AAI to sue Devas Multimedia for seizing assets in other countries

The Airports Authority of India (AAI) said on Tuesday, January 4 that it would defend itself legally after a Canadian court recently ordered that Devas Multimedia’s shareholders could seize its assets abroad as damages for India’s failure to honour several arbitral awards won by the satellite firm.

Shareholders of Devas Multimedia have said that they have been able to seize assets worth $30 million to date as part of the enforcement strategy after the Superior Court of Quebec granted them the right to legally seize property belonging to AAI held by the International Air Transport Association (IATA) in Montreal.

These assets include, among other things, air navigation charges and aerodrome charges collected on behalf of AAI. “AAI has not been served any order by the Quebec Court, Canada in this matter. However, IATA shared certain documents on AAI’s request for suspending the transfer of the amount collected on behalf of AAI,” a spokesperson for AAI said. “AAI is taking legal recourse to defend itself from the impugned order.”

AAI to sue Devas Multimedia for seizing assets in other countries.

ET reported on Jan 3 that the Canadian court’s directives were the first major victory for shareholders of the beleaguered satellite firm in enforcing several global arbitral awards won by them against India. The legal battle erupted after a satellite deal between Antrix Corp, the commercial arm of the Indian Space Research Organisation (Isro), and Devas Multimedia was cancelled by the government in 2011.

The three investors — CC/Devas Mauritius, Telcom Devas Mauritius and Devas Employees Mauritius Pvt Ltd – had moved the Montreal district court last year for the seizure of assets of the Indian government to enforce an October 13, 2020, order by the UN Commission on International Trade Law tribunal for Antrix Corporation (a commercial arm of ISRO) to pay $111 million as compensation for the cancellation of a Devas- Antrix satellite deal that was signed in 2005.

The Montreal court ordered the seizure of the AAI funds after preliminarily identifying it as an alter ego of the Government of India, which owns ISRO and Antrix. A formal judgment will be passed later on Devas investors’ efforts to collect the compensation award through assets linked to India.

This culminated in a $1.3 billion ($562 million-plus interest) arbitral award in favour of Devas by the International Chamber of Commerce in 2015. The Quebec court’s order, however, pertains to a ‘Quantum Award’ issued by the Permanent Court of Arbitration in October 2020, which awarded Devas’ shareholders $111 million-plus interest and costs as compensation for the expropriation of their 40% interest in the satellite business owned by Devas.

“Our action in Canada has resulted in millions of dollars garnished by Devas’ shareholders and represents the first fruits of a globally focused effort to be paid. Our enforcement in Canada reaffirms the fundamental legal principle accepted around the world that deadbeat debtors must pay what they owe."Matthew D McGill, Partner at Gibson, Dunn & Crutcher, and lead counsel for the shareholders

In September 2015, the arbitration tribunal asked the commercial arm of ISRO to pay USD 672 million.

In his order dated October 27, 2020, Judge Thomas S Zilly, US District Judge, Western District of Washington, Seattle, asked Antrix Corporation to pay a compensation of USD 562.5 million to Devas Multimedia Corporation and the related interest rate, amounting to a total of USD 1.2 billion.

Spicejet dropped 3.96% to Rs 69.05 after the company's consolidated net losses widened to INR 731.12 crore in Q1 June 2021 (Q1 FY22), higher than the net loss of INR 600.52 crore in Q1 June 2020 (Q1 FY21).

The net debt of SpiceJet was around 10.6 billion Indian rupees during the fiscal year 2020. This was among the lowest value over the seven financial years beginning from 2014.

With Covid dealing a severe blow to the entire aviation industry, many airlines were pushed to their financial limits, with little or no support from the government.

On a standalone basis, SpiceJet reported a net loss of INR 729 crore in the first quarter of FY2022 as against a net loss of INR 593 crore in the same quarter of the previous year as flight operations were severely impacted due to Covid-19 second wave.  However, SpiceXpress's revenue soared 285% to INR 473 crore for the reported quarter compared with INR 166 crore in the same quarter last year.

