Qatar Airways takes Airbus to London High Court over A350 skin damage

Qatar Airways said on Monday, December 20 it had started proceedings in a UK court against planemaker Airbus in a bid to resolve a dispute over skin flaws on A350 passenger jets, bringing the two sides closer to a rare legal showdown over aviation safety.

The companies have been locked in a row for months over damage, including blistered paint and corrosion to a sub-layer of lightning protection, which Qatar Airways says has now led to the grounding of 21 A350 jets by its domestic regulator.

Airbus insists the carbon-composite passenger jets are safe to fly despite some "surface degradation," while Qatar Airways says it is too early to say whether safety has been compromised.

(Image Courtesy - Reuters)

The dispute came to a head last week when Airbus, in what experts called an unprecedented move, accused the Gulf airline of misrepresenting the problem as a safety issue and threatened to call for an independent legal assessment.

On Monday, December 20 Qatar Airways hit back, saying it had taken its complaint against Airbus to the High Court in London. In a statement, Airbus confirmed it had received a formal legal claim. "Airbus intends to vigorously defend its position," it said.

"We have sadly failed in all our attempts to reach a constructive solution with Airbus with the accelerated surface degradation condition adversely impacting the Airbus A350 aircraft," it said in a statement. "Qatar Airways has therefore been left with no alternative but to seek a rapid resolution of this dispute via the courts."

A spokesman earlier reiterated it had found the cause of the problem and was working with customers and Europe's safety regulator, which has said it has not identified a safety issue.

Qatar Airways denies that the surface flaws - which witnesses say have left some of the jets with a pock-marked appearance - are properly understood and said on Monday that it wanted Airbus to mount a "thorough investigation". 

Several industry executives said such a public legal fight between two of aviation's leading players is unprecedented.

The row widened when documents revealed at least five other airlines in varying climates had complained about paint or other surface problems since 2016. Airbus had until recently maintained the problem was focused on paint on Qatar's A350s, based in the Gulf.

The planemaker has said it is proposing interim solutions ranging from repairs to repainting and has accused Qatar Airways of ignoring those proposals without reasonable justification.

Qatar Airways reiterated on Monday, December 20 it could not be sure whether the proposed repairs would work without deeper analysis. Its chief executive has questioned why Airbus is still working on a solution if a reliable fix is already available.

The 21 grounded jets represent 40% of its current fleet of A350s, for which it was the launch customer with the biggest order. Other airlines still operate the jet, saying its airworthiness is not affected by what they term cosmetic issues.

The row meanwhile looks set to cost Airbus a big Qatar order for a new A350 freighter version. It received the first firm order for the model on Monday, confirming a previously tentative order for four planes from France's CMA CGM.

Qatar Airways Chief Executive Akbar Al Baker told the South China Morning Post last week he had previously looked at placing a large order for the cargo A350. Sources now expect Boeing to win the order to replace Qatar's 34-35 freighters.

(With Inputs from Reuters)

Boeing Chief Executive Dave Calhoun and Airbus Americas CEO Jeffrey Knittel on Monday, December 20 urged the Biden administration to delay the planned deployment of new 5G wireless services, saying it could harm aviation safety.

The executives in a joint letter asked the U.S. Transportation Secretary Pete Buttigieg to support postponing AT&T and Verizon's January 5 deployment of C-Band spectrum 5G wireless.

"5G interference could adversely affect the ability of aircraft to safely operate," the letter said, adding it could have "an enormous negative impact on the aviation industry."

The industry and Federal Aviation Administration (FAA) have raised concerns about the potential interference of 5G with sensitive aircraft electronics like radio altimeters.

FAA this month issued airworthiness directives warning 5G interference could result in flight diversions. The agency plans to provide more information before January 5.

The Boeing Airbus letter cited an analysis from trade group Airlines for America (A4A) that if the FAA 5G directive had been in effect in 2019, about 345,000 passenger flights and 5,400 cargo flights would have faced delays, diversions or cancellations

In November, AT&T and Verizon delayed the commercial launch of C-band wireless service by a month until January 5 and adopted precautionary measures to limit interference.

