div> The government estimates airlines will save about ₹1,000 crore a year by flying shorter routes. “60% of the Indian airspace is freely available, because it is fairly restricted for civil and defence purposes, so we have been taking longer routes. This has to be rationalised for optimum utilization of time and fuel. Customers can get to their destinations quicker and cheaper,” Sitharaman said. More airport projects up for grabs The second step taken was that six more airports will be put up for auction by the Airports Authority of India and will be built on public private spaces. “Additional investments will be made by private players in 12 airports where investments are already present. The financial implications will be on the AAI. The first and second round of investments to get ₹13,000 crore,” said Sitharaman. India currently has several airport projects under construction – the Jewar international airport in Greater Noida, the Mopa Airport in Goa, Navi Mumbai international airport in Maharashtra, Sabarimala airport in Kerala among others. In April 2020, GMR got the go-ahead for the Bhogapuram airport in Andhra Pradesh. In February 2019, the Adani Group won a tender to operate all six government-owned Indian airports located in Ahmedabad, Jaipur, Mangaluru, Trivandrum (Thiruvananthapuram), Lucknow, and Guwahati. Making India an airline maintenance hub Another major investment was Sitharaman’s bid to make India an MRO hub – Maintenance, Repair and Overhaul. “Most Indian aircrafts go abroad for their repair works and spend there. But India has all the capacity – manpower and soft skills to set up an MRO hub here. India can be the centre for many of the flights for South East Asia as well as westwards,” she said. This will be a major step that we want to make sure India benefits from, she added. Not just the civil sector but defence aircrafts will also benefit from it. Through this, maintenance will also be cheaper for the aviation sector. The issue the MRO industry used to face because of the aircraft used to fly to other countries for repair. "In India we have a promising civil aviation sector, so we want the MRO sector to be located in India and much of the repair work should be done here. The problem they used to face was competitiveness was in GST. GST rate used to be 18%, so the meeting held in March the rate has been brought down to 5% with full input tax credit and that is something that will make the MRO industry very competitive," said the government. The coronavirus pandemic has left the Indian airlines sector stranded on the runway. All domestic and international flights have been suspended ever since the lockdown. “It will take 2-3 years for air travel to return to 2019 levels and a few more years to return to long-term growth trends according to Boeing,” said a Centrum Broking report last week. The <keyword id="34987" type="ORGANIZATION" weightage="20" keywordseo="aviation-industry">aviation industry</keyword> is staring at losses to the tune of ₹25,000 crore, according to a CRISIL report. “These are preliminary estimates, and aggregate losses could increase if the lockdown is extended beyond the first quarter. As and when operations resume, overall operational capacity will hover at 50-60% for the rest of the fiscal. Consequently, mergers and acquisitions of airlines, and relook at expansion plans of private and upcoming greenfield airports would be possibilities," <a href="https://www.livemint.com/news/india/covid-19-impact-indian-aviation-may-incur-rs-25-000-crore-losses-says-crisil-11588838896045.html">said Jagannarayan Padmanabhan</a>, director and practice leader, transport &amp; logistics, Crisil Infrastructure Advisory. <a href="https://www.thehindu.com/opinion/op-ed/will-the-aviation-industry-recover-from-the-pandemic/article31359708.ece">Globally</a>, the industry’s revenues could be cut by $252 billion in 2020.

Indigo and Spicejet get shorter routes, cheaper fuel bills while Adani, GMR, and GVK get more airport projects to bid for