Economic Times

The last five quarters have been the most difficult phase ever for SpiceJet as aviation remained the worst?hit sector during the second wave as well. Q1 was severely impacted by the second wave as passenger traffic almost disappeared. While no one can predict the future, with vaccination numbers picking up and demand for air travel increasing steadily, we hope the trend reverses soon.Ajay Singh, chairman and managing director (MD), SpiceJet

Bloomberg Quint

Fast forward to December 2021, the Madras High Court asked the carrier to wind up its operations for non-payment of more than $24 million to Swiss company SR Technics, which is responsible for maintenance, repair and overhauling of aircraft engines, modules, components, assemblies and parts. Apparently, the two parties had entered into a supplemental agreement in August 2012 and should the airlines fail to pay its debt under the mentioned period, it would be deemed to be unable to pay its debts.

SpiceJet Group incurred a loss of INR 1,028.18 crore as of 31 March 2021. Including the previous losses, the total loss had reached INR 4,223.38 crore. The liabilities on the airline are INR 5,18,424.9 crore more than the current assets.

Employees say their salaries were cut and in some cases not paid. As of March 2021, the company had 14,810 employees, down from 16,280 last year. Reportedly, the company did not even have enough money left for the PF of the employees.

To make matters even worse for the airline, very recently, a SpiceJet passenger flight took off from Gujarat's Rajkot without the mandatory clearance from the Air Traffic Controller (ATC), following the which aviation regulator, DGCA, has ordered a probe into the incident.

Runway overshoots cancelled flights coupled with unresponsive customer support only added further woes to the already piling list of issues with the carrier.

Additionally, in the annual report for FY21, the independent auditors also pointed out that SpiceJet had defaulted on tax payments, GST payments and employee provident fund dues in FY21 totalling INR 90 crore and were doubtful of the airline's sustenance as its net worth has eroded.

SOURCE(s)

COVER: One Mile at a Time

A newborn baby, covered in blood-soaked toilet paper, was found abandoned in the trash bin of a plane's washroom and rescued by officials who were on an inspection round, said media reports.

A 20-year-old woman from Madagascar, suspected of having given birth on the Air Mauritius plane, which landed at Sir Seewoosagur Ramgoolam International Airport on January 1, was arrested, reported the BBC. The baby is said to be doing well, the news report said.

Newborn baby, covered in blood-soaked toilet paper, was found abandoned in the trash bin of a plane's washroom. (Image Courtesy - BBC)

Airport officers spotted the child when they screened the plane for a routine customs check, reported Cities Newsroom. They noticed that there was blood-stained toilet paper, and rushed the baby to a public hospital for treatment, it said. 

The suspected mother, who initially denied the boy was hers, was made to undergo a medical examination which confirmed that she had just given birth, the BBC said in its report.

Airport officers spotted the child when they screened the plane for a routine customs check. (Image Courtesy - Insider)

The woman has been put under police surveillance at the hospital, it said. Both she and the baby are said to be doing well.

The Malagasy woman, who arrived in Mauritius on a two-year work permit, will be questioned after her release from the hospital and charged with abandoning a newborn.

Airbus provisionally exceeded its target of 600 jet deliveries in 2021, with final totals depending on a still incomplete audit, industry sources said on Monday, January 3.

Deliveries of aircraft went down to the wire, with several handovers completed on December 31, according to specialist website Hamburg Finkenwerder News and flight-tracking data.

Deliveries included a flurry of last-minute activity for A350 wide-bodied jets, for which demand has been slack as international travel remains dogged by the coronavirus crisis.

Airbus provisionally exceeded its target of 600 jet deliveries in 2021.

That brought December's tally for the long-haul jets to about a dozen, though almost half of those have yet to enter operational service, according to Flightradar24 tracking data.

Airbus deliveries frequently surge in the final month of the year, but supply chain problems have hampered deliveries of some medium-haul jets while the spread of Omicron has raised fresh doubts over the likelihood of an early rebound in long-haul travel.

