Parliamentary panel slam aviation ministry over AAI for falling short of global standards in aviation safety and security

Radhika Bansal

05 Feb 2022

A key parliamentary committee has rapped the Ministry of Civil Aviation over the Airports Authority of India (AAI) lagging behind global standards in two critical elements of aviation safety and security measures, according to a report by The Tribune India.

“Out of eight critical elements, AAI is lagging behind ineffective implementation in two critical elements—organisation and licensing, which is 61.54% and 25.26%, respectively, against the world average score of 70.8%,” the Committee on Public Undertakings has stated in its report on AAI tabled in Parliament.

ICAO requires its member states to establish and implement an effective state oversight system for aviation safety and security.

The other six critical elements, as mandated by the International Civil Aviation Organisation (ICAO), are legislation, operations, airworthiness, accident investigation, air navigation services and aerodromes. ICAO requires its member states to establish and implement an effective state oversight system for aviation safety and security by taking into account the eight elements.

The Committee observed that while AAI’s overall effective implementation score of 70.8% was a notch above the world average of 69.76%, it trailed by a wide margin in the organisation and licensing where the world average was 71.14% and 73.55%, respectively.

The Committee had earlier expressed concern that India, which is one of the major civil aviation markets after the US and China, was lagging far behind in the effective implementation of the two critical elements.

Pointing out that AAI had not been able to keep pace with global standards, the Committee had expressed apprehensions that it may deter foreign investments in the civil aviation sector and thereby adversely affect the sector’s expected growth.

The Ministry of Civil Aviation had stated before the Committee that licensing covered pilots, flight engineers, ground personnel, air traffic controllers and aerodromes.

All AAI airports used for international operations and all AAI domestic airports operating scheduled air transport services are licensed by the Directorate General of Civil Aviation (DGCA) and hence effective implementation in licensing on part of AAI was 100%. Poor percentage of effective implementation in this area may be attributed to other licensing areas, the ministry said.

The Committee however pointed out that the ministry had only elaborated the reasons for poor performance only in respect of licensing and was conspicuously silent on the other critical element of the organisation. Even while talking about licensing, the ministry only referred to aerodromes and left out other components such as personnel.

While seeking elaborate reasons for poor performance in the two critical elements, the committee stressed that the central government should take suitable steps not only to reach world averages but also to be on par with the best in the world.

(With Inputs from The Tribune India)

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Jhunjhunwala likely to use stock options to entice employees for his airline

Radhika Bansal

04 Feb 2022

Akasa, a new Indian airline backed by billionaire Rakesh Jhunjhunwala, plans to offer stock options to attract staff, using a lure more often deployed by technology startups in its bid to gain a foothold in one of the world's most competitive air-travel markets.

The carrier, which is preparing to start flying in late May, is taking the unusual approach of granting company shares to a bigger pool of top employees, rather than a select group of senior executives, as the aviation industry globally suffers from a talent shortfall.

Airlines have retrenched thousands of workers because of the pandemic and many pilots have quit, either taking early retirement or switching careers.

Akasa plans to offer stock options to attract staff.

The degree to which Akasa plans to grant stock options for staff will be "far greater than most airlines in India and hopefully reminiscent of maybe some of the tech startups where they go fairly deep in the way they provide employee stock ownership plans," Dube said. There isn't a suggestion stock option would be given to aircrew or regular pilots, however.

Putting employee satisfaction so squarely front and centre is an interesting strategy in a market that's historically gone after customers by offering cut-throat prices. Rock-bottom airfares have long been a feature in India, which has a suite of no-frills carriers targeting the nation's huge flying public.

