ASSOCIATION OF PRIVATE AIRPORT OPERATORS

Monthly Newsletter December, 2012

Members:

CONTENTS

1. Aviation Sector ...... 3 2. Airports 2.1 Bangalore International Airport Limited ...... 11 2.2 Cochin International Airport Limited ...... 11 2.3 Delhi International Airport Limited………………………………………………………11 2.4 GMR Hyderabad International Airport Limited…………………………………….12 2.5 Mumbai International Airport Limited…………………………………………………13 3. Airlines 3.1 Air ………………………………………………………………………………………………14 3.2 ……………………………………………………………………………….15 3.3 SpiceJet………………………………………………………………………………………………16 3.4 ……………………………………………………………………………………….…17 3.5 IndiGo…………………………………………………………………………………………….…..18 3.6 GoAir………………………………………………………………………………………………….18 3.7 Air Mantra………………………………………………………………………………………….18 3.8 International Airlines………………………………………………………………………….18 4. Cargo ……………..………………………………………………………………………………………..20 5. AERA Appellate Tribunal …………………….…………………………………………………..21 6. Traffic…….…………………………………………………………………………………………………22

7. Source……………………………………………………………………………………………………….24

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ABBREVIATIONS

AAI Airports Authority of India ADF Airport Development Fee AERA Airports Economic Regulatory Authority of India ANS Air Navigation System ATC Air Traffic Control ATF Aviation Turbine Fuel BCAS Bureau of Civil Aviation Security BIAL Bangalore International Airport Limited CAPA Centre for Asia Pacific Aviation CCI Competition Commission of India CIAL Cochin International Airport Limited CISF Central Industrial Security Force CSIA Chhatrapati Shivaji International Airport, Mumbai DGCA Directorate General of Civil Aviation DIAL Delhi International Airport Limited F&B Food and Beverage FIPB Foreign Investment Promotion Board GHIAL GMR Hyderabad International Airport Limited IATA International Air Transport Association ICAO International Civil Aviation Organisation IGIA Indira Gandhi International Airport, MIAL Mumbai International Airport Limited MoCA Ministry of Civil Aviation MoU Memorandum of Understanding OMDA Operation, Management and Development Agreement PLF Passenger Load Factor PNGRB Petroleum and Natural Gas Regulatory Board PPP Public Private Partnership RGIA Rajiv Gandhi International Airport, Hyderabad UDF User Development Fee VAT Value Added Tax

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1. AVIATION SECTOR

1. West Bengal’s first private airport is expected to be operational by 15th April 2013. The airport is being developed near Durgapur by Bengal Aerotropolis Pvt. Ltd. The new airport will take on competition with cheaper landing charges, airport usage fees, rentals and night parking facilities. Apart from the Rs 600 crore domestic airport, with peak hour capacity of nearly 450 passengers, Bengal Aerotropolis Pvt. Ltd. is also developing an airport city (aerotropolis) on an 1800 acre plot.

2. DGCA is in the process of preparing a ‘Hazard Log Template’ which DGCA says will become a sort of “bible” for air safety in the years to come. An internal circular was send to all concerned parties i.e. airlines, aircraft parts manufacturers, oil and insurance companies, to prepare a report that lists out hazards, apart from preparing an analysis in order to create an effective safety manual.

3. MoCA is considering divesting Ltd’s engineering subsidiary in 2013 after hiring a foreign executive to head the engineering business as its Chief Executive. The move is to improve the efficiency of the business and win potentially large local contracts worth several hundred crore of rupees.

4. Supreme Court on 3rd December questioned the levy of several miscellaneous charges on fliers and took a suo moto cognizance of imposition of UDF and conveyance charges by airlines, setting the ground for a massive hike in airfares for those flying in and out of the IGIA. The apex court issued notice to the Centre and DIAL and sought a categorical explanation as to why these charges were burdened on the travelers instead of airline companies.

5. Minister of Civil Aviation Shri Ajit Singh met Petroleum Minister on 4th December and convinced him to bring ATF under the purview of PNGRB. Bringing ATF under PNGRB will make the pricing of jet fuel transparent and also check cartelization by oil companies. The cost of ATF across the country is likely to come down by up to 25% which will be at par with airports such as Bangkok, Hong Kong and Singapore where it is 20 to 25% lower. Both the Ministers will meet Finance Minister to convince him to bring ATF under capital goods category. Petroleum Minister also agreed to the request for Rs 5,000 per kilolitre discount for Air India on a condition that Air Idia will not default on payments any further and also clear all the dues to oil companies by April 2013.

