Air India Sale - Government mulls restricting employee benefits

The Centre is likely to receive financial bids for its strategic disinvestment of a 100% stake in the national carrier Air India, by September 15, 2021, from qualified interested bidders (QIBs).

Delhi airport

Government's stance

Minister of State for Civil Aviation V K Singh informed Lok Sabha about this in a written response to a question on the status of Air India's disinvestment process, on Thursday.

The minister further informed the Lower House that the Civil Aviation Ministry had issued the preliminary information memorandum for inviting Expression of Interest (EOI) for strategic disinvestment of Air India along with a 100% stake in Air India Express Ltd and 50 per cent stake in Air India SATS, on January 27, 2020.

However owing to the outbreak of the Coronavirus pandemic, the last date for submission of EOI was frequently postponed and finally, it was fixed for December 14, 2020, he said in the reply.

Air india express

Subsequently, multiple EOIs were received by the "Transaction Advisor", who evaluated them for the selection of QIBs. Request for Proposal (RFP) along with draft Share Purchase Agreement (SPA) were shared with QIBs by the Transaction Adviser on March 30, 2021, for submission of financial bids, which are now likely to be received by September 15, 2021.

A sweeter deal

Mr Singh also informed Lok Sabha that a Special Purpose Vehicle (SPV) i.e. Air India Assets Holding Limited (AIAHL), has been set up inter-alia for warehousing non-core assets of Air India Limited. Monetisation proceeds of non-core assets of Air India are to be used to offset the debt of Air India transferred to AIAHL, he further said.

ai-sats (Bengaluru International airport)

The government is likely to limit employee benefits only up to the time it is an owner of cash-guzzler national carrier Air India, setting the template for the privatisation of other public sector companies as part of its ambitious strategic sale programme.

The move will mean that the new owner of the airline —which is a top priority company for disinvestment this year — will have new terms for employees and can tweak the compensation packages in a way that benefits sections where it wants to make them more attractive.

Benefits at a glance

Air India employees are entitled to several benefits that go beyond the usual health and provident fund scheme to also include free tickets for several segments. Although the number of free tickets that can be issued in a year is fixed, it was given beyond the immediate family which typically comprises the employee, spouse and dependent children.

air india

Last year, the Air India Employees Union had petitioned the civil aviation ministry that the medical scheme for serving and retired employees, provident fund and leave encashment should be continued in their current form even after privatisation, arguing that it is critical for their well-being. Given that a few benefits go beyond normal industry practice, some of the bidders have concerns over offering liberal packages to the entire workforce, prompting the government to deliberate internally.

Union - A likely hindrance

A government official said that it is only fair that the Centre honour its share of the commitment, which can only be restricted up to the time it is the owner. Workers and employees, however, believe that they joined the company keeping the benefits in mind and worked on the assumption that the contract terms will remain unchanged. Employee benefit is one of the factors which has delayed the entire process beyond the target date for privatisation with some of the other aspects still being decided. Covid-19 has also delayed the process.

alliance air - wholly owned subsidiary of air india

Setting example for future disinvestment

A senior officer, however, said that the company, which will see a fresh INR 1900 crore from the government once the supplementary demand for grants is approved, is on course to be privatised during the current financial year as the Centre too is keen to check the bleeding. The Centre aims to call for financial bids in September and all efforts are being made to ensure that the sale is wrapped up in the current fiscal year. “It may be taking a little longer but some of the issues that are decided here will also be used in case of other companies that will be privatised in the coming months,” said the senior officer.

The global outbreak of COVID-19 led to the freezing of flight operations, both domestic and international in India by the end of March 2020, to restrict passenger movement and to prevent further spread of the virus. Despite some of the newer challenges, we are definitely reaching a tipping point of this pandemic, a crossroads where optimism for a sustained recovery has met the reticence of governments to take a risk-based but proactive approach to easing travel restrictions and lockdowns.

Shri Jyotiraditya Scindia

Passenger traffic is resuming but airlines are not able to meet the financial requirement. This could lead to further financial deterioration going forward, if not addressed in time. Though limited operations have started, experts suggest that it will take some time for the industry to bounce back to the pre-COVID levels.