"We want to have an organization that's very tight-knit in values, but diverse in experiences, genders, locations within India. We were saddened by the plight of employees through the pandemic, some of the bankruptcies that have taken place in Indian aviation, and we wanted to create homes for them where they are happy.What gives us confidence is the way in which we have purchased our aircraft, established our long-term engine maintenance deals, the way in which we have started leasing our aircraft with the lessors. The leadership team Akasa has attracted is also "hyper-focused on the hundreds of elements that make up an airline's cost structure."Vinay Dube, CEO, Akasa Air

Akasa, backed by some impressive aviation veterans, has hired around 50 employees for back-office functions and is now recruiting pilots, flight attendants and airport staff, said Dube, who is also Akasa's founder and managing director.

The careers page of Akasa's website, decked out in the airline's orange and purple brand identity with a tagline of "It's Your Sky," states that new applications have been paused after an "unprecedented number" of inquiries were received.

Vinay Dube; Founder, CEO, Managing Director; Akasa Air

"It's flattering, overwhelming, but there's also a hint of sadness because I don't want so many people to be either unemployed or unhappy," said Dube, who says 95% of staff call him by his first name. "If we don't treat our employees well, if we don't take care of them, then it's very hard for them to take care of customers, which we want them to do."

Customer service alone isn't going to alleviate the pain wrought by Covid, however. Airlines in India are expected to take a USD 8 billion hit from the pandemic and even before the virus decimated air travel, the landscape was littered with failures. 

Former billionaires like liquor baron Vijay Mallya with Kingfisher Airlines and travel agent-turned-entrepreneur Naresh Goyal with Jet Airways India Ltd. couldn't crack the market, both venturing into cheap, on-time budget business to augment their more premium offerings.

Kingfisher folded in 2012 after failing to clear its dues to banks, staff, lessors and airports.

Kingfisher folded in 2012 after failing to clear its dues to banks, staff, lessors and airports, while Jet Airways has new owners following a court-monitored, insolvency-resolution process.

Even those still in business find it tough. SpiceJet Ltd. almost collapsed before its founders returned to gain control and revive the company in 2015. Air India Ltd. survived on taxpayer bailouts worth billions of dollars before the government sold it to Tata Sons and the local ventures of Singapore Airlines Ltd. and Malaysian tycoon Tony Fernandes's AirAsia Bhd., both of which teamed up with Tata Sons, have never made money.

Coupled with high taxes on aviation fuel, the sector is so riddled with brutal price wars that don't leave carriers any fat to cover costs it's "chronically ill," IndiGo's Chief Executive Officer Ronojoy Dutta said recently.

"Startups have a particularly difficult road ahead," said Robert Mann, the New York-based head of aviation consulting firm R.W. Mann & Co. The challenges before airline upstarts like Akasa include the availability of sufficient capital and the need to stimulate flyer appetite with cheap fares upon launch, which generates good word of mouth leading to positive cash flow and eventual profit, he said. 

Dube is optimistic his airline, with secure financing and a low cost-structure, can succeed where others have failed. 

Indeed Akasa's founding team has a long history of running airlines. Dube is a former Delta Air Lines Inc. veteran who also ran Jet Airways until it went belly up in 2019. He briefly led Wadia Group's no-frills carrier Go Airlines India Ltd. and laid the groundwork for the budget carrier to file for an initial share sale. 

Vinay Dube with Aditya Ghosh during signing the deal with CFM engines for B737 Max.

Akasa, operated by SNV Aviation Pvt., is also backed by Aditya Ghosh, who spearheaded IndiGo for nearly a decade and propelled the once little-known startup to the nation's top spot, eventually capturing more than 50% of the market.

Under Ghosh, IndiGo placed record aircraft orders worth tens of billions of dollars, had a blockbuster IPO and catapulted itself ahead of AirAsia Group Bhd. and Spring Airlines Co. to become the biggest budget airline in Asia by market value.

Akasa plans to follow a similar playbook of growing at a breakneck pace, adding 18 aircraft during the year ending March 2023 -- the first deliveries from a November order for 72 Boeing Co. 737 Max jets, worth USD 9 billion at sticker prices.

A deal for the 737 Max, which was grounded globally after fatal crashes in Indonesia and Ethiopia, probably helped Akasa secure bigger discounts than usual considering it was one of Max's first new customers after the model's recertification.  