Airbus raised the outlook for jet deliveries to 600 from a previous target of at least 566 in July after posting better than expected half-year results. 

Bloomberg News reported on December 22 that Airbus was on track to meet its annual delivery goal.

Boeing deliveries

Boeing last won the delivery battle in 2018. The Max was grounded worldwide early the following year after two crashes that killed 346 people. 

Sales and deliveries of the Chicago-based planemaker’s best-selling jet were frozen for the better part of two years, with customers cancelling hundreds of orders as Covid weakened their finances. 

The output of the 737 Max gained pace throughout 2021, but separate continued quality problems with its 787 Dreamliner has continued to hamper deliveries. 

While a sales comeback driven by pent-up demand for the 737 Max lifted Boeing to an order lead for most of 2021, Airbus managed to erase that advantage too. 

Boeing last won the delivery battle in 2018

Based on a Bloomberg calculation of announced sales, Airbus edged its U.S. rival by some 58 orders in 2021.

During the Dubai Airshow 2021, The French aerospace manufacturer had amassed 408 announced orders and commitments by the end of the show’s fourth day, while its American counterpart Boeing trailed with 101. Airbus and Boeing are the world’s two largest aerospace companies by revenue. 

The order numbers so far from the first major air show since the Covid-19 pandemic began are a positive sign for aviation and travel, which suffered devastating losses for much of the last 18 months.

(With Inputs from Reuters and Bloomberg)

The chief executives of AT&T and Verizon Communications rejected a request to delay the planned January 5 introduction of the new 5G wireless service over aviation safety concerns but offered to temporarily adopt new safeguards.

The U.S. Transportation Secretary Pete Buttigieg and Federal Aviation Administration chief Steve Dickson had asked AT&T CEO John Stankey and Verizon CEO Hans Vestberg late Friday, December 31 for a commercial deployment delay of no more than two weeks.

AT&T

The wireless companies in a joint letter on Sunday, January 2 said they would not deploy 5G around airports for six months but rejected any broader limitation on using the C-Band spectrum. They said the Transportation Department proposal would be "an irresponsible abdication of the operating control required to deploy world-class and globally competitive communications networks."

The aviation industry and FAA have raised concerns about the potential interference of 5G with sensitive aircraft electronics like radio altimeters that could disrupt flights.

The exclusion zone AT&T and Verizon propose is currently in use in France, the carriers said, "with slight adaption" reflecting "modest technical differences in how C-band is being deployed."

"The laws of physics are the same in the United States and France," the CEOs wrote. "If U.S. airlines are permitted to operate flights every day in France, then the same operating conditions should allow them to do so in the United States."

Verizon

The FAA said in a statement on Sunday that it was "reviewing the latest letter from the wireless companies on how to mitigate interference from 5G C-band transmissions. U.S. aviation safety standards will guide our next actions."

FAA officials said France uses spectrum for 5G that sits further away from spectrum used for radio altimeters and uses lower power levels for 5G than those authorized in the United States.

Verizon said it will initially only use spectrum in the same range as used in France, adding it will be a couple of years before it uses additional spectrum. The larger U.S. exclusion zone around U.S. airports is "to make up for the slight difference in power levels between the two nations," Verizon added.

Sara Nelson, president of the Association of Flight Attendants-CWA (AFA), representing 50,000 workers at 17 airlines, on Sunday, January 2 wrote on Twitter that pilots, airlines, manufacturers and others "have NO incentive to delay 5G, other than SAFETY. What do they think ... we're raising these issues over the holidays for, kicks?"

(Image Courtesy - New York Post)

The Air Line Pilots Association also backed the delay. Government and industry officials said the exclusion zones proposed by the wireless carriers are not as large as what has been sought by the FAA.

The FAA and Buttigieg on Friday, December 31 proposed identifying priority airports "where a buffer zone would permit aviation operations to continue safely while the FAA completes its assessments of the interference potential."

