Government notifies capital asset transfer from Air India to AIAHL

The central government has issued an order notifying the transfer of capital assets from Air India Ltd to Air India Assets Holding Ltd (AIAHL) as part of its plan to go for the sale of 100 stakes in the national carrier.

In another order, the government has also exempted the national carrier from tax collected at source provisions under the Income Tax (IT) Act on sale of goods, including shares to AIAHL, the special purpose vehicle (SPV).

“In exercise of the powers conferred under the IT Act , the Central government herby notifies the transfer of capital asset under plan approved  from Air India Limited (PAN AACCN6194P), being transferor public sector company, to Air India Assets Holding Limited (PAN: AAQCA4703M), being transferee public sector company, for the purpose of said clause.This notification shall come into force with effect from 1st day of April, 2022 and shall, accordingly, apply in relation to the assessment year 2022-23 and subsequent assessment years”. Central Board of Direct Taxes (CBDT)

In the orders, the Central Board of Direct Taxes (CBDT) has specified that AIAHL will not be considered as ‘buyer’ in case of transfer of goods by Air India as part of the plan and that Air India will not be considered as ‘seller’ during the transfer of goods by it to the SPV.

Before the stake sale, the government has put in place a plan to make Air India attractive to potential buyers and according to which Air India’s capital assets are going to be transferred to the AIAHL, which has been created for holding half of the airline’s loans, four of its subsidiaries and non-core assets.

The central government has issued an order notifying the transfer of capital assets from Air India Ltd to Air India Assets Holding Ltd (AIAHL) as part of its plan to go for the sale of 100 stakes in the national carrier.

The exemption from tax collected at source (TCS) has been done to make the sale of Air India more attractive to investors. The national carrier is undergoing strategic divestment with the government selling its full stake and management control to the buyer. Financial bids for the same are expected by September 15.

As per the tax collected at source (TCS) provisions introduced last year, a seller having a turnover of more than INR 10 crore in the immediately preceding year, is required to collect the tax at 0.1% on the sale of goods to any person for an aggregate value exceeding INR 50 lakh in the current financial year. Shares of a company sold on the stock exchange would also be considered ‘goods’ and are subject to TCS.

“In order to make the transaction of Air India disinvestment deal financially lucrative for the strategic investor and considering the huge amount of sale consideration involved, the government has exempted Air India from such share/asset sale transaction from TCS provision." Shailesh Kumar, Partner at Nangia & Co LLP

Jet Airways, once among India’s largest airlines, will restart operations from the first quarter of 2022. The Jalan Kalrock consortium has confirmed that Jet Airways will begin its operations again, with a flight from Mumbai to New Delhi. Representatives of the consortium have visited airports in the last month, for the same.

The process of reviving the grounded carrier is on track with the existing Air Operator Certificate (AOC) already under process for revalidation, said the company in a statement.

“We received NCLT approval in June 2021, and since then we have been working closely with all concerned authorities to get the airline back in the skies. Jet Airways 2.0 aims at restarting domestic operations by Q1-2022, and short-haul international operations by Q3/Q4 2022. We plan to have 50+ aircraft in 3 years and 100+ in 5 years.The aircraft is being selected based on competitive long term leasing solutions. It is the first time in the history of aviation that an airline grounded for more than two years is being revived and we are looking forward to being a part of this historic journey. The brand Jet Airways has a huge loyalty base and we are confident that we will be able to capitalise and create new benchmarks. We would like to assure all our loyal Jet Airways guests that your favourite airline will soon be back in the skies.Murari Lal Jalan, lead member of the Jalan Kalrock Consortium and the proposed non-executive chairman of Jet Airways

In an interview with ET, Dubai-based businessman Jalan had earlier said the airline would start in July 2021. Later its court-appointed resolution professional reportedly said it would start flying by December 2021. Shortly by the third or fourth quarter of 2022, the airlines will also resume international short-haul flights.

They plan to increase their fleet of planes to 50 in three years and raise that to 100 in five years.

Crippled by mounting losses, the airline, once India's biggest private carrier, was forced to ground all flights in April 2019, owing billions to lenders and leaving thousands without a job.

Jet Airways, once among India’s largest airlines, will restart operations from the first quarter of 2022.

