UAE warns Canada ties may be hit by lack of air deal

Canada’s ties with the United Arab Emirates will be "affected" by the lack of an agreement to expand aviation links between the two countries, the UAE’s ambassador to Canada was quoted as saying Sunday.

"The UAE is disappointed that despite intensive negotiations over the last five years, the UAE and Canada have been unable to arrive at an agreement on expanding the number of flights between the two countries," Mohammed Abdullah al-Ghafli was quoted as saying by the official WAM news agency.

"The fact that this has not come about undoubtedly affects the bilateral relationship," the ambassador said.

The report said that the existing six commercial flights a week fell short of the economic needs and growth potential of both Canada and the Gulf state.

The Canadian embassy in Abu Dhabi could not be reached for comment on Sunday, while UAE foreign ministry officials were also not immediately available.

But according to Canadian media reports, the country may have to withdraw from a "secret" military base near the UAE transport hub of Dubai as a result of the disagreement.

"The Canadian government is now preparing to relocate forces from the United Arab Emirates to somewhere such as Cyprus rather than give in to what it considers unreasonable demands from the host country," The Globe and Mail reported on its website on Friday in reference to the commercial flights issue.

The Vancouver Sun said Saturday that "Canadian soldiers and aircrew have only 27 days to pack up and clear out of Camp Mirage, the not-so-secret airbase in the United Arab Emirates that Ottawa established seven years ago to support military operations in Afghanistan."

The daily’s website said the UAE suspended a memorandum of understanding on the base on Tuesday, after the Canadian government balked at a demand that "Dubai-based Emirates Airlines and Abu Dhabi-based Etihad Airways... each be granted daily flights between Toronto" and the UAE.

About 27,000 Canadians live in the United Arab Emirates, which is one of Canada’s biggest economic partners in the Middle East with bilateral trade valued at about 1.5 billion dollars per year, WAM cited Ghafli as saying.

About 27,000 Canadians live in the United Arab Emirates, one of Canada’s biggest economic partners in the Middle East with bilateral trade valued at about 1.5 billion dollars per year, according to UAE officials.

In a sign of tensions between the two countries, the UAE on Monday closed their airspace to a plane carrying MacKay, several Canadian media outlets reported.

The value of Jazz Air soared more than eight per cent in heavy trading Friday after the company said it will increase rewards to shareholders after converting later this year to a dividend-paying corporation called Chorus Aviation Inc.
"We have taken a responsible and balanced approach in setting our dividend policy to provide both investor income and allow financial flexibility to fund growth," chief executive Joseph Randell said in a statement.
"In fact, post-conversion, Chorus is expected to offer investors one of the highest dividend-paying stocks in the airline industry," Randell said.
The Halifax-based fund announced earlier that a typical shareholder in Ontario and Quebec would receive a higher after-tax return after the conversion, which will coincide with a change in federal tax rules early in 2011.
Although the income fund will change its corporate name to Chorus with the conversion, its planes will continue to be branded Jazz.
On the Toronto Stock Exchange, units in Jazz Air closed up 38 cents, or 8.15 per cent, at $5.04. The volume of trading was just over 1.6 million units, more than five times the daily average.
Airline analyst Rick Erickson said investors were likely reacting to the payout under the new corporate structure.
"When you look at the yield on that compared to the value of the share, it's about a little over 10 per cent," said Erickson of Calgary-based RP Erickson & Associates.
"It's a high yield," Erickson said.
The planned dividend policy of 60 cents per Chorus share annually represents 43 cents of after-tax income for a typical retail investor in Quebec or Ontario, versus the 32 cents after-tax equivalent income under the income trust structure.
The move to a corporate structure is being made in response to changes to the new tax rates for income trusts next year. The switch was announced in October 2006 and phased in over the last four years.
The conversion plan requires approval from at least two-thirds of Jazz unitholders scheduled for Nov. 9.
The aviation industry is experiencing a moderate rebound in travel demand, so the company will be able to sustain the payments after the corporate conversion, Randell said.
The change in the Jazz structure should go virtually unnoticed by the average traveller because they will still board planes that carry the well-known Jazz logo.
It's only the name of the airline's holding company that will change, said Jazz spokeswoman Debra Williams.
"The branding for our airline operations — Air Canada Jazz and Jazz — will not change," Williams said via email.
"Therefore areas such as aircraft livery, airport signage, uniforms etc. will not change as a result of corporate conversion, she said.
Erickson said it would have been a "very foolish" and expensive decision to change Jazz's name.
"I think Jazz if fairly well ingrained, if you will, on the part of Canadian consumers."
Randell described the conversion of the fund as "a significant step" in the evolution of the business that will support "our objectives of growth and diversification."
Randell said the new corporate brand name, Chorus, will reflect the "harmony, creativity, passion and collaboration" demonstrated by its employees.
Erickson said Jazz could eventually turn itself into a full-service airline and undertake sales, marketing and scheduling instead of just providing seat capacity.
He also said Jazz could take its model to other countries or regions, such as Europe, and provide capacity in those markets for growth.
Jazz Air Income Fund was created as a separate company after Air Canada (TSX:AC.A) was restructured under court protection.
Its airline, Jazz Air, primarily sells its capacity to Air Canada although it recently signed a multi-year deal to operate a six-plane fleet on behalf of Thomas Cook, a vacation supplier.