The wireless carriers, which won the C-Band spectrum in an $80 billion government auction, previously agreed to precautionary measures for six months to limit interference but say the upgrades are essential to compete with other countries like China and to enable remote working.

Trade group Airlines for America, representing American Airlines, FedEx and other carriers, on Thursday, December 30 asked the Federal Communications Commission (FCC) to halt deployment around many airports, warning thousands of flights could be disrupted daily.

The airline group has said it may go to court Monday if the FCC does not act. The group urged the FCC and the telecom industry to work with the FAA and the aviation industry to "enable the rollout of 5G technology while prioritizing safety and avoiding any disruption to the aviation system."

An FCC spokesperson said Sunday the agency is "optimistic that by working together we can both advance the wireless economy and ensure aviation safety." Wireless industry group CTIA said 5G is safe and spectrum is being used in about 40 other countries.

A Canadian court has ordered the International Air Transport Association (IATA) to seize funds collected on behalf of Air India and the Airport Authority of India (AAI).

Separate orders were issued on November 24 and December 21 in response to shareholder petitions filed by Devas Multimedia Private Limited to enforce arbitration awards against the Indian government.

The order resulted in the seizure of approximately $6.8 million belonging to the Airport Authority of India. The exact amount owed to Air India that has been delayed as a result of the order is unknown.

The news comes just weeks before the Tata group's successful bid for the national airline in 2021. In its shareholder agreement with the government, the company was granted indemnity from previous legal claims.

Three Devas shareholders who won a $111 million arbitration award against the government petitioned the Superior Court of Quebec for enforcement, and garnishment orders were issued based on their requests.

“We will pursue the Indian government in courts worldwide to ensure the debts owed to Devas are satisfied. Our action in Canada has resulted in millions of dollars garnished by Devas shareholders, and represents the first fruits of a globally-focused effort to be paid.Devas shareholders have been clear from the start: Despite state-sponsored investigations intended to intimidate and scare-off the victims of India’s unlawful acts, we will continue to pursue the Indian government’s assets to satisfy the awards, while remaining open to an amicable settlement."Matthew D McGill, Partner, Gibson, Dunn & Crutcher and Lead Counsel for Several Shareholders

“On the intervention of Air India’s counsel, the commercial division of the Quebec Superior Court accepted to designate a judge on an urgent basis to hear the applications of quashing and seizures brought by Air India, AAI and IATA. The hearing will take place on January 4, a day on which court would normally be closed due to the holidays,” a senior government official said.

IATA assists airlines and air navigation service providers in collecting monies due from ticket sales and route navigation charges. Its billing and settlement plan (BSP) mechanism act as a payment gateway for travel agents around the world. Remittances for ticket sales are made to an airline through the BSP. Similarly, it collects route navigation charges from foreign airlines operating in India and for flights overflying the country and passes them to the Airport Authority of India.

Airport navigational services (route navigation, terminal navigational, and landing charges) brought in INR 3592 crore in FY 19-20, accounting for nearly 28% of AAI's revenue.

In response to the order, Air India removed all of its ticket inventory from global distribution systems on December 22. (GDS). When it comes to issuing tickets, travel agents use GDS platforms like Amadeus or Travelport. The platforms are connected to the IATA BSP, which keeps track of all sales made through this mechanism.

GDS platforms account for more than half of Air India's sales, so the sudden lack of availability of its tickets caused concern among travel agents.

Air India re-listed its ticket inventory on GDS platforms last Wednesday, but only allows ticket issuance with approved credit cards. Agents also received text messages that any ticket issued against cash will be cancelled by Air India.

Payments through credit cards are paid to the airline by a bank or credit card company. Though IATA keeps a record of credit card sales it is not involved in the collection and remittance process. Other than credit cards, agents have the option to do a bank transfer to IATA for ticket sales. These are known as cash sales and agents get up to seven days to make payments to IATA under this process.

(With Inputs from Business Standard)