Air India intends to purchase a 100% stake in AirAsia India; Tatas to relocate all 4 airlines to Gurgaon

The Tatas have begun the task of consolidating their airlines' businesses through a proposed merger — of AirAsia India Pvt Ltd (AAIPL) with Air India (AI) — and bringing together all these entities under one roof at a mega office in Gurgaon.

Air India has notified the Competition Commission of India (CCI) about its plan to merge AAIPL into it, thereby beginning the legal process of this consolidation. AAIPL started operating in 2014, a year before the second Tata JV Vistara and still does not have the right to fly abroad.

Air India intends to purchase a 100% stake in AirAsia India

Air India Limited, along with its wholly-owned subsidiary, Air India Express Limited (AIXL), is primarily engaged in the business of providing- domestic scheduled air passenger transport services; international scheduled air passenger transport services; air cargo transport services in India, and charter flight services in India.

“The proposed combination relates to the acquisition of the entire equity share capital of AAIPL by Air India, an indirect wholly-owned subsidiary of Tata Sons Private Limited (TSPL). At present, TSPL holds 83.67% of the equity share capital of AAIPL. The proposed combination is notifiable under… the Competition Act, 2002.”Competition Commission of India (CCI)

AAIPL is a joint venture in which Tatas have an 83.67% stake and the remaining 16.33% switch to AirAsia. “The Proposed Combination will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of how the relevant markets are defined,” it adds.

AAIPL is a joint venture in which Tatas have an 83.67% stake and the remaining 16.33% switch to AirAsia.

As per the notification, Air India has submitted the relevant markets, concerning horizontal overlaps. These are the market for domestic passenger air transport services in India, the market for the provision of domestic air cargo transportation services in India, and the market for the provision of charter flight services in India.

It has also additionally submitted the relevant markets involving vertical overlaps. These are:

The upstream market for ground handling services, and downstream market for passenger air transport services (including charter flight services) at the Bengaluru, Hyderabad, Delhi, Thiruvananthapuram and Mangalore airports; and the upstream market for cargo handling services at Bengaluru airport.The upstream market for cargo handling services, and the downstream markets for air cargo transportation services and charter fight services at Bengaluru airport.The upstream market for in-flight catering services, and the downstream market for passenger air transport services (including charter flight services) in India.

Tata-owned all the 4 airlines coming under one roof

Additionally, the Tata Group has begun to move to have greater synergy between its four airlines by shifting them to one mega office in Delhi’s suburb of Gurgaon. It has identified an office space of up to 70,000 square feet which can be leased “immediately”.

Working with Tata Realty, the group is now finalising its office requirement and plans to start the transition at the earliest.

Considering the existing 4 (airlines) and one JV (AI-SATS) as part of the Tata fold, it has been decided that to optimise resources, increase teamwork and have higher synergies at work, the various entities will move together into a complex in Gurgaon to start with as far as possible in a phased manner.

"New office space on NH8 has already been identified where we have an option to lease up to 700,000 sq ft immediately,” a communication sent to the heads of these five Tata aviation entities says.

“We now need to finalise our exact space requirement and start planning the transition to this new space immediately. We are targeting to move in the next 2-3 months. For this purpose, to develop the strategic plan, the task has been entrusted to Harpreet A De Singh, ED headquarters, along with the Consultants from Ernst and Young,” it adds.

The entities have been asked to give information about their required office space to this team “promptly, to facilitate this strategic transformation and consolidation at the earliest.”

A team from Tata Realty - the group’s real estate firm is working on the project led by its Managing Director and CEO Sanjay Dutt. Consultancy firm EY has also been roped in for the project.

Air India currently has its headquarters at Airlines House situated in Central Delhi where it shifted from the iconic Nariman Point Building in Mumbai in 2013. The airline’s low-cost subsidiary Air India Express is based out of Kochi.

Tata Group-owned AirAsia India is based out of Bengaluru while Vistara, its joint venture with Singapore Airlines is based out of Gurgaon.

AirAsia India is based out of Bengaluru while Vistara is based out of Gurgaon.

This shift will consolidate Gurgaon’s pre-eminence in Indian aviation as it already houses IndiGo and SpiceJet. Mumbai, one the hub of airline headquarters, now houses a few relatively big airlines like GoAir.

The Tata Group had taken over Air India and Air India Express this January-end. It is yet to spell out the consolidation among the four airlines.

The options are - a low cost by merging Air India Express and AirAsia India, Air India and Vistara; one full service and a low cost; Air India (merging all three) and Vistara till the latter’s 49% stakeholder Singapore Airlines agrees to a merger with AI. The group is trying to get a CEO for its airline business to finalise the future course of action.