The impact on revenue has also resulted in job losses and reduction in manpower requirements, as employees across the sector were and are still being asked to go on leave without pay until the situation normalises. Ground handling agencies were the most affected in terms of employment reduction, followed by cargo operators.

Composition of the Airline ensemble

Mr Jyotiraditya Scindia, Minister of Civil Aviation, Government of India will be the chairman of this advisory group on airlines. Apart from Minister of State for Civil Aviation Gen VK Singh, Civil Aviation secretary & DGCA, this group will include top bosses of the big airlines like Rajiv Bansal, CMD of Air India, Indigo‘s Rahul Bhatia, SpiceJet‘s chairman Ajay Singh, GoFirst‘s Director Ness Wadia, Vistara‘s Chairman Bhaskar Bhat, Air Asia‘s CEO Sunil Bhaskaran & the CEO of Alliance Air.

According to its constitution, the group will be required to meet in New Delhi from time to time or any other place decided by the Minister. If necessary, the group will be allowed to induct subject matter experts. The group may form working sub-groups to anchor its activity in certain areas of importance.

What is expected from this bunch ?

The main objectives of the Airline advisory group are to advice the government for enhancing the domestic and international connectivity, promotion of passenger and cargo services, passenger facilities during air travel, manpower skilling in the aviation sector which would eventually generate employment in this sector, development of India as a hub for passengers travel, cargo, and MRO operations, leasing and financing of aircraft.

Participants are also expected to suggest ways to safeguard the viability of airlines. To advise on matters related to aircraft, component manufacturing and regulatory issues.

indigo airline

The industry has welcomed the setting up of advisory groups by the government to strengthen the sector. This development comes days after Jyotiraditya Scindia took charge as the Civil Aviation Minister following a cabinet reshuffle by Prime Minister Narendra Modi.

However, the government would still need to carry out bold reforms including bringing down taxes on jet fuel, to help the sector mitigate some of the challenges posed by the ongoing covid-19 pandemic, a senior official of a no-frills airline said, requesting anonymity.

A New Start

This is the first time ever in India when the government and airlines have joined hands to boost the aviation Industry. The airlines can now directly tell their grievances to the government and suggest ways to improve. This direct communication will certainly help in prioritising areas of concern and getting prompt resolution.Can you think of any other Name that according to you should be made member of this group ? Do let us know in the comments below.

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The government's regional connectivity scheme UDAN celebrated its 4th anniversary on April 27. But it has witnessed slow progress of implementation, as not even 50% of the route have been operationalised and according to a report, the second wave of the pandemic which started from mid of March 2021, may impact it further going forward. Rating agency ICRA in its report said that there is likely to be a further delay of two years in achieving the target of operationalising as many as 100 unserved and underserved airports and starting at least 1000 RCS routes by 2024.

Aimed at enhancing regional connectivity through fiscal support and infrastructure development, the maiden flight under the Ude Desh Ka Aam Nagrik (UDAN) scheme was flagged off by Prime Minister Narendra Modi from Shimla for Delhi on April 27, 2017. As of May 31, only 47% of total routes and 39% of airports (unserved and underserved) have been operationalised under UDAN, according to ICRA.

The demand-driven scheme was envisaged for a period of 10 years, with concessions from central and state governments and viability gap funding. The policy has made around 60 regional airports operational so far.

Durgapur airport

Regular Flow of Investment

The number of new RCS routes which started operations increased at a healthy pace and stood at 102 and 120 routes in FY2019 and FY2020 respectively, but have declined to 77 new routes in FY2021 due to the COVID-19 pandemic, ICRA said. Also, during FY2018 FY2021, a total of INR 3350 crore have been incurred by the central government towards the UDAN scheme and the budgeted outlay for FY2022 is INR 1130 crore.

ICRA said, as many as 52 unserved and underserved airports and 359 routes are operationalised as of June 30. The rating agency also said that to improvise the RCS network and achieve its target, the Airports Authority of India (AAI) has launched UDAN 4.1 as a special bidding round under UDAN 4.0 in March this year to award 392 routes. AAI is the implementing agency for UDAN.

Botched-up Balance Sheet

The weak credit profile of domestic airlines is expected to have an impact on the existing routes under the UDAN scheme, particularly for smaller airlines given the stretched liquidity position, low utilisation in some of the routes and will also impact future bidding of routes under the scheme, he added. According to ICRA, there has been a significant impact on the financial health of airline operators due to the COVID-19 pandemic.