New Delhi, May 16 () The government's announcements for civil aviation sector breathe some life into the coronavirus pandemic-hit sector and will provide overall positive sentiment, experts said on Saturday, even as some of them emphasised the need for support for airlines. On Saturday, Finance Minister Nirmala Sitharaman announced plans for managing airspace efficiently, making the country a MRO (Maintenance Repair and Overhaul) hub, and auctioning of six more airports on PPP model. GMR Group Chairman G M Rao said India is leading the growth of civil aviation sector globally and is generating significant economic impact. According to him, rationalising Indian airspace is a significant step that would benefit not only the entire sector but also bring down travel time for passengers. Privatising six new airports under public-private partnership (PPP) model would generate significant economic effect and would lead to creation of new jobs. "Likewise, tax incentives for the MRO sector will not only bring foreign investment into India and impact the economics of the airlines but will also open up new opportunities for youth to build careers. The investments being made in airports, privatised in the first two phases, are already leading to enhanced job creation in both aero and non-aero areas," he said. GMR Group manages two airports -- Delhi and Hyderabad -- through PPP model. Welcoming the announcements, GVK Group founder and Chairman G V K Reddy said the move to have PPP model for six more airports would provide the Airports Authority of India (AAI) resources to develop smaller airports across the country. "The plans to make India a global MRO hub will ensure savings of precious foreign exchange and enable Indian airlines to get their aircraft serviced locally," he said. GVK Group manages Mumbai airport through PPP model. Consultancy EY India's Transaction Partner Kuljit Singh said the announcements are good initial first steps and this might be followed by a second phase of reforms package. "... the second phase may need to have more reforms in taxes on fuel, subvention for airport charges, government guarantees for additional unsecured borrowings of private airlines etc," he noted. Law firm Cyril Amarchand Mangaldas' Partner Ajay Sawhney said that today's announcement breathe some life into the pandemic-hit civil aviation sector, but no mention of bailouts on an immediate basis may attract mixed response from the industry. "Though, easing curbs on airspace would certainly bring in long term efficiency, and on an immediate basis some relief to the airlines, but a more meaningful intervention may be required if the aviation sector is not on the recovery path soon," he noted. Travel portal EaseMyTrip.com Chairman and CEO Nishant Pitti said the announcements would definitely provide positive sentiments for the industry overall. "In addition for industry to withstand the recovery period, government will need to support the backbone, airlines, in these turbulent times through tax relief or relaxation in multiple charges paid by airlines to reduce their costs," Pitti said. Vasudevan S, Partner (Infrastructure Government and Healthcare) at consultancy KPMG in India said the aviation sector is the hardest hit because of the global pandemic with an estimated USD 500 billion loss in airline and airport revenues in FY20. Airport PPP transactions will help unlock value for AAI and state governments, given current investor interest and long-term potential of the Indian market. "Rationalising the MRO tax structure has been a long pending demand of the industry and it is good to see that happening finally, but more needs to be done to create a level playing field, attract foreign investment and make it profitable," he noted. Care Ratings Chief Economist Madan Sabnavis said aviation sector has incentives as six airports would have PPP model, but the "question is who will invest now when future of airlines is uncertain". Consultancy Deloitte India Partner Peeyush Naidu said the initiative for private sector participation for operations, management and development of airports is well-intentioned. IAS GDK RAM RVK

Govt measures will provide positive sentiment for civil aviation sector: Experts

Mumbai, May 7 () The disinvestment process for national carrier Air India looks "very uncertain" in the wake of the coronavirus pandemic that has impacted the aviation sector the most globally, according to rating agency Crisil. In another attempt to sell loss-making Air India, the government, in January this year, sought Expression of Interest (EoI) and the deadline for submission of EoI has now been extended till June 30. Initially, the deadline was March 17 and was first extended till April 30. "With the current kind of environment, for people to bid for a known airline like Air India and the kind of commitment that they would have to make, it looks very uncertain that their process can go through in the current scheme of things," Jagannarayan Padmanabhan, Director and Practice Leader (Transport and Logistics) at Crisil Infrastructure Advisory said on Thursday. However, Crisil expects mergers and acquisitions of airlines in the face of the losses that the domestic carriers are estimated to suffer in the current situation. "The EoI might have been issued but in the current situation, airlines are unlikely to take up any new assets on its books." he said. "The Air India part of privatisation will have to wait for its turn. What is the timeline, I don't know as of now. But the current environment may not be the best time to go through (the sale process)," Padmanabhan said. In 2018, the government's efforts to divest Air India failed to take off. At that time, 76 per cent stake in the airline was to be sold. Under the current disinvestment plan, the government has proposed to sell 100 per cent stake in the airline along with entire shareholding in AI Express and 50 per cent in ground handling joint venture -- Air India-SATS. Of the airline's total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle. Padmanabhan said all airlines irrespective of their size or business model or nature of operations have been impacted due to the coronavirus outbreak and all are looking at how to survive in the current situation. According to him, the domestic aviation industry is expected to incur combined loss to the tune of up to Rs 25,000 crore, with the airline sector accounting for an estimated loss of Rs 17,000 crore. IAS ANUANU