Aviation regulator DGCA has asked Tata Group-owned Air India to repair its aircraft after a passenger complained on social media about the plane's shabby interiors, including a broken armrest, officials said.

The Directorate General of Civil Aviation (DGCA) had last Wednesday, April 20 grounded a SpiceJet aircraft over a passenger's complaint of dirty seats and malfunctioning cabin panels. The SpiceJet plane took to the skies a day later after all the suggested repairs were effected.

ALSO READ - SpiceJet grounds its B737 aircraft after passenger complains about the cabin’s poor condition

https://twitter.com/PRINCE0879/status/1518538371270062080

On Monday, April 25 a passenger posted on social media a couple of pics of shabby interiors including a broken armrest of Air India's Airbus A320 aircraft with registration number VT-EDF, officials said.

As a result, the DGCA asked the airline to check and rectify the problem as soon as possible, they mentioned. The plane will be in Kolkata on Monday, April 25 night and the repair works will be done during that time, they said.

DGCA asks Air India to repair its aircraft's shabby interiors

The Tata Group took control of Air India on January 27, after successfully winning the bid for the airline on October 8, 2021. A DGCA circular issued on April 19 said Air India has lost its preferential access to bilateral rights that are needed to operate flights to another country.

Air India had preferential access to bilateral rights, which are granted under air services agreements signed between two countries, as it was the government-owned national carrier.

Asiana Airlines Inc., South Korea's second-biggest carrier, announced that it will reopen the route to India this week as eased Covid-19 restrictions unleash pent-up demand.

Asiana will offer one flight a week on the Incheon-Delhi route starting from Friday after it suspended the route 33 months ago due to the Covid-19 pandemic, Yonhap News Agency quoted the company as saying in a statement.

The airline added that it will also expand the number of flights on routes to Sydney, Los Angeles, Osaka, Fukuoka, Hanoi, Ho Chi Minh City and Manila from May. Asiana operates 25 international routes, down from 71 before the pandemic, and seven domestic routes.

South Korea's Asiana Airlines to resume services to India

The country's No. 2 full-service carrier after Korean Air Lines Co., has another low-cost carrier Air Seoul Inc. under its wing. The South Korean govt, earlier announced plans to add about 100 international flights per week starting May 2022 as demand for overseas travel is expected to increase.

This announcement comes as South Korean Covid-19 cases have been declining for about three weeks, and the government has eased Covid-19 restrictions. 

India, on the other hand, resumed commercial international flights on March 27 after nearly a two-year-old break due to the Covid-19 pandemic that forced nations to close their borders.

Asiana Airlines is an airline based at Seoul Incheon International Airport with a secondary hub at Seoul Gimpo International Airport

Established in 1988, Asiana Airlines is an airline based at Seoul Incheon International Airport with a secondary hub at Seoul Gimpo International Airport. The airline serves destinations across Asia, North America, Australia and Europe. Asiana is a member of the Star Alliance.

Majority-owned by one of South Korea's largest conglomerates, the Hyundai Development Company, Asiana is the one of the largest airlines in South Korea and an increasingly important player in the East Asian region.

In September 2021, Korean Air confirmed it received approval from Korea Development Bank (KDB) for its post-merger integration (PMI) plan to acquire a controlling stake in Asiana Airlines for KRW 1.8 trillion (USD 1.5 billion) and subsequently merge the two airlines.

Air India, under its new Tata management, has taken an INR 60,800 crore (USD 8 billion) cover by paying INR 266 crore premium to a clutch of insurance companies, including Tata AIG General Insurance.

The airline managed to get a better deal as it valued its fleet lower by almost USD 2 billion. The new management held extensive negotiations – both in India and London, to get a good deal considering the rising premiums due to the ongoing Russia-Ukraine war.

As per the new policy, the airline will not be able to fly over Russian and Ukrainian airspace due to the conflict.

Air India takes INR 60,800 crore cover for fleet insurance

The new cover, effective April 1 for a year, will be marginally higher than INR 258 crore paid in the last financial year by the airline under its previous owner, the Indian government, said a source close to the development.

In the last financial year, the airline had taken a cover of INR 76,000 crore (USD 10 billion). The policy also includes passenger liability in case of any mishaps. A Tata group spokesperson did not comment on the cover.

As of now, Air India has a fleet of 117 aircraft while Air India Express has a fleet of 24 narrow-body aircraft.

Air India has a fleet of 117 aircraft

Tata AIG General Insurance for the first time received a 30% share in the cover while one of its parents, AIG continued to be the re-insurer leader of the new policy. New India Assurance has taken the highest share of 40% of the policy while ICICI Lombard has received a 6% share in the policy.