Recently, The Federal Aviation Administration announced a new rule that forbids pilots from using auto-landing and other certain flight systems at low altitudes where 5G wireless signals could interfere with onboard instruments that measure a plane’s distance to the ground.

Pilots typically rely on types of equipment known as radio altimeters to land safely in areas of low visibility. 5G signals could lead to faulty readings that may make flying unsafe in these conditions.

While C-band 5G and these radio altimeters don’t operate in the same band, they are close enough for potential interference. Although carriers and their lobbying group, the CTIA, have suggested that there isn’t a valid reason to fear interference, a lot would have to be done to convince the FAA of otherwise.

Aviation industry groups said that was insufficient. Boeing and Airbus said they made a counterproposal that would limit cellular transmissions around airports and other critical areas.

United Airlines Chief Executive Scott Kirby said last week that FAA's 5G directives would bar the use of radio altimeters at about 40 of the country's biggest airports. Wireless industry group CTIA said 5G is safe and accused the aviation industry of fearmongering and distorting facts.

The Air Line Pilots Association on Monday said that aviation and communications regulators are at a stalemate. "That's a big problem for passengers, shippers and the American economy," the group said.

(With Inputs from Reuters)

The Delhi High Court on Friday, December 17 dismissed Air India's appeals against an order directing the reinstatement and payment of back wages to over 40 pilots whose services were terminated in 2020.

A bench of justices Rajiv Shakdher and Talwant Singh upheld the relief granted to the pilots by a single judge of the high court and clarified that those who have now secured employment elsewhere would only be entitled to back wages and not reinstatement.

"We find no good ground to disturb the final result arrived at by the learned single judge," said the bench. The pilots had moved to the high court in 2020 after Air India refused to accept the withdrawal of their resignations and terminated their employment.

"The State and its instrumentalities are obliged to act as a model employer, and, therefore, cannot be seen to deprive the pilots of the right to serve the organisation (Air India) at a point in time when finding jobs in the private sector is a difficult proposition.

"The State and its instrumentalities are expected to look at myriad aspects and not just profits. The welfare of employees in times when jobs are difficult to come by should form a crucial ingredient of its decision-making process. The State cannot be seen to cast off its social responsibility towards its employees and their families when it expects the private sector to bear that burden," the court said.

In its 64-page order, the court held that acceptance of resignation was an integral part of the process put in place for a pilot seeking to exit.

It also rejected as "irrelevant" Air India's objection that the pilots had tendered resignations because they sought "greener pastures" i.e. better offers from private airlines, and said that the untenable financial wherewithal of the pilots because of the pandemic could not denude them of their legal right to revisit their decision to resign.

The single judge had quashed the carrier's decision to terminate the services of the pilots, both permanent and on contract, and directed their reinstatement. In its June 1 order, the single judge had said that back wages, including allowances, have to be paid at par with what in-service pilots were receiving and by the government rules.

In its appeal, Air India had opposed the reinstatement and payment of back wages to the pilots, saying that unless resignation is specifically made prospective, it is effective immediately and a pilot cannot withdraw it subsequently.

It had contended that there was no such "notice period" within which pilots can be said to have a right to withdraw their resignations.

"Once a resignation is tendered, a pilot has to continue to work for six months in terms of the Civil Aviation Requirements, in the public interest," senior counsel for Air India had said.

The lawyers for the pilots had argued that Air India's stand could not be accepted as a resignation is prospective, which comes into effect after the mandatory six-month notice period. It was pointed out that in certain instances before the court in the present batch of appeals, the withdrawal of resignation was even accepted by Air India.

The terminated pilots had first moved to the high court in July 2020, seeking directions to Air India to accept the withdrawal of the resignations tendered by them. However, on August 13, 2020, Air India issued termination letters to several pilots, including those who had wanted to withdraw their resignations.

Subsequently, the pilots moved the high court against August 13, 2020, the decision of Air India.

Air India on October 29 opposed before the Delhi High Court the reinstatement and payment of back wages to over 40 pilots, saying that unless resignation is specifically made prospective, it is effective immediately and a pilot cannot withdraw it subsequently.