6. Minister of State for Civil Aviation Shri K.C. Venugopal in a written reply to a question in Lok Sabha on 5th December informed that MoCA has engaged a team of experts from ICAO to carry out a detailed study of the existing security system at the airports to strengthen the Civil Aviation Security in the country and suggest measures to improve the same. The ICAO study report, which has been accepted by the Government, has suggested establishing a dedicated Aviation Security Force under the command and control of the MoCA which is supposed to be completely integrated with the aviation industry, in line with the practices across the world. To pursue the matter further, a Sub- group was constituted by the MoCA to examine the recommendations of ICAO study report on creation of a dedicated specialized Aviation Security Force. The Sub-group has also recommended constitution of a dedicated, specialized Aviation Security Force under the command and control of MoCA. Further, necessary action has been initiated to approach Cabinet Committee on Security for seeking its approval. Page 3 of 24

7. Minister of State for Civil Aviation Shri K.C. Venugopal in a written reply to a question in Lok Sabha on 5th December informed that airfares applicable for domestic passengers are determined by the market forces and are not fixed by the Government. Airfares are dependent upon ATF prices, Airport Development Charges, Passenger Services fee, Foreign exchange rates, Service Tax etc. Fluctuations in any of these components affect the airfares. Scheduled airlines offer different fare buckets for each flight and the airfares offered by the airlines in lower bucket are affordable. The airfares increase with the increase in demand for seat, as the lower fare buckets get sold out fast. Random monitoring of domestic airfares revealed that the airfares are remaining within the fare band made available by the scheduled airlines on their respective websites. With a view to maintain transparency in tariff publication, Scheduled domestic airlines have been asked to display established tariff route-wise and fare category-wise on monthly basis and also to notify noticeable changes to DGCA within 24 hrs. of effecting such a change. The intention behind the above directions is to keep the passengers informed of pricing pattern of airlines. Further, DGCA also monitors tariff on specific sectors on regular basis.

8. MoCA is working on a proposal to cap the lowest and highest ticket prices for a given period which the airline would not be allowed to cross.

9. Parliamentary Penal has sought a probe against Indian Carriers charging unreasonable air fares and recommended that any increase in ticket prices should be approved by DGCA in the future.

10. West Bengal Government is exploring opportunities to introduce helicopter services to Sunderbans and the hills.

11. AAI and Ministry of Transport and Civil Aviation, Islamic Republic of Afghanistan has signed an MoU on 5th December under which AAI will provide training to Afghanistan Aviation Personnel on airport management, fire service and communication and navigation services at different training institutes of AAI.

12. IATA in its Airline Industry Forecast 2012-2016 has mentioned that only Kazakhstan, India and China would experience double-digit growth in domestic passenger traffic during the period, recording 22.5, 13.1 and 10.1 per cent growth respectively, adding a total of 49.3 million new passengers. By 2016, the five largest markets for domestic passengers would be the United States (710.2 million), China (415 million), Brazil (118.9 million), India (107.2 million) and Japan (93.2 million). Globally, the IATA industry traffic forecast showed that the airlines were expected to fly some 3.6 billion passengers in 2016, which is about 800 million more than the 2.8 billion carried by airlines in 2011.

International freight volume will grow at 3% per annum to total 34.5 million in 2016. That is 4.8 million more tones of air cargo than the 29.6 million tones carried in 2011. India would be among five fastest growing international freight markets over the 2011-2016 period. The compound annual growth rate of the air cargo sector would be the highest for Sri Lanka at 8.7 per cent, followed by Vietnam (7.45), Brazil (6.3%), India (6.0%) and Egypt (5.9%). By 2016, the largest international freight markets will be United States (7.7 million tonnes), Germany (4.2 million tonnes), China (3.5 million tonnes), Hong Kong ( 3.2 million tonnes), Japan (2.9 million tonnes), UAE (2.5 million

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tonnes), the Republic of Korea ( 1.9 million tonnes), UK (1.8 million tonnes), India (1.6 million tonnes), and the Netherlands (1.6 million tonnes).

13. A meeting between the Home Ministry and MoCA is scheduled soon to discuss the issue of control of BCAS which is the Regulatory Authority for civil aviation security in India. BCAS plans and coordinates on aviation security matters, issues entry passes at airports across the country, lays down aviation security standards and ensures that persons implementing security controls are appropriately trained. At present, BCAS comes under MoCA and the possible reason why the Home Ministry wants control is because CISF which provides security at airports comes under Home Ministry.

14. The Government on 7th December sought parliament’s nod for spending an additional Rs 30,804 crore in fuel subsidies and equity infusion in Air India. Government will also infuse Rs 2,000 crore in equity into Air India as part of a turnaround and financial restructuring plan.

15. Minister of Civil Aviation Shri Ajit Singh on 7th December asked the Chief Ministers to bring down taxes on ATF in their states to lower the operating cost of the airlines.