ICRA estimates the domestic carriers to report a significant net loss of INR 210 billion in FY2021, and an estimated net loss of INR 127 billion in FY2022, with the industry's debt level increasing to around INR 500 billion in FY2022.

Kalaburagi airport

What is Actually Happening?

Ever since the airport in Kalaburagi in Karnataka opened in November 2019, it has reported the highest growth in passenger traffic despite the impact of COVID-19 on the overall aviation industry. Adding to its newfound tag as an emerging aviation hub, Kalaburagi is now also a satellite centre of Indira Gandhi Rashtriya Uran Akademi, the pilot training institute.

Kalaburagi, which comes under UDAN, is not alone. Airports in Jharsguda, Hubli, Belgavi, and Kishangarh are among the handful few who have seen passenger traffic soaring above pre-COVID-19 levels. A recent report by Kotak Institutional Equities listed 12 such airports that have "become relevant over the past few years through the regional connectivity scheme". None of the airports in metros has compared to the recovery seen in their smaller peers.

Joint Secretary MOCA, Usha Padhee said in an interview that every crisis is an opportunity in regards to the havoc created by the pandemic on the aviation sector.

She said "We had started UDAN operations when flights resumed in May 2020. Even as most metro airports had restrictions of various kinds due to COVID-19, there was a huge demand for air service in smaller airports. The routes under RCS (regional connectivity scheme) picked up as customers understood air travel was safer and also saved time," she adds. Flights on these routes, adds the senior government official, now have a load factor of 80%.

Since 2017, the government has awarded 700 routes to airlines under UDAN. The initiative has also seen 60 airports, including heliports and water aerodromes opening up. Passighat (Arunachal Pradesh) and Jabalpur (Madhya Pradesh) became the 59th & 60th airport respectively to come under the regional connectivity scheme after SpiceJet started scheduled flights to destinations like Mumbai, Pune, Surat and Ahmedabad last week.

Indigo airline

Major Roadblocks

Despite the progress, UDAN has had its share of setbacks too. Just about half of the awarded routes are operational. Many regional airlines, who started operations banking on the scheme, have struggled to have a sustainable model. Some even closed down.

Post COVID-19, with capacity utilisation still low, the contribution from airlines has dried up, forcing the government to make a tweak so that the outgo from the Fund doesn't eat up the corpus. The airlines have been asked to reduce the frequency of flights or the number of UDAN seats so that the need for funding reduces.

But sometimes, even the government support is not enough for airlines to begin services from a new airport. This leads to many routes, half of the 700 awarded, lying unused. There is something that the government is about to embark on that may help airlines, especially those with smaller aircraft, make a business out of UDAN.

Latest operationalised routes

UDAN 4.1 unlocked

The Ministry of Civil Aviation had started a "special round of bidding" in March 2021. This 4.1 round of UDAN includes routes that were otherwise cancelled in the earlier rounds along with new route pairs suggested by the stakeholders.

"We will give airlines a lot of operational flexibility. So if you have a 3-seater, 4-seater,  20 seater aircraft,  or if you want to operate as a non-scheduled operator, this will be allowed. We will explore if this model will help airlines with small aircraft. If it works out, it will mark a new chapter for UDAN," said Usha Padhee, Joint Secretary, Ministry of Civil Aviation.

The new round will also have routes that will be operated by helicopters or involve seaplanes. Special focus will be on routes served by helicopters, says Padhee, as these are places, mostly in the North-East that take a lot of time to reach by road. After Bareilly, Kurnool in Andhra Pradesh has become the second new airport to start its services this year. The operationalisation rate now is faster than the pace seen before COVID-19 when the government was opening a new airport and eight new routes under UDAN every month.

The Main Challenges

Poor infrastructure including the lack of operational readiness of airports in remote areas and lack of availability of bays in the private airports in the large metro cities, shortage of pilots, lack of favourable rules and delay in DGCA reforms. The situation will get worse as airlines in India plan to add over 900 aircraft in the next 10 years. There is a growing concern among industry professionals that increased pace of demand will overshadow meagre efforts made by the government in building infrastructure.