Air India, which has been recently sold to the Tatas, earlier cited financial constraints and the impact of Covid-19 on the commercial functioning of the company for the termination before the single judge.

Ever since the pandemic hit the world, global aviation has been on the downturn, with devastating bookings and passenger travel taking a major hit. According to statistics, most of the airlines either stopped ordering new planes or deferred and in some cases, even cancelled deliveries- and this was at the height of the pandemic.

Generally, there has been a realisation by the airline community at large that when people can travel, they will travel and they will do so with a vengeance... The Covid crisis has accelerated the realisation that the transition to more... fuel-efficient technology is inevitableChristian Scherer, chief commercial officer at the European aerospace group

Mr Scherer said that, ironically, the demand for more fuel-efficient jets were now on the rise despite emerging concerns of the new variant of the Covid-19 virus threatening to undermine any progress made so far.

According to Airbus, the popular single-aisle jet built for the short-haul is the Airbus A320 family which includes the A321 and A220 as well. Apparently, airlines ordering these variants will now have to wait indefinitely, or at least until the next two years for deliveries owing to supply constraints.

The World of Aviation

I wish I had more aeroplanes to sell. There is a supply constraint for the most desirable assets out there... on the single-aisle, this points towards the A320 and A321 and now also the A220Christian Scherer told the Financial Times

Airbus still remains on course to retain its title as the world’s biggest aircraft-maker at the end of the year although Boeing is trailing very closely behind with manufacturing demands for 737 Max adding up. The latter, reportedly, secured 692 orders for the Max this year, through to the end of November while Airbus had secured 540 orders for its rival A321neo and A320neo in the same period.

You have to watch the supply chain very carefully. Customers want reliability and quality and predictability. You have to set up production targets that the market will need and towards what the supply chain can support.Ihssane Mounir, senior vice-president of commercial sales at Boeing

According to Boeing, demand for new commercial aircraft will be driven in the medium term by carriers replacing older, less fuel-efficient planes rather than purchases aimed at growth.

The industry has faced challenges before, and from a comparative basis this challenge is ... larger without questionDarren Hulst, Boeing’s vice president of commercial marketing

With the current scenario, Hulst predicts long-haul travel to recover later than short-haul. With massive aircraft grounded around the world during the pandemic, the focus has shifted more towards air cargo now.

With commercial aviation fluctuating, the defence has become an important focal point for Boeing. The company has forecast a $2.6 trillion market for the defence and space sectors over the next 10 years, which is apparently $100 billion more than last year’s estimate.

Boeing Defense | Representative | Twitter

In summary, the ongoing pandemic is touted to have a detrimental impact on sales, at least for the next 10 years.

SOURCE(s)

COVER: Scientific American

The government has received an undisclosed number of financial bids for the sale of its stake in ailing helicopter operator Pawan Hans, moving the divestment process to the last stage.

"The financial bids for Pawan Hans disinvestment have been received by the transaction advisor. The process now moves to a concluding stage," DIPAM Secretary Tuhin Kanta Pandey tweeted. He, however, did not disclose the number of bidders.

The government is selling its entire 51% stake in Pawan Hans. State-owned Oil and Natural Gas Corporation (ONGC) which holds the remaining 49%, has also offered its entire shareholding in the company for sale along with the government stake.

Set up in 1985, Pawan Hans has a fleet of over 40 helicopters and over 900 employees, less than half of them on permanent roles. It provides helicopter services for the exploration activities of ONGC and to India's northeast.

For 2019-20, the company reported a net loss of INR 28 crore, lower than INR 69 crore in 2018-19. As of March 31, 2020, its authorised capital stood at INR 560 crore and paid-up share capital at INR 557 crore.

In 2018, the government had invited bids to sell its stake in Pawan Hans. However, the process was withdrawn after ONGC decided to sell its 49% stake in the company along with the government's. In 2019, a second attempt was made to sell the company but it failed to receive investor response.