The Indian companies will pass on 95% of the premium and risk to the foreign reinsurers to de-risk their books in case of any accidents.

On 25 October 2021, the central government, previous owners of Air India, signed a share purchase agreement with Tata Group, after its INR 18,000 crore winning bid to acquire the airline.

The sale was closed on January 27, 2022, with the formal handing over of the airline to its new owner, Talace Pvt Ltd, a subsidiary of Tata Sons.

Tata AIG General Insurance Company Limited is an Indian general insurance company and a joint venture between the Tata Group and American International Group (AIG). Tata Group holds a 74% stake in the insurance venture with AIG holding the balance of 26%.

Tata AIG General Insurance Company, which started its operations in India on 22 January 2001, provides insurance to individuals and corporates.

The aviation sector is touted to emit more than 900 million tons of carbon dioxide per year accounting for about 2-3% of global carbon emissions and the figures are only set to grow. Beyond C02, nitrogen oxide emissions, soot and water vapour, leading to the formation of contrails and cirrus clouds, also contribute to the "overall" global warming emissions.

Representative | Neste

Decarbonization, as it is, is a major challenge for aviation. Although various technologies and innovations like Sustainable aviation fuel (SAF) and electric propulsion have come to the fore, they require significant R&D, investments and corresponding regulations for safe and economical implementation.

Hydrogen propulsion is one such "disruptive technology", with a promising potential to be a part of the future propulsion technology as well.

What do the statistics say?

Recent estimates show H2 combustion could slash climatic impact by 50-70% and fuel-cell propulsion by 75-90%- this is in comparison to 30-60% by bio-fuels.

Fuel cell-powered propulsion has emerged to be the most energy-efficient when it comes to regional and commuter aircraft. A hybrid propulsion system was found to be best suited for short-range aircraft.

Hydrogen fuel-cells | Representative | Compositesworld.com

Medium-range aircraft would require stretched fuselages for H2 storage-leading to an increase in energy expenditure by 25% than conventional flights-thereby also leading to increased airfares by up to 30%.

Representative | AirInsight

The road to hydrogen propulsion is not without hurdles

As is with anything, a well-thought-out blueprint has to be in place for the successful implementation of these technologies. Challenges include scalable refuelling technology than refuelling trucks, establishing parallel refuelling, appropriate airport infrastructure, and adaptive parking stands to accommodate aircraft-to name a few.

Representative | AirInsight

If global climatic goals are to be met by 2050, now is the time to put the leg forward as commercialization and certification of aircraft can take more than ten years (give or take) and fleet replacement another ten.

Research and developments to make H2 propulsion a reality

HyPoint, a California-based firm, is developing a revolutionary cryogenic tank with a design that reportedly could massively boost the range of hydrogen-powered aircraft.

Touted to be extremely lightweight compared with traditional fuel cells, it could allow airliners to fly up to four times farther than traditional passenger aircraft.

Weight is a critical factor when it comes to aviation and aerospace as it directly impacts performance, thereby affecting overall operational costs.

Reducing weight is the most important factor for enabling longer-distance air travel with fewer stops to refuel.Dr Alex Ivanenko, founder and CEO of HyPoint.

Dr Alex Ivanenko | Twitter

Apparently, the company has struck a deal with Gloyer-Taylor Laboratories (GTL), an aerospace engineering firm. The collaboration between the two companies will see the integration of GTL’s ultra-light carbon tanks into its aeroplane fuel cell system, and numbers suggest the combination could dramatically increase range.

Tech and specs

Hydrogen's superior energy storage per weight is what sets it apart from other comparable alternatives like lithium batteries in the aviation world.

All-composite cryogenic fuel tank | Representative | CompositesWorld

According to GLT, its cryogenic tanks have demonstrated a huge 75% mass reduction when compared to "state-of-the-art aerospace cryotanks (metal or composite)." Reportedly, these lightweight tanks are also touted to hold more than 150 kg of hydrogen fuel, giving it a mass fraction of 70%. Basically, that means the tanks can store ten times more liquid hydrogen without adding mass. And all of this while slashing carbon emissions.

Similar to the carbon fibre that is used in racing bikes, our carbon-composite technology adds strength and durability while significantly reducing weightsaid Paul Gloyer, president and CEO at GTL

How is this significant?

The weight reduction achieved this way makes an enormous difference, especially when dealing with a fuel like liquid hydrogen, which weighs so little in its own right. In other words, every kilogram of hydrogen needs about 9 kg of the tank to haul it about.