Of the 440-odd air routes allotted to 14 major and fledgling airlines under the two phases of UDAN, not more than 40 to 60 routes were operating regularly. This was because smaller operators such as Zoom Air, Trujet, Pinnacle Airlines, Heritage and AAA Aviation had succumbed to operational issues. Industry experts pointed out several operational, technical, procedural and financial problems in the scheme that failed to create a proper ecosystem for smaller operators. The operational costs of the operators of small aircraft went so high that the government subsidy could not compensate. The scheme hence benefited only the operators of larger aircraft like the ATR 72 and the Airbus A320.

A close examination of the distribution of successful UDAN routes by the operator, shows most of the successful routes have come from large operators like SpiceJet and IndiGo. Both these airlines have chosen to not take the Viability Gap Funding subsidy, but are instead leveraging the scheme strategically towards gaining additional slots for themselves at congested Tier-1 airports and gaining monopoly status on routes. However, UDAN cannot run without small aircraft operators as only small aircraft can land and take off from the majority of the 400 airports that the scheme intends to bring online.

The scheme also faced criticism for the financing model it had adopted. A viability gap funding structure, where a surcharge was levied on tickets on existing routes, which would be used to refund part of the ticket costs for the airlines flying on the UDAN route, was adopted which didn't go down well with various quarters.

About the UDAN Scheme

The scheme aims to enhance connectivity in remote and regional areas of the country and make air travel affordable. It is a key component of the Centre’s National Civil Aviation Policy led by Prime Minister Narendra Modi and launched in June 2016. Under the scheme, nearly half of the seats in UDAN flights are offered at subsidised fares, and the participating carriers are provided with a certain amount of viability gap funding (VGF) – an amount shared between the Centre and the concerned states. The scheme will be jointly funded by the central government and state governments. The scheme will run for 10 years and can be extended thereafter.

To help the Civil Aviation sector recover from the COVID-19 shock, the new Civil Aviation Minister Jyotiraditya Scindia has formed 3 advisory groups. These 3 groups will meet regularly to find solutions to the challenges faced by the aviation sector.

Shri jyotiraditya scindia

As per a tweet by the official Twitter handle of the Ministry of Civil Aviation, 'Under the chairmanship of the Hon’ble Minister of Civil Aviation, Jyotiraditya Scindia, MoCA has formed three advisory groups comprising Airlines, Airport Operators and MRO, Cargo Carriers, FTOs & Ground Handling companies.'

The advisory group on airlines will have the Minister of Civil aviation as the Chairman and 10 members. Apart from Minister of State for Civil Aviation Gen VK Singh, Civil Aviation secretary & DGCA, this group will include top bosses of the big airlines.

[embed]https://twitter.com/MoCA_GoI/status/1417732635925745667[/embed]

As per sources, Rajiv Bansal, CMD of Air India, Indigo's Rahul Bhatia, SpiceJet's Ajay Singh, GoFirst's Ness Wadia, Vistara's Bhaskar Bhat, Air Asia's Sunil Bhaskaran & the CEO of Alliance Air will be the members and they will advise the minister on several issues.

From enhancing domestic & international connectivity to passenger facilities during air travel to manpower skilling to developing India as a hub for passenger travel, cargo & MRO operations to even regulatory issues.

The Civil Aviation Minister will be the Chairman for the other two groups as well. The advisory group on airports will have 11 members including the Joint secretary as the convener.

This group includes Chairman Airports Authority of India, GMR Group's Business Chairman, Vice President Adani Group, BIAL's MD & CEO along with officials from the ministry.

The terms of reference for this group range from enhancing airport capacity to infrastructure augmentation and modernisation to other regulatory issues. The 3rd group will focus on Maintenance, Repair & Overhaul (MRO), cargo, flight training organisation & ground handling.

There is a big hope among the aviation industry that this would help the airlines, airport operators, cargo and all the people in these difficult times. This step should also boost the aviation sector during the ongoing pandemic.

One the eve of 12th November 1996, Saudi Arabian Airlines Flight 763 and Kazakhstan Airlines Flight 1907 collided mid-air over Charkhi Dadri, a village in Haryana killing a total of 349 souls on board. The accident remains third deadliest aviation disaster till date in terms of total body count. The final investigation report listed various reasons that led to the collision ranging from language barriers and outdated radar equipment to restricted airspace policy.