In 2020, the government sweetened the terms, reducing the minimum net worth for potential bidders and the lock-in period of investment and allowing the successful bidder to sell assets after a year.

Previously, the sale terms allowed the successful bidder assets two years after acquisition. Also, a change in shareholding among consortium partners was permitted, provided the lead investor holds a minimum of 26% stake and other members hold at least 10 per cent each.

The lock-in period for investment was also reduced to one year from three years earlier. However, a new clause of business continuity was added to ensure that the successful bidder will not liquidate or close down the business for three years.

The minimum net worth of bidders has also been reduced to INR 300 crore from INR 350 crore earlier and the profitability criteria have been abolished to increase the universe of the bidders.

In February this year, the government received multiple preliminary bids for its privatisation process. The bidders thereafter did the due diligence of the company and have now submitted financial or price bids.

UAE’s Sky One FZE is among the bidders in the race to buy the government’s stake in helicopter services company Pawan Hans, according to people aware of the matter. Pawan Hans was put up for sale in December 2020.

The Sharjah-based company has submitted an expression of interest (EoI) for the helicopter services firm and is planning a bid, the people said. There could be other bidders competing to acquire the company. Industry experts expect the employees’ union of Pawan Hans, along with Global Vectra Helicorp and Heligo Charters to bid for the company.

The disinvestment is part of the INR 1.75 lakh crore revenue mobilisation target set by the government for the 2021-22 (April 2021 to March 2022) fiscal year. So far, the government has garnered INR 9,330 crore from minority stake sales.

In October, the government sold Air India to Tata Group at an enterprise value of INR 18,000 crore, the first major privatisation step in about two decades. The government will get INR 2,700 crore cash from Tatas for the sale of its 100% stake.

The country's largest airline IndiGo is working with other industry players and the civil aviation ministry to address the "long-standing problem" of the high indirect tax rate, which currently stands at 21%, according to its chief Ronojoy Dutta.

In his Christmas and New Year greetings to the employees, the IndiGo CEO also flagged that profitability is under considerable pressure owing to the low airfares regime at a time when the carrier is focusing on "repairing" its balance sheet.

Ronojoy Dutta, CEO, IndiGo

His views also come at a time when the civil aviation sector is slowly on the recovery path after being battered by the coronavirus pandemic. While various restrictions, including on travel, were being eased till late last month, the emergence of the Omicron variant has triggered fresh health concerns and various countries have started to re-impose curbs to contain the infections.

The domestic aviation industry has been pitching for lower direct and indirect taxes at various levels."We pay over 21% of our revenues as indirect taxes to the government. We think it is unconscionable that a critical infrastructure industry such as aviation, with its large multiplier effects in employment, should be taxed at such a high rate.

"We are working with other players in the industry and the civil aviation ministry to address this long-standing problem," Dutta said in the message.

The IndiGo chief also pointed out that even as the domestic aviation market is growing rapidly, post the second wave, which almost grounded air travel demand, airline ticket prices in India are among the "lowest" in the world.

"As income levels in the country rise, we can expect some relief in the form of higher ticket prices, but in the meantime, there is considerable pressure on profitability," he said.

During the pandemic, the airline incurred large losses and has been forced to take on a large amount of debt to fund its cash burn, Dutta said and emphasised that "repairing our balance sheet is an urgent task".

Outlining the "game plan" for the future, Dutta said maintaining the cost leadership position is, of course, of "critical importance" amid heightened domestic competition along with international expansion, as "we see immense scope for profitable growth in geographies all around us".

"We see opportunities for improving our revenues by further segmenting our customer base and offering additional services tailored to each segment. Developing our cargo business is one of our major initiatives," he said.

Significantly, 2022 is expected to see two more players -- ace investor Rakesh Jhunjhunwala's ultra-long cost carrier Akasa and grounded Jet Airways under new owners (Jalan-Kalrock consortium) -- taking to the skies.

Dutta said the airline's growth prospects are well reflected in its fleet plan, with growth muted for the next 24 months but then expected to accelerate to 25% per annum. "... given the environmental challenges of our planet, we will be making investments in sustainable growth".