The company is working closely with authorities and airport coordinators on slot allocation required airport infrastructure, and night parking.

Jet Airways' revival plan was approved by the National Companies Law Tribunal (NCLT) in June. All the creditors, said the company, will be settled as per the plan in the coming months.

The bankruptcy court's go-ahead came several months after Jet's creditors had given their approval in October last year to the revival plan submitted by the consortium.

Unlike Jet Airways 1.0, this time the headquarters of the airline will be based in Gurugram.

“In its new avatar, Jet Airways will now be headquartered in Delhi NCR with its senior management working from the corporate office at Gurugram. However, Jet Airways will continue to have a strong and significant presence in Mumbai where it will work from its ‘Global One’ office in Kurla. Jet Airways also has a state-of-the-art training centre located at Global One, which will be retained and used for in-house training for the Jet Airways team.Jet Airways has already hired 150+ full-time employees on its payroll and we are looking to onboard another 1,000+ employees FY 2021-22 across categories."Newly appointed Captain Sudhir Gaur, Acting CEO, Jet Airways and member of the Jalan Kalrock Consortium

The hiring, he added, will be in a phased manner and will be strictly on merit, to meet the operational requirements of the airline. Meanwhile, the airline has also started its hiring activities as India's private carrier gets closer to be back on the skies. In a tweet, Jet Airways shared that it has started hiring professionals and looks to onboard them soon. 

In June this year, the Mumbai bench of the National Company Law Tribunal (NCLT) approved the resolution plan submitted by the Kalrock Capital and Murari Lal Jalan consortium. The bankruptcy court's go-ahead came several months after Jet's creditors had given their approval in October last year to the resolution plan submitted by the consortium.

The airline suspended operations on April 17, 2019, due to financial distress and had been undergoing a resolution process under the Insolvency and Bankruptcy Code (IBC) for over two years.

Legal Issues still in the picture

Jet Airways continues to be stuck in legal issues. Earlier this month, Punjab National Bank (PNB) moved the appellate bankruptcy court, seeking a stay on the approval on its resolution plan,

In its petition to the National Company Law Appellate Tribunal (NCLAT), the state-owned lender claimed that the resolution professional (RP) — the executive appointed to manage the company during the bankruptcy process — arbitrarily cut its claim after approving it.

The NCLAT issued notices to resolution professional Ashish Chhawchharia, the Kalrock-Jalan consortium and the airline’s lenders, and posted the matter for hearing on September 21.

Jet Airways continues to be stuck in legal issues.

This is the second petition in the appellate tribunal over Jet Airways’ revival plan. Late last month, Jet's employees challenged the resolution plan on aspects of payment of salary arrears and gratuity.

According to the resolution plan, the potential owners of Jet would give a small fraction of the employees’ claimed dues of INR 1,200 crore and employ a small chunk from the staff still on the payrolls of the airline. The tribunal had sought the response of the Kalrock-Jalan consortium on the employees’ petition.

The final investigation report that had been delayed over 8 months following the fateful crash of Air India Express in Kozhikode airport is finally made public by the Aircraft Accident Investigation Bureau.

On August 7, 2020 the Air India Express flight, a Boeing B737, was on a repatriation mission to bring back Indians stranded in Dubai. On landing at Kozhikode airport, the aircraft overshot the runway and rammed nose-first into the ground before coming apart into two pieces.

ONMANORAMA

The deadliest commercial aviation disaster to have taken place in the country in the past 10 years, there were 192 souls on board including the crew. 20 fatalities were reported while the rest survived.

The probable cause of the accident was the non-adherence to SOP by the PF (Pilot Flying), wherein, he continued an unstabilized approach and landed beyond the touchdown zone, halfway down the runway, in spite of ‘Go Around’ call by PM (Pilot Monitoring) which warranted a mandatory ‘Go Around’ and the failure of the PM to take over controls and execute a ‘Go Around- Final report of the accident

Now that the final report is made available to the open public, let's take a look at the gist of what transpired on that fateful night.

The final report

Brief history

The operations department of Air India Express Limited had planned an IFR flight for the sector Kozhikode-Dubai-Kozhikode on August 7, 2020. The aircraft was to operate with the radiotelephony call sign AXB 1343/1344.