Representative | Global Circulate

HyPoint estimates an aircraft equipped with GTL tank technology could achieve as much as four times the range of conventional aircraft that use aviation fuel, cutting aircraft operating costs by an estimated 50% on a dollar-per-passenger-mile basis.

For perspective, a De Havilland Canada Dash-8 Q300 with a capacity of 50-56 pax, can fly as far as 4,488 km as opposed to its normal range of  1,558 km, if fitted with this technology.

De Havilland Canada Dash-8 Q300 | Representative | Source

That's the difference between this plane going from New York to Chicago with high carbon emissions versus New York to San Francisco with zero carbon emissionssaid HyPoint co-founder Sergei Shubenkov in its statement

HyPoint is a leading producer of high-temperature PEM fuel cells for aviation applications including logistic drones, air taxis, electric vertical takeoff and landing vehicles (eVTOLs), and fixed-wing airplanes.

2035 emerges as European Target for Hydrogen Commercial Jet | Representative | Aviation Today

With the entire industry gearing up towards sustainable aviation, HyPoint says its fuel cell system should launch in client hydrogen aircraft by mid-2024. Also worth noting is the fact that Airbus also has plans of retrofitting an A380 with a hydrogen powertrain by 2026.

Airbus A380 Hydrogen powertrain | Representative | CNN

SOURCE(s)

COVER: New Atlas

Chhattisgarh and Jharkhand have come out in support of Tamil Nadu's stance that whenever the Central government privatises an airport in a state, the state government should get a share in the revenue.

In a policy note issued earlier this month, Tamil Nadu said that if the state government acquires and transfers land to the Centre-run Airports Authority of India (AAI) free of cost, and if the AAI or the Centre transfers that land to a third party, the value realised or revenue accrued thereby must be proportionately shared with the state government "reflecting the huge investment in land being made by the state government".

Chhattisgarh and Jharkhand back Tamil Nadu on revenue share of privatised airport

ALSO READ - 13 airports to be privatized by March 2022

The AAI's board had in September 2021 given the approval to privatise 13 airports, including Trichy in Tamil Nadu and Raipur in Chhattisgarh.

ALSO READ - Privatisation of airports to be done through clubbing model, 13 next in line

"Land is a state resource and when the state and the central government come together for developing a project, which is supposed to be an earning project, the state government's capital is present as a shareholder in terms of the land. So long as it is in the government sector, things are moving in a particular way, the government of India would be making some revenue and there would be something spilling over to the state government and there would be a benefit to the public, so that is fine.Now when you are selling it to a third entity which is a private party, then you are selling the assets of the company, which include apart from the infrastructure, the land also. So, the state government should be given the value of the land.When you are in a joint venture then the investment which has been made, the government of India would put in the capital in terms of infrastructure, the state government puts up its capital in terms of its land. So, definitely in every such venture, the value of the land should be given to the state government if and when it is sold to a third party which is a private player."T S Singhdeo, Minister of Panchayat and Rural Development, Health and Family Welfare and Commercial Tax, Chattisgarh

The sale when it comes about would be using a valuation of the entire property which would include the sale price of the land, he noted, adding states should get their share.

ALSO READ - Centre to privatise 25 airports in next 3 years

According to the National Monetisation Pipeline issued last year, 25 AAI-run airports have been earmarked for asset monetisation including Bhubaneshwar, Varanasi, Amritsar, Trichy, Indore, Raipur, Calicut, Coimbatore, Nagpur, Patna, Madurai, Surat, Ranchi Jodhpur, Chennai, Vijayawada, Vadodara, Bhopal, Tirupati, Hubli, Imphal, Agartala, Udaipur, Dehradun and Rajahmundry.

According to the National Monetisation Pipeline issued last year, 25 AAI-run airports have been earmarked for asset monetisation

Tamil Nadu's policy note, issued earlier this month, stated that the value of land -- at an appropriate stage -- should be converted into equity of the state government in the airport's special purpose vehicle or an appropriate revenue sharing arrangement should be arrived at before the airport is transferred to a private party.

"I agree (with the Tamil Nadu government). The land belongs to the state. When it is under the central government, we have no issues, we give land, water and other resources. But if the Centre is handing it to private parties, revenue should be shared with the state government. A policy should be framed in this regard for all the states, not just Jharkhand."Rameshwar Oraon, Finance Minister, Jharkhand

While the Ministry of Civil Aviation is yet to officially comment on this matter, its officials told PTI that the decision regarding the matter will be taken at the higher levels of the government. 

The Centre had in 2019 privatised airports at Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati for operation, management and development through the public-private partnership (PPP) model. The Adani group won the bids to run all six airports.