Monday, October 11, 2010

INDIAN AVIATION NEWS

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AERA asks DIAL not to collect domestic cargo handling charges

Hyderabad: The Airport Economic Regulatory Authority (AERA) has directed Delhi International Airport (DIAL) run by GMR group to stop collecting domestic cargo handling charges from air cargo agents.
The authority issued the order based on a representation by Domestic Air Cargo Agents Association of India (DACAAI). The DACAAI had moved AERA against the levy of Terminal, Storage and Processing (TSP) charges, X-Ray screening charges among others by Delhi Cargo Service Centre Pvt Ltd (DCSC) and DIAL at the new terminal at IGI Airport in the national capital.
The DACAAI in its application pointed ou that all domestic airlines provide the warehouse and X-Ray screening facilities and the overall freight charges by the airlines are inclusive of the charges for these facilities. Presently DCSC charges Rs 3.50 per Kg as TPS charges for both inbound and outbound cargo movements. The DACAAI also argued that neither DIAL nor DCSC had obtained necessary permission from the AERA.




Cat-III ILS sought at Rajasansi airport

Chandigarh: The Amritsar Vikas Manch has demanded that the Rajasansi International Airport should take measures to prevent discomfort to passengers during winters. Like Delhi airport, where the Delhi International Airport Private Limited (DIAL) installed Category III instrument landing system (ILS) three years ago to tackle the problem of fog, Rajasansi, too, should take similar measures, said AVM patron Dr Charanjit Singh Gumtala. Cat-III allows compatible aircraft and trained pilots to land even when the runway visibility is up to 50 metres. The Amritsar airport has Cat-I ILS at present.




Airfares to shopping destinations soar

Mumbai: Despite a month left for the festival, flights to shopping and leisure destinations such as Dubai, Singapore, Hong Kong, Malaysia and Thailand are full, and fares have shot up between Rs 8,000 and Rs 14,000 across four airlines: Jet Airways, Kingfisher Airlines, Air India and Singapore Airlines.
A Mumbai-Dubai return ticket, normally available for Rs 16,000, is selling for Rs 24,000. Of these, Singapore is the most expensive destination on the Diwali week, with fares having almost doubled.
It’s all about high demand, said travel agents. “Laxmi Puja is on November 5. People are leaving for vacations the next day and schools re-open only after November 15,” said Anup Kanuga, owner Bhatija Travels.
Tour managers said the demand to these destinations peak during Diwali because people flock there to shop.

Saudia Airlines to operate Haj flights from Mangalore

Mangalore: The Union Ministry of Civil Aviation has approved Saudia Airlines to operate its chartered flights for Haj pilgrims from Mangalore Airport to Saudi Arabia this year, according to M.R. Vasudeva, Director, Mangalore Airport.

He told The Hindu that Air India Express will not operate its flights for Haj pilgrims from here this year.

Kalanithi Maran’s company Kal Airways buys shares in Spicejet

 Kal Airways Pvt Ltd has purchased a 5.03 per cent stake in Spicejet for an estimated Rs 91.52 Crore. Kal Airways Pvt Ltd is owned by Kalanithi Maran of Sun TV and the purchase will be made up of 19.37 million shares in SpiceJet at 47.25 Indian rupees for every share. The deal was done via an off-market transaction and comes as part of the larger deal to acquire 37.7 per cent in the firm.