16. DGCA has asked airlines to submit data on the Category III trained pilots, trained to fly in visibility as low as 50m, so as to ensure that the airlines are prepared to operate during dense fog.

17. According to a study by trade group, IATA found that there will be nearly 50 million new passengers on the domestic circuit within the next 4 years. The study also found that India will clock the second highest growth rate at 13.1% in 2012-16, which will translate into 49.3 million new passengers. However, an analysis by DGCA found that the first nine months of 2012 saw a decline of 0.9%, similar to the corresponding figures last year. According to IATA, despite the current economic uncertainty, the expected demand for connectivity remains strong. Growing air transport links generate jobs and underpin economic growth. But exploiting these will require governments to recognize aviation’s value with policies that do not stifle innovation, tax regimes that do not punish success and investments that enable infrastructure to keep up with growth.

18. Goa Government is planning to float a global tender for its new airport project at Mopa in the northern part of the state by March 2013. The new airport will be developed on a PPP basis. The state’s contribution will be restricted to providing land for the project. The airport will come up at a cost of Rs 3,000 crore and is likely to be operational by 2016.

19. Vistajet, luxury aviation firm, on 9th December said that it will focus on the Indian market and hopes to have a base of around 200 business-flyer clients in the country in the next 5 years.

20. Changi Airports International would raise its stake in the upcoming airport city project in West Bengal from 26% to 51%.

21. The Competition Appellate Tribunal as said there is no evidence of cartelization among foreign airlines operating on international routes from India in their decision to stop paying commissions to travel agents. Hearing an appeal by the Travel Agents Association of India against an order by the Competition Commission of India in the matter, the Page 5 of 24

tribunal ruled that “there was no evidence of any cartelisation whatsoever”. In its order passed on December 7, the Competition Appellate Tribunal also upheld the Competition Commission of India decision that these airlines cannot be viewed “as a group or enterprise” and none of the carriers was individually dominant in their market.

22. Koval international Airport, Coimbatore is plagued by connectivity issues. Industrial and commercial bodies have sought redressal with Minster of Civil Aviation Shri Ajit Singh. The associations have asked for better connectivity and more cargo flights from the city so that exporters do not have to g to Kochi, Chennai or Trichy. The trade bodies are also seeking the inclusion of Coimbatore under bilateral agreements for unrestricted operations. Barring Coimbatore, all other airports in the South including Thiruvananthapuram, kochi, Kozhikode, Tiruchi and Vizag have been listed in bilateral agreements to get improve international connections.

23. MoCA has decided to ask domestic airlines to reduce rates and increase Passenger Load Factor that has been falling even in peak seasons. MoCA will meet domestic airlines to discuss how the upper limit in each bucket could be reduced to bring down average airfares, which have been rising in the past few months. Airlines would have freedom to vary their rates, but within the decided narrowed–down range. The average monthly PLF of domestic airlines s around 72% and the domestic traffic has seen a contraction lately due to the 20-30% increase in fares over the past year.

24. AAI has raised the issue of DIAL not sharing the interest charged on Air India’s dues with an oversight committee – the OMDA Implementation Oversight Committee. AAI in its internal audit found that DIAL has not shared the interest they charge on Air India dues on the grounds that the airport company had to borrow money from the market to fund their working capital requirements, which otherwise would have come from Air India.

25. In the past 3 years, 65 ‘airprox’ incidents – situations where two or more moving aircraft come in proximity of each other – have been reported. Minister of Civil Aviation Shri Ajit Singh in a reply to Lok Sabha on 12th December informed that a number of corrective steps have been taken to “avert recurrence of such incidents” in future. The main findings of the airprox investigations found seven major causes. These include human error by air traffic control and pilot; coordination failure like late or non-receipt of flight level change, radar failure, failure to get message properly leading to pilot climbing or descending to a wrong level, a trainee ATC working and his or her instructor getting late in correcting a mistake and “heavy traffic leading to stress and fatigue”. Air traffic control systems are being modernized to give conflict warning in case of an emergency. Corrective training is being given to ATCs and pilots.

26. Delhi High Court on 12th December refused to stay Minister of Civil Aviation Shri Ajit Singh’s order raising the flying hours of Air India cabin crew.

27. Chipsan Aviation, Delhi based company, has launched helicopter service from Nedumbassery airport to Sabarimala.

28. The Express Industry Council of India has alleged that all domestic airlines have formed a price cartel that is exploiting the levy of fuel surcharge on cargo by not applying a rational pricing mechanism for the same. Seeking redressal, Express Industry Council of Page 6 of 24

India has written to CCI and Minister of Civil Aviation Shri Ajit Singh urging them to look into the matter. Express Industry Council of India has demanded that airlines must stop charging fuel surcharge till such time as pricing is made transparent and market forces allowed to determine pricing.