Air India divestment process looks very uncertain amid COVID-19 crisis, says Crisil

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Peter Macdiarmid/Getty ImagesPassengers have been left stranded by Primera going bust.</div></div></div><ul class="summary-list"><li>Nordic budget airline Primera Air has become the latest European carrier to go bust.</li><li>The European budget airline sector has been struggling for a while - Monarch went bust last year and Ryanair issued a profit warning this week.</li></ul>Nordic budget airline Primera Air has become the latest European carrier to go bust, saying all flights were being halted and stranding thousands of passengers."On this sad day we are saying goodbye to all of you," the airline <a href="https://primeraair.com/about-us/corporate-news/ceases-operations/">wrote in a note on its website</a> dated September 30. Here's the message: <div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://primeraair.com/about-us/corporate-news/ceases-operations/">Primera Air/screenshot</a></div></div></div>Primera was forced to cancel flights earlier this year, citing delays in receiving aircraft from Airbus, but has faced growing complaints about poor service and late refunds. The airline was planning to launch routes from Madrid to New York, Boston, and Toronto next year at prices as low as €149 ($172) each way.In Europe, <a href="http://uk.businessinsider.com/how-airlines-combat-low-cost-competition-2017-12">legacy airlines have been fighting back</a> against low-cost rivals by operating budget carriers of their own, squeezing an already crowding market and driving fares lower. KLM has Transavia while sister company <a href="http://www.businessinsider.com/joon-air-france-new-airline-millennials-2017-7" target="_blank" rel="noopener">Air France has launched Joon</a>.IAG, the parent company of British Airways and Iberia, in 2012 took full control of Spanish low-cost airline Vueling, which services destinations across Europe. Last year, IAG launched Level, a low-cost long-haul carrier designed to take on Norwegian and WOW. Lufthansa has been developing its Eurowings and Germanwings low-cost subsidiaries for the past 15 years.Primera's collapse comes a year after Britain's <a href="https://www.businessinsider.com/monarch-airlines-collapse-what-happened-explained-2017-10">Monarch Airlines went under after falling victim to intense competition for flights and a weaker pound.</a> Air Berlin, Germany's second-largest airline, filed for bankruptcy protection in August 2017.Just yesterday, <a href="http://uk.businessinsider.com/ap-ryanair-warns-earnings-hurt-by-strikes-rising-fuel-cost-2018-10">Ryanair, Europe's biggest airline by passengers, warned</a> that profit for the year would be hit by the fallout from labor strikes and rising fuel prices. The airline said more staff strikes could force the company to issue further profit warnings. <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/gary-shilling-legendary-economist-trade-war-outlook-says-us-will-win-2018-10">The legendary economist who predicted the housing crisis says the US will win the trade war</a></h3> <div> </div> </div>

Nordic budget airline Primera Air has collapsed - another blow for the struggling sector