The aviation industry is such a sensitive industry that safety is at the core of all its operations and activities. Every object that takes to the skies from the ground is subjected to countless regulations and stipulations making sure there is no room for even the slightest error that could endanger safety. Gravity could be a friend or foe depending on how things are handled 30,000 ft up in the air.

That said, mid-air collisions should be a thing of the past right? Fortunately, they are. Thanks to the ever evolving technology, we now have well defined intricate set of stipulations that govern the movement of these aircrafts while in air, thereby ensuring the safety of all concerned. Nevertheless, safety is never to be taken for granted and hence…

History has shown

Historical stats show that in a staggering 105 mid-air collisions that occurred between 1964 and 1968 , majority of them had convergence angles associated with one aircraft taking over the other . 35% were from 0-10 degrees- straight from behind while  the rest 5% were from a head-on-angle. What is even more bewildering is the fact that most of these occurrences took place within 25 miles of an airport and below 8000 ft, primarily on final approach and in traffic pattern.

As is apparent, an increased traffic and higher closing speeds is what can be touted as the primary factors contributing to mid-air collisions.

According to FAA, "It takes a minimum of 10 sec for a pilot to spot incoming traffic, identify it, realize it's a collision- threat, react and have the aircraft respond" 

To get a perspective let's say, a jet and a twin have a closing speed of about 750 mph. The two planes converging at 750 mph would be less than 10 seconds apart when the pilots even first spot each other! - recipe for disaster. Hence, ICAO, which is the regulatory body for all civil aviation operations worldwide, came up with a well defined set of rules and regulations which would ultimately regulate all aircraft movements and oversee aviation safety globally.

Vertical separation

Perhaps the most important separation when it comes to aircraft spacing, is the vertical separation. The ICAO States that all aircrafts below 29,000 ft be separated by 1000ft while those above 29,000 ft should be separated by 2000 feet-applicable to all IFR flights.

Reduced Vertical Separation Minima (RVSM)

RVSM was introduced to decrease the flight separation above 29,000 ft to 1000ft from 2000 ft. This was done in order to fly more optimum flight paths without compromising safety leading to fuel savings and also advocated a more efficient use of the available airspace. In 1988, the ICAO completed a study wherein it investigated the safe transition of separation from 2000ft to 1000ft between FL290 and FL410 and found it to be technically feasible. Only RVSM approved aircrafts may fly through this airspace and non-RVSM aircrafts "may" travel through RVSM route provided authorisation is obtained from the concerned ATC and guidance is given at all times.

In the event that the two aircrafts are separated LESS than the vertical separation minimum, horizontal separation must be applied:

Procedural separation

Based on reports given by the pilots, this separation doesn't require the active intervention of the ATC as the position of the aircrafts is verbally communicated between pilots . In some cases though, the ATC radar intervenes to provide the separation minima.

Lateral separation

This separation minima is based on the position of the aircraft derived from dead-reckoning or from beacons. Aircrafts installed with beacons need to be at a certain distance from each other and their tracks to/from the beacon must diverge by a specified minimum angle. To be precise 5 NM horizontal separation up to 60 NM from radar head, 5 NM within 60 NM of ADS-B ground station when only ADS-B is used in non-radar environment. 10 NM horizontal separation beyond 60 NM from radar head, 10 NM beyond 60 NM of ADS-B ground station when only ADS-B is used in a non-radar environment. Under certain circumstances, a special authorisation is given for 3 NM separation from the radar head.

Longitudinal separation

Aircrafts following tracks 45 degrees of each other and not laterally separated, are said to be flying the same route. Such scenarios call for longitudinal separation and it can be based upon time/distance measures by the DME(distance measuring equipment). What is to be noted though is that no two aircrafts flying the same route should come within 15 minutes of flying time of each other.

Speed Control Procedures

Also, there are certain speed control procedures that need to be followed subject to aircraft performance limitations; a surveillance controller may assign a specific speed to the aircraft in order to maintain/achieve required spacing. Speed control is also necessary to achieve the desired separation minimum or spacing between the successive arrivals. This in turn would improve the utilization of airspace and enhance the runway capacity to handle more aircraft.