Before the second leg of the journey, it was reported that the captain was concerned about the undue delay and was anxious for an on-time arrival at Kozhikode. The return sector was uneventful until the final approach when things started to go haywire.

Descent into Kozhikode

At 13:19 UTC, Chennai Upper Area Control transmitted Kozhikode airfield weather details to AXB 1344 as runway in use 28, visibility of 1500 m in moderate thunderstorm and rain with surface winds of 270/14 kt. Visibility minima required for ILS approach for both runways (10/28) at Kozhikode was 1300 m. PF approach briefing before top of descent covered ILS approach details for runway 28, wherein no contingency for change of runway in use was briefed.

Kozhikode airfield, at the time, was under two concurrent ‘Aerodrome Warnings’- one for TSRA and the other one for exceeding wind speed beyond 17 knots.

First/missed approach

After careful evaluation of the current weather conditions, the aircraft was cleared for ILS approach on runway 28. Despite being given the clearance, the pilots failed to make the mandatory announcement for the cabin crew to be seated.

Unable to sight the runway at minimums, the crew performed a missed approach as per company SOP.

The ATC, at this time, enquired if the crew were okay using Runway 10 for landing to which they complied.

Final approach, landing and landing roll

The aircraft was now given clearance for ILS-Z approach for runway 10 via 284 radial 15 DME fix as published. The crew failed to calculate the mandatory LDR during the approach briefing for runway 10.

Approximately 1 second before touchdown, while the aircraft was crossing 10 ft RA, at 4200 ft beyond the threshold the PM gave a call of “Go around”. The PF paid no need and continued with the landing.During the flare, the aircraft floated, which resulted in a long landing along with an extended flare of 16 seconds. The aircraft touched down at 4438 ft on the 8858 ft long runway with a CAS of approximately 150 kt and a GS of 165 kt. It was raining at the time of touchdown and the runway condition reported by DATCO was wet.

The aircraft failed to stop on the runway and this resulted in a runway overrun. The aircraft exited the designated end of runway 10 (8858 ft) at a ground speed of 84.5 Kt and then overshot the RESA, broke the ILS antennae and a fence before plummeting down the table-top runway.

Apparently the RESA (runway end safety area) which the airport had, wasn't maintained as per standards and not plowed regularly to curb the speed of an aircraft in case of an overrun.

Whatever steps are advocated in the report, they will have to be implemented. A group of people in the ministry will be tasked with implementing the recommendations in the reportCivil Aviation Minister Jyotiraditya Scindia said

Aftermath

Aircraft damages

The New York Times

The aircraft was totaled and the fuselage split up into 3 sections- the FWD, CENTRE and AFT.

Other damages

1. 02 Runway End Lights and 01 Threshold Light were heavily damaged by the aircraft wheels

2. Localiser Antenna Array as the aircraft passed through the array

3. Runway Area Perimeter Fence was damaged due to impact with aircraft as it slid down the slope after overshooting the runway and RESA.

4. A lamp post on the perimeter road was also damaged due to impact with the right wing of the aircraft.

Both engines were completely detached from the wings and although there was fuel leak, it fortunately didn't result in a fire.

The ARFF crew on duty immediately sprang into action with the help of Central Industrial Security Force (CISF) personnel stationed at the airport.

The rescue operation was completed at 16:45 UTC (22:15 IST).

The PIC had vast experience of landing at Kozhikode under similar weather conditions. This experience might have led to over confidence leading to complacency and a state of reduced conscious attention that would have seriously affected his actions, decision making as well as CRM (CREW RESOURCE MANAGEMENT)-Report

COVER: The Filipino Times

(Inputs from Business Standard)

Nearly 70 trainee pilots in AirAsia India who have been grounded for over a year will get an opportunity to work with Vistara.

While Tata group companies have inter-company transfer policies, such co-operation between the two airlines is unique. It will allow the trainee pilots to resume flying, help Vistara execute its expansion plans and could be a sign of further synergies between the two airlines.

The Covid-19 pandemic disrupted air travel and hampered the growth plans of airlines. It impacted pilot training too. Trainee pilots undergo ground classes, simulator training and supervised flying before being released for regular duty.