With this fresh purchase, Maran's direct holding in SpiceJet now stands at 17.72%. the acquisition of the SpiceJet stake is pursuant to a share purchase deal done four months ago that involved Maran, with Kal Airways Pvt Ltd meant to purchase 37.7 per cent in Spicejet from US investor Wilbur Ross and Royal Holdings Services, held by the Kansagra family, for around Rs.800 Cr.

Begun five years ago, the airline is eligible to fly abroad and had approached the Indian government for permission to operate regular flights to Dhaka, Kathmandu and Colombo. Airlines in India have to fly at least five years on domestic routes before they are eligible to fly overseas. SpiceJet fulfilled that requirement in May.

Sovereign guarantee to cut AI interest

The National Aviation Company of India Ltd (Nacil) will be able to save more than 30 per cent on its interest payment per year, as the finance ministry recently agreed to furnish sovereign guarantees on loans raised by the company which runs Air India [ Images ].

Nacil pays Rs 1,800 crore (Rs 18 billion) a year as interest to banks.

"We will be able to save Rs 550 crore (Rs 5.5 billion) per annum on the entire working capital borrowing of Rs 18,500 crore (Rs 185 billion)," said a top Air India official, who did not want to be identified. "Our interest payment on the working capital loan is Rs 1,800 crore (Rs 18 billion) and the sovereign guarantee will be of much help to us," said another official on condition of anonymity.

With the sovereign guarantee, Air India could reduce its interest rates by up to 150 basis points. The carrier has been looking to convert its high-cost debt to low-cost to extricate itself from financial mess.

The working capital loan has been borrowed at an interest rate of 12 per cent per annum. The loan is for payment of employees salary and other operational payments.

Melbourne's Air India coup faces a tricky landing

Air India's plans to fly to Melbourne, heralded as a coup for Victoria when they were announced in June, are in doubt.

Melbourne Airport remains confident that Air India will still fly there, but says the service has been delayed to an unknown date because the airline is yet to gain approval from the Indian government for a new international route.

Air India, which is owned by the government, was scheduled to begin daily services between Tullamarine Airport and Delhi from November 1.

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The deal was hailed in June as a diplomatic and economic coup and evidence of Victoria's ability to beat NSW in a bidding war for airlines.

But Indian media have reported that India's Civil Aviation Ministry last month rejected the airline's plans to fly to Melbourne for the second time in two months.

It has also been reported that an Air India board member wrote to the regulatory authorities to stress that the route would not be viable and would only add to the losses of the cash-strapped airline.

Indian Aviation News

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Aircraft `crash lands' at Amausi, 'rescued'

 Lucknow: It was business as usual at Amausi airport on Saturday -- passengers strolling in the terminal area, CISF jawans carrying out the routine checking drive and airlines officials helping out the passengers as they checked in.
Suddenly, at 3.30pm, there was a panic among some airport officials. Alarms flashed messages that an aircraft was heading for a landing with its left engine up in flames. Since it was bound for a crash landing, many casualties were feared in next few minutes. Fire tenders frantically rushed to the air strip. They were followed by the district and police officials. Soon, some doctors from the Sanjay Gandhi Post-Graduate Institute of Medical Sciences too reached the airport.
A battery of officials from the fire department in their special gears rushed to the site, while Airport Authority of India (AAI) immediately constituted a help desk. The rescue operation began as firemen used water cannons to douse the flames.
Soon everything fell back in order! More so, when it was learnt that the entire exercise was a mock drill, carried out to ascertain the `response time' during a crash landing. Planned by the Airport Authority of India, such drills are a routine affair under the standard operation procedure (SOP).




2 held at IGI for smuggling cellphone memory cards

New Delhi: Customs officials nabbed a passenger and the supervisor of a firm hired by DIAL in connection with the smuggling of cellphone memory cards worth over Rs 35 lakh at the IGI Airport.
The consignment was left in the toilet by the passenger, Narinder Singh, and then picked up by Sachin Kumar, supervisor of a firm — UDS — hired by DIAL for cleaning and upkeep of the international terminal.
Singh, who came to Delhi from Hong Kong in a plane that landed around 9.30 pm on Thursday, was carrying 20,000 memory cards in a small bag.
After immigration check, Singh went to the restroom and kept the bag in the wastepaper bin inside the toilet and came out, said additional commissioner Ashutosh Baranwal.
Within minutes, it was picked by Kumar. He came out and started moving towards the lift in the arrival hall with the bag. The lift opens into the departure hall on the upper level where customs officials intercepted Kumar.
They were nabbed after the customs department laid the trap following a tip-off that a huge consignment will be delivered in the toilet of the international terminal.