All the speed restrictions shall be complied with as promptly as feasible and flown as accurately as possible within the limits of operational constraints. Aircraft unable to comply with the specified speeds must inform Air Traffic Controller (ATC) and report the minimum speed it is able to follow. In such cases controllers shall apply the alternative method to achieve the desired spacing between aircraft concerned.

Separation due to wake turbulence

Wake turbulence is one another factor to be considered when applying separation rules to aircrafts. An aircraft may fly into wake turbulence from a preceding aircraft which can cause it to enter a sudden unintentional roll leading to loss of control. Hence a minimum separation between departing and/or arriving aircrafts have to be maintained based on their MTOW ( classified as Jumbo, Heavy, Light, Medium) -as per ICAO wake turbulence category.

*MTOW- Maximum Take-off Weight, NM- Nautical miles

PRECEDING AIRCRAFTFOLLOWING AIRCRAFTMINIMUM SEPARATION(NM)SUPERHEAVY6.0SUPERMEDIUM7.0SUPERLIGHT8.0HEAVYHEAVY4.0HEAVYMEDIUM5.0HEAVYLIGHT6.0MEDIUMLIGHT5.0

Please refer to the Enroute section of the Aeronautical Information Publication (AIP) document for further detailed reading about the Indian regulations in the event of collision hazard, Termination of surveillance service, ATS surveillance system failure and Communication failure procedure. The latest AIP is available on the Airport Authority of India’s (AAI) official website for public use.

With aviation making a remarkable comeback from the devastating pandemic, people have slowly started taking to the air. That means an increase in passenger loads translating to increased traffic in air. Though it will still take time to return to pre-pandemic levels the one thing that will always remain constant, is SAFETY.

Note: The data in this article is as per DGCA (India) rules. Please contact/refer to the relevant regulator’s website for laws pertaining to any other country or region.

With the ghosts of the second wave of the pandemic still looming and concerns over the covid-19’s Delta variant, Canada extended the expected date for opening of borders for Indian travellers for the fourth time in a row since April 22. The North American nation was expected to lift its ban on Indian flights on July 21 as per its previous announcement.

To help manage the continued risk of imported #COVID19 cases and variants of concern into Canada, we have extended the #NOTAM restricting all direct commercial and private passenger flights to Canada from #India until August 21, 2021 at 23:59 EDT https://t.co/g9CRcZi1dO— Transport Canada (@Transport_gc) July 20, 2021

Tick-off the rules before checking into the Maple country

A press release issued by the Government of Canada on their website stated that the ban has been extended “based on public health advice”. About the drastic surge in the Covid-19 cases in India and new variants emerging, Canada also reworked the rules and regulations to be maintained to curb the transmissibility.

ANI

Passengers travelling to Canada from India via an indirect route is required to produce a negative Covid-19 test before continuing their journey for Canada. For travellers who have contracted the virus before is required to show proof of positive Covid-19 report at the connecting airport. The test should be conducted between 14 and 90 days before the departure. A person might even be asked to be quarantined for 14 days in the connecting country if required.

However, travelling by a third country will have its own set of complications which travellers should be aware of and make necessary provisions :

Certain countries do not allow entry or transit from passengers arriving from India or from passengers who have previously tested positive to COVID-19.COVID-19 testing for passengers in transit might not be available in all international airports or third countries.If you test positive during transit, you may be quarantined or sent back to your point of departure.

The announcement came while Canada is relaxing travel measures for other countries. Wholly vaccinated American citizen and permanent residents are permitted to travel to Canada for non-essential purposes given the passenger have been quarantined for 14 days prior departure. In addition, fully vaccinated travellers do not need to take a post-arrival test.

Skeptic Canada

“On September 7, 2021, provided that the domestic epidemiologic situation remains favourable, the Government intends to open Canada’s borders to any fully vaccinated travellers who have completed the full course of vaccination with a Government of Canada-accepted vaccine at least 14 days before entering Canada and who meet specific entry requirements,” said the Public Health Agency of Canada.

canada

In near future, Canada is seeking to welcome over 1.3 million immigrants from around the world as stated by the Immigration, Refugees and Citizenship Canada policy. Vaccines by Pfizer, Moderna, AstraZeneca and Johnson Johnson have been approved by the Canadian government.

latest updates on Canadian travel requirements for Indians