Akasa would also have taken advantage of the pandemic to get its aircraft and engine contracts right, which should help it achieve lower costs in the initial years, according to Kapil Kaul, South Asia chief executive officer for Sydney-based CAPA Centre for Aviation.

Akasa is on track to be well-capitalized with a potential ability to raise USD 500 million through sale and leaseback of its aircraft over five years, he said. Jhunjhunwala initially pumped USD 35 million into the airline.

The carrier will begin flying internationally by the summer of 2023.

The carrier will begin flying internationally by the summer of 2023 when it inducts 20 aircraft, the minimum fleet requirement to serve overseas routes according to local regulations, Dube said. Akasa will have an option of flying to the Middle East, Southeast Asia, Nepal, Bangladesh and Sri Lanka, all within the range of a 737 Max.

Akasa also plans to cut down queues at airports and reduce the number of time passengers spend waiting to board by using technology, Dube said, without elaborating.

"If you look at the next 20 years, Indian aviation is going to continue to grow by leaps and bounds," Dube said. "India is geographically a very large country and aviation is under-penetrated, there are many people today who still haven't flown relative to most Western economies. All said and done, we are extremely bullish about the future. 100% -- Akasa will be profitable."

(With Inputs from Bloomberg)

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Government yet to decide on transaction mechanisms for next round of airport leases

Radhika Bansal

04 Feb 2022

The government on Thursday, February 3 said transaction modalities are yet to be decided for leasing out the next set of airports under public-private partnerships. As part of the National Monetisation Pipeline (NMP), 25 AAI airports are proposed to be leased out over the 2022-2025 period.

Currently, there are 130 operational airports, two water aerodromes and eight heliports. Out of them, five airports are private and four non-AAI airports are joint ventures.

In a written reply to the Lok Sabha, Minister of State for Civil Aviation V K Singh said the government is "yet to decide the transaction modalities for next set of airports to be leased out under PPP mode".

Gen. (Dr.) V. K. Singh (Retd.), Minister of State for Civil Aviation

In 2018-19, the Airports Authority of India (AAI) undertook to bid under PPP for six airports -- Ahmedabad, Jaipur, Lucknow, Guwahati, Mangaluru and Thiruvananthapuram. They were bid out based on Per Passenger Fee (PPF) payable to AAI.

The 25 airports to be leased out as part of NMP include Bhubaneshwar, Varanasi, Amritsar, Trichy, Indore, Raipur, Calicut, Coimbatore, Nagpur, Patna, Madurai, Surat, Ranchi and Jodhpur. Other airports are Chennai, Vijayawada, Vadodara, Bhopal, Tirupati, Hubli, Imphal, Agartala, Udaipur, Dehradun and Rajahmundry.

Shirdi Airport is one of the 8 operational airports.

Meanwhile, the government has accorded in-principle approval for setting up 21 greenfields (fresh) airports in different parts of the country. Out of them, eight airports are operational.

Those are Kannur, Sindhudurg, Shirdi, Kalaburagi, Orvakal, Kushinagar, Durgapur and Pakyong. In a separate written reply, the minister said AAI has requested 78 acres of land from the Bihar government for the proper development of Darbhanga airport in the state.

Out of the 78 acres, 54 acres will be utilised for terminal building, car parking and offices, among others, while 24 acres of land will be for the operational requirement. Civil flight operations started from Darbhanga in November 2020.

The government has received the proposal for renaming Darbhanga airport as the Vidyapati airport.

AAI has developed the interim terminal building of the airport on a land pocket of 2.3 acres leased from the defence ministry, along with strengthening of runway and apron, among others, according to the reply.

Singh also said the government has received the proposal for renaming Darbhanga airport as the Vidyapati airport. "A decision on renaming of airports is taken by the Union Cabinet after due consultation with the concerned central ministries/ departments," he added.