29. Minister of Civil Aviation Shri Ajit Singh has requested Uttar Pradesh Chief Minister Shri Akhilesh Yadav to transfer 50 acres of identified land in Allahabad to AAI to develop a new Civil Enclave to handle civil airport operations in the City as due to lack of space, AAI is not able to upgrade the Civil Enclave of Bamrauli Airport at Allahabad as the airport belongs to Indian Air Force. Shri Singh further wrote that the AAI has already made a preliminary study of the surroundings of the airport area and discussed with the Indian Air Force. The site measuring approximately 50 acres has been identified south of the airfield for development of new Civil Enclave. The new Civil Enclave will include new Terminal Building, Apron to park civil schedule flights, Link Taxi Track, Car Park, etc. The letter further states that in case of any difficulty in acquisition and transfer of identified land, an alternative location having an area of 50 acres may be acquired and handed over to AAI at the earliest, as a number of representations have been received for development of the airport.

30. DVB Bank has filed a case in the Delhi High Court against DGCA and Kingfisher Airlines seeking de-registering of two aircraft that it has repossessed from Kingfisher Airlines. DVB Bank repossessed two Airbus A320s from Kingfisher Airlines earlier this year due to non-payment of dues. However, the two planes have not yet been de- registered by the DGCA, which has meant that DVB has not been able to redeploy the planes elsewhere.

31. According to IATA, India, China and Latin America would continue to lead the growth next year in the global aviation industry, which would improve its profit from $6.7 billion to an estimated $8.4 billion. IATA further said that while Chinese domestic market continues to expand ‘very strongly” despite a slowdown earlier this year, the Indian market by contrast went into a “sharp reverse” in 2012 following the problems faced by Kingfisher Airlines and the slowdown in the Indian economy.

32. The government has taken steps to accelerate approvals for mega projects and approved a new law for land acquisition, acting decisively to spur investment and growth. Government has proposed setting up of a Cabinet Committee on Investments, headed by Prime Minister, which will monitor and speed up approvals for large projects of investment over Rs 1,000 crore. The land acquisition bill provides for consent of 80% of the people affected by a private project and 70% of the people in case of public-private partnership projects. The proposed law will also be applied to all cases where acquisition in not completed by the time it is enacted.

33. DGCA has asked the Airlines to provide free meals to stranded passengers at IGIA because of the fog and the coupon system will help regularize the facility. The facility will be extended to all passengers whose flights are delayed more than an hour. According to the air traffic controller, fog reduces the capacity of runways by 40% thereby making delays inevitable.

34. The meeting of the Consultative Committee of the Members of Parliament for MoCA was held on 17th December 2012 to discuss the issue of airport infrastructure and air

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connectivity. Minister of Civil Aviation Shri Ajit Singh enumerated the recent steps taken by the Government to revive the aviation industry and ensure its long term viability and added that apart from 5 major airports already operationalised under Joint Venture/ PPP mode, Government has given in principle approval for setting up of 15 new Greenfield airports including Goa, Navi Mumbai and Kannur. Shri Singh outlined the priority areas of the Ministry which included providing greater connectivity to smaller and remote parts of the country, development of low-cost airports, reduction of VAT on ATF, bringing ATF under the ambit of PNGRB Act, India to be developed as an international hub, creation of Civil Aviation Authority and creation of Civil Aviation Security Force.

35. Minister of State for Civil Aviation Shri K.C. Venugopal in a written reply to a question in Rajya Sabha on 18th December has informed that MoCA had set up a Working Group on Air Cargo/Express Service Industry. One of the recommendations of the said Working Group is to lay down a comprehensive policy framework governing air cargo operations in the country. With a view to steer through the reforms suggested in the Report of the Working Group, the Ministry has constituted Air Cargo Logistic Promotion Board, an Inter-Ministerial Group. In terms of value, air cargo is over 30 per cent of total merchandise trade. The up-gradation of facilities at the airport is a continuous process and is done as per the requirements.

36. Minister of State for Civil Aviation Shri K.C. Venugopal in a written reply to a question in Rajya Sabha on 19th December has informed that there is shortage of type rated Commanders in the country due to growth in aviation industry and induction of new aircrafts in the fleet of the airlines. However, adequate number of co-pilots are available and employed with the airlines. These co-pilots do not possess sufficient training and experience as required to become commander on that type. To cover the shortage of Commanders and to provide experience and training to above mentioned co-pilots so that they can be upgraded to commanders, validation of foreign pilots is done as per CAR Section-7, Flight Crew Standards, Series ‘G’ Part-II dated 01-12-2010. The number of foreign pilots is on the decrease in the recent years