<div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image on-image"><a title_source="AP" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/56a10e02c08a806f008bb32f-960/ap_222168315247.jpg"></a>AP</div></div></div>Falling oil prices are great news for the airline industry. For United Airlines, though, things are little more complicated. The airline just reported a fourth-quarter drop in revenue and earnings that fell short of analysts projections. One of the biggest reasons for this is the impact of falling oil on Houston's economy. Houston's George Bush Intercontinental Airport is one of United's largest hubs.Although cheap fuel has helped United become more profitable - United saved $4.2 billion in fuel costs last year - the airline is uniquely exposed to the recent financial struggles of the energy industry.In the fourth-quarter, revenue fell 3% to $9 billion and earnings came in at $934 million - below analysts projections of $959 million. The airline also blamed the strong dollar and pricing competition for the shortfall.<h2>Houston hit</h2>United's Houston operation has thrived in recent years as business from energy executives surged. But with the price of oil tumbling and mass layoffs underway, business from the energy sector has fallen significantly for the airline.Even worse, the airline said during the call that it is seeing a downturn in bookings in and out of Houston from non-energy sector customers which is an indication of the expanding impact of weakness in the industry on the whole city. Investors are taking this in stride. United's shares rose Thursday, along with the broad market, after having dropped for most of the year so far. <div class="KonaFilter image-container display-table float_left"><div><div class="image on-image">Yahoo FinanceUnited Airlines shares so far this year</div></div></div> It's partly because this continuation of a trend that United has flagged earlier. According to the airline, revenue from United's energy sector corporate business fell 35% last summer. United expects this trend to continue into the first quarter of 2016. There was some unexpected good news too. United's CEO Oscar Munoz, who had a heart transplant two weeks ago, turned up on the company's <a href="http://www.businessinsider.com/united-airlines-ceo-on-call-2-weeks-after-heart-transplant-2016-1" target="_blank">earnings call</a>.Munoz has been on medical leave since suffering a heart attack in October, but he's expected to return to the company as CEO at the end of the first quarter of 2016."I feel great! I'm planning to increase my involvement," Munoz said on the call. "I will certainly be back full time by the end of the first quarter if not sooner."With Munoz on medical leave, acting chief executive Brett Hart took time to thank the company's employees for their hard work and vowed to continue with Munoz's plan to improve the company's profitability and service. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/airbus-rocket-can-cross-the-atlantic-in-an-hour-2015-8">Airbus invented a rocket-powered airliner that can cross the Atlantic in an hour</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="9tNTlvdjo-YnhoH4FASxvdCXtuZJ4D8Q" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

United Airlines is the only airline in America that's got a problem with cheap oil

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">REUTERS/Mike Blake</div></div></div>United Airlines' third quarter earnings fell short of analysts projections. Revenue fell 2.4% to $10.3 billion and earnings came in at $1.7 billion - which was an increase from last year. On the company's earnings call, the topic of the plunge in oil prices came up - but not for the reason you might expect. Tumbling oil is actually hurting United's business. In the quarter, revenue from United's energy sector corporate business fell 35%, executives said on the call with analysts and the media. This won't be getting any better - United projected a 40% fall in business at the end of the year. The airline doesn't break out how much of its overall revenue comes from the energy industry, but there is a simple reason for the importance of the sector: Among legacy airlines, United has the largest presence in Houston. Over the past year, <a href="http://www.businessinsider.com/r-oil-prices-fall-on-global-oil-glut-fears-weaker-us-jobs-data-2015-9" target="_blank">crude oil prices have been</a> cut in half, resulting in hundreds of thousands of layoffs in the energy sector particularly in the Houston area. Of course the drop in fuel prices isn't all bad news for the airline. Third-quarter fuel expenses were more than 38% lower than the same period in 2014. Cheap fuel has helped the airline cut overall expenses by 10% in the last quarter. In addition to weakness in the energy section, company executives also cited poor exchange rates and a drop in income front surcharges as other factors that contributed to the airline's fall in revenue. Investors are taking this in stride. United's shares rose Thursday after the results. But that gain also comes after the shares were hammered by uncertainty over the company's leadership. The earnings call came just a week after <a href="http://www.businessinsider.com/united-airlines-ceo-has-resigned-2015-9" target="_blank">newly-appointed</a> <a href="http://www.businessinsider.com/report-united-airlines-ceo-has-suffered-a-heart-attack-2015-10" target="_blank">CEO Oscar Munoz</a> was admitted to a hospital after suffering a heart attack. With Munoz on medical leave, acting chief executive Brett Hard took time to thank the company's employees for their hard work and vowed to continue with Munoz's plan to improve margins and service.<div class="KonaFilter image-container display-table"><div><div class="image on-image">United Airlines</div></div></div> <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/airbus-rocket-can-cross-the-atlantic-in-an-hour-2015-8">Airbus invented a rocket-powered airliner that can cross the Atlantic in an hour</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="9tNTlvdjo-YnhoH4FASxvdCXtuZJ4D8Q" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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