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The Indian Airforce Boeing B737-200 completes 51 years of operation

Prashant-prabhakar

04 Feb 2022

The Indian Airforce has now, over the years, emerged to be the fourth-best air force in the world. With about 1,80,000 air force personnel and about 1750 aircraft-although, the exact number of aircraft in service with the Indian Air Force cannot be determined with precision-it is one of the most advanced, powerful, and prestigious Air forces in the world.

Indian Air Force | Representative | DNA India

Having been established on 8 October 1932, the Indian Airforce operates a wide range of aircraft from combat fighters, transport and refuelling aircraft, reconnaissance to a small number of passenger planes for dignitaries.

Although the fleet size of the IAF has decreased to 33 squadrons now owing to the retirement of older aircraft, one aircraft remains active today, even after 51 years of operation.

A brief look into the model and its active role in the fleet.

The Boeing B737-200

The Boeing 737-200, with the call-sign VT-EAJ, and now registered as K3187, was first delivered in January 1971 to Indian Airlines-a state-owned domestic carrier at the time. The aircraft played a significant role during then, having performed countless domestic missions across the country.

Planespotters.com

As a part of fleet expansion, the aircraft was 1 of 36, 737-200s delivered to Indian Airlines over nearly four decades. Aircraft deliveries spanned between 1970 and 2008 with the final passenger jet arriving in 2005 and the rest being cargo.

The plane was configured in a 3-3 layout with 126 seats in total, according to Planespotters.com.

Take-over by the Indian Airforce

The Indian Air Force (IAF) acquired  VT-EAJ from Indian Airlines in 1993 and reconfigured the aircraft into a VIP configuration, meant to carry important military officials and members of government across the country. As is with any military aircraft meant for diplomatic travel, very little is known about the interiors of the aircraft.

VT-EAJ is one of seven 732s that were transferred to the military in total. K2142 and K2143 were relocated in 1984 and are still in service. In 1986, the IAF acquired two 732s, which were subsequently retired in 1989. Aircraft with registration K3186 is preserved in Hindon Air Base at the outskirts of Delhi. Alliance Air leased the final jet for a short time before returning it to the regional carrier in 2003. (K5011).

The K2142 and K2143 are both relatively young at 38.5 years old, it is not known as to why the K3187 remains in service, despite 51 years of operations (as of 2022). Reportedly, the airframe is still operational meaning the aircraft is still airworthy.

Wikimedia Commons

With changing demands in operations and security needs, the IAF has been updating its fleet ever since.

In addition to the three 737-200s listed above, the IAF has acquired three 737-700 BBJs, specifically mean to ferry officials domestically and to medium-haul destinations.

Boeing BBJ K5012 | Bharat-Rakshak.com

Although seen less frequently now, the 737-200 remains one of the oldest flying aircraft in the country.

SOURCE(s)

COVER: Wikimedia Commons

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Air India can use the land for 6 months at previous rates at Delhi and Mumbai airports

Radhika Bansal

04 Feb 2022

The Tata Group can continue to utilise land that Air India has at its two hubs — Delhi and Mumbai airports — for six months at the old agreements the government-run Maharaja had with DIAL and MIAL.

According to a report by TOI, Before the end of this July, the newly-privatised airline will need to enter into fresh commercial agreements with the airport operators for the land parcel they need to retain for operational reasons.

Being government-owned for decades and the biggest airline till the late 1990s, Air India, erstwhile Indian Airlines and their numerous subsidiaries have significant landholding at airports across India. They have a massive presence at Delhi and Mumbai airports.

Air India can use the land for 6 months at previous rates at Delhi and Mumbai airports.

The Union aviation ministry held meetings with stakeholders on the issue of land/space utilisation by AI and subsidiaries at airports.

On AAI land, all the civil structures and buildings of AI (currently owned by AI) will be transferred to AI Assets Holding Ltd (AIAHL). The current terms and conditions will prevail for the subsidiaries AIESL, AIASL, and Alliance Air as long as they remain public sector enterprises.