Air India's unpaid leave scheme: 350 takers and counting

New Delhi: Air India's leave-without-pay scheme has been taken up by some 350 employees, or about 1 per cent of the airline's work force, since the plan was launched in July 2009.
Sources told Business Line that the number could go up in the near future as several more applications had been received.
The scheme allows a person to go on leave for two to five years.
Almost 70 per cent of the employees who opted for the scheme are from the erstwhile Air India.
The exact quantum of savings for the airline from the scheme was yet to be determined, the sources said. “People have gone on leave at different times and for different periods. Besides, there is a difference in the pay scales of people in Air India and Indian so it will be difficult to put a number on the financial saving,” sources said.




Navy changes stance on Dabolim

Panaji: Plans for the expansion of Dabolim airport have again flown into rough weather with the navy informing the Airports Authority of India (AAI) that it will not hand over the 12.52 acres it had promised earlier.
Although both AAI and navy officials have refused to comment on the issue, documents with TOI show that a meeting held in New Delhi on August 4 rejected the minutes of a meeting held in Goa on April 6 in which navy officials had agreed to the land transfer.
AAI was planning facilities for aircraft parking, a parallel taxi track and ramp equipment parking place apart from a multi-level car park on this 12.52 acres. At the August 4 meeting—which took place at the office of the chief of naval staff and was attended, among others, by navy chief Admiral Nirmal Verma and AAI chairman V P Agarwal—the navy declined to part with the land stating that Dabolim is a premier naval air station which has assets equivalent to two Indian Air Force (lAF) air bases.
Deputy chief of the naval staff Vice Admiral R K Dhowan informed the AAI chairman that "IN (Indian Navy) had not agreed to hand over additional 12.52 acres of naval land to AAI at Dabolim".
This is a major shift from the position the navy had taken at the April 6 meeting.




Air India to demand another Rs 2,000 crore to repay debts

New Delhi: As the process to infuse Rs 1,200 crore as additional equity in Air India takes shape, the national carrier might ask for another Rs 2,000 crore from the government in the next financial year to repay its massive debt, official sources said on Sunday.
The airline would require Rs 3,000-Rs 4,000 crore annually to pay off its debt, which is primarily on account of aircraft induction, according to an official estimation.
The monthly interest burden on this count averages at Rs 200 crore, while the debt each month stands at about Rs 300 crore, the sources said.
In this backdrop, the airline may ask for another tranche of Rs 2,000 crore as equity some time in the next financial year, the sources said.
While the government infused Rs 800 crore in the last fiscal, a note for consideration to the Cabinet Committee on Economic Affairs (CCEA) is being prepared by Civil Aviation Ministry for an additional infusion of Rs 1,200 crore.
The second tranche of government funds, to be released after CCEA approval, is also likely to be used for settling outstanding dues and not to enhance the airline's equity base.



Foreign no-frill airlines fly into tier-II towns

New Delhi: When fly dubai started operations to Lucknow in June, many were surprised. Why would Dubai's first low cost carrier (LCC) choose a Tier II city for its maiden Indian route? Would a metro not have been the obvious choice? But this is good business strategy, something that other foreign carriers have done as well.
Air Asia, from Kuala Lumpur and Air Arabia, from Sharjah, fly to various Tier II cities — Trichy, Coimbatore, Kozhikode, Kochi, Lucknow, Nagpur, Jaipur and Ahmedabad.
Aviation experts say that Tier II cities have huge potential because they are populous and their residents have increasingly disposable incomes and the desire to travel.
Air Asia agrees it was good business thinking on their part to choose Trichy as their first Indian route and follow this up with eight other Tier II cities. Its CEO Tony Fernandes says the Indian market is second only to China. The thinking is obvious.
Cheap foreign carriers choose Indian cities that have particular needs or particular meaning to the wider world. Air Asia chose Trichy because it is a popular pilgrimage site. Lucknow was attractive to flydubai because it is one of India's fastest growing cities, with a presence in the manufacturing, commerce, retail and education sectors.
Unfortunately, while the Indian skies have opened for foreign carriers, the reverse has not happened.