Nearly 70 trainee pilots in AirAsia India who have been grounded for over a year will get an opportunity to work with Vistara. (Image Courtesy - Business World)

Airlines have been operating fewer flights compared to pre-Covid times, as capacity has been capped by the government. Fewer flights mean reduced training opportunities for the junior crew.

Some 70-80 pilots were under training in AirAsia India but their training came to a halt because of the Covid-19 pandemic. These trainee pilots are now being offered a chance to join Vistara as AirAsia India has sufficient pilots to meet its requirements.

"This will certainly benefit pilots in their career progression. It is not so much of a cost-saving exercise for the airline," a source said.

Currently, AirAsia India has 27 Airbus A320 aircraft and will be receiving another aircraft next month.

Currently, AirAsia India has 27 Airbus A320 aircraft and will be receiving another aircraft next month. No other addition is planned at the moment. It is operating around 110-120 flights daily which are around 55-60% of its pre-Covid capacity. Currently, the government allows airlines to deploy 72.5% of their capacity.

AirAsia India declined to comment. In an internal email, the operations department wrote to the pilots that selected candidates will have to undergo ground and simulator training to maintain the validity of the licence before their transfer to Vistara. Those who do not wish to take the transfer will be assigned office work within the airline and no assurance can be given regarding the start of training in AirAsia India, the airline told its trainee pilots.

"For us, the momentum gained in the last one year on our international expansion has been rewarding and we have plans in place to continue adding more destinations to our network as soon as we can. While working on our future growth strategy we are leveraging every opportunity available within our ecosystem for the same."A Vistara spokesperson to Business Standard

Emphasising the need to rationalise tax rates on jet fuel, civil aviation minister Jyotiraditya Scindia on Thursday, September 9 said lower rates will bring in more flights and act as an economic multiplier that will be "50 to 100 times more" than what states earn from a low level of revenue from Value Added Tax (VAT).

Emphasising the need to rationalise tax rates on jet fuel, civil aviation minister Jyotiraditya Scindia on September 9 said lower rates will bring in more flights. (Image Courtsey - The Tribune)

Aviation Turbine Fuel (ATF) cost is a significant component of the operational expenses of carriers and the civil aviation ministry has been pitching for lower rates to boost the airline industry that has also been adversely hit by the coronavirus pandemic.

Addressing a press conference, the minister noted that lower the rates, more flights will come in and the economic multiplier will be 50 to 100 times more than what you (states) earn from a low level of revenue from VAT.

"There are two solutions to the issue of VAT on ATF. Go to every state for rationalisation (of VAT) so that there is a level playing field… Today, there are 8 to 9 states that are ranging between 1 to 4%. Other states vary from 4 to 30%. So much so that sometimes there is variation at inter-state also. So, some states have different for certain cities."If you look at all states, the VAT revenue from all states is ranging between INR 3,500 to INR 4,000 crore. It is not a large amount of money, but it is a huge multiplier in terms of economic growth.Second way is through the GST. For that too, it is the states that will decide on that… Ultimately, the responsibility lies with the states. It is important for us to the canvas with the right constituencies, which is states as well as the Ministry of Finance.I do not think that mandating policy on every front should be the domain of the government. You should allow the free market to function."Jyotiraditya M. Scindia, Union Minister of Civil Aviation

Noting that there is a long way to go in increasing air travel and that the market is there, he said rationalisation of VAT is important in this regard.

To a query on ticket refund policy, Scindia made it clear that markets should be allowed to perform that function.

Milan-bound IndiGo passengers protested at Amritsar airport and raised slogans against the company after the airline abruptly cancelled the flight due to denial of arrival permission from the country concerned at the eleventh hour.

"The Amritsar-Milan Indigo flight via Istanbul has been cancelled due to some permission issues with the concerned country's aviation authority. Passengers staged a protest at the IndiGo booking counter," an Amritsar airport official told ANI.

Milan-bound IndiGo passengers protested at Amritsar airport and raised slogans against the company after the airline abruptly cancelled the flight.

The flight was booked under Vande Bharat Mission flight and 215 passengers checked in at the terminal building for travelling.

The airline has confirmed the flight cancellation and the passengers were told by the airline that their full money would be refunded.

"IndiGo is committed to refund their entire money," an official said.