In the case of Air India, the same terms and conditions will be extended for six months after the closing date of operation. The subsidiaries must sign agreements directly with AAI, with an additional annexed document outlining the civil structures owned by AIAHL.

Air India was taken over by Tata Group firm Talace on January 27.

“All the civil structures and buildings of AI (currently owned by AI) on AAI land will be transferred to AI Assets Holding Ltd (AIAHL)…. For the subsidiaries AIESL, AIASL and Alliance Air, the existing terms and conditions shall apply as long as they remain public sector undertakings. In case of their disinvestment, the same terms and conditions are to be extended for six months from the closing date for continuity of business, as done in the case of Air India. Agreements are to be signed by the subsidiaries directly with AAI, with an additional annexure to specify the civil structures owned by AIAHL. A tripartite agreement to be made for the same,” an office order issued by the ministry says.

“As per conditions… about the transition period provided at DIAL and MIAL airports, the umbrella agreement with AAI to be extended for six months from the date of closing of the proposed transaction on similar terms and conditions made available to Al before divestment. Within the 6 months (after the closing of the transaction), the strategic investor will negotiate with AAI and sign a fresh agreement with mutually agreed commercial rates, which would be effective from a date six months after the closing date This would apply in case of both Air India and Air India Express,” it adds.

Air India have a massive presence at Delhi and Mumbai airports.

Comments were sought and are awaited from AI and airport operators on various issues like the landholding of the airline at various places and how much do they plan to retain.

Air India was taken over by Tata Group firm Talace on January 27. Through a competitive bidding process, the government sold loss-making Air India to Talace for INR 18,000 crore.

As part of the deal, Talace paid INR 2,700 crore in cash and took over the INR 15,300 crore debt of the airline. The remaining debt and borrowings of Air India were transferred to AIAHL.

(With Inputs from The Times of India)

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Indian skies to get busier in 2022, parallel airline WINAIR on the runway

Radhika Bansal

04 Feb 2022

World’s first parallel airline company ‘WINAIR’ has agreed with Alliance Air, the subsidiary of Air India. The term ‘WINAIR’ means We Indian Nationals, says Samuel Timothy, CMD, of Winair Aviation Private Limited.

A parallel airline is a new concept that means utilizing an existing operator who has equipment (Aircraft, NOC, NSOP) and an operating permit. In short, the aircraft are leased utilizing their license and viable routes are planned. In other words, it is just like utilizing the idle hours of the existing airlines, this is the first time in the world that such a module is being framed.

(Image Courtesy - Entrepenuer Stories)

“The Indian aviation story is all set to undergo a huge change in the coming year and the markets are going to grow faster than they were ever before. The growing number of airports, the increasing per capita income, and the fierce competition resulting in one of the lowest ticket prices globally has boosted the number of people traveling by air.”Samuel Timothy, CMD, Winair Aviation Private Limited

Aviation industry veteran Winnie Kurup, CEO, WINAIR will oversee the operations of the parallel airline.

The airline passenger business has returned to 85% of the pre-covid level and the air cargo business has recovered to 80%. Just like their global counterparts—The Indian fliers also look for low fares, friendly service, and nonstop trips. 

“The pandemic has forced airlines around the world to reassess their business models and become more focused. When the world changes, airlines must change with the world, and this means that innovation and restructuring should accelerate. In India, we believe that WINAIR will be a catalyst for some airlines to change faster too. We strongly believe that the country has a dynamic environment for airlines and those who change will only be the winners in the game.”Winnie Kurup, CEO, WINAIR

The airline will operate ATR-72 aircraft

The base for the airlines will be Hyderabad and it will operate on Hyderabad-Pune -Shirdi - Nagpur -Surat, Goa-Coimbatore - Mangalore-Cochin, Goa - Surat-Jaipur-Delhi routes. The aircraft selected are ATR72-600 (72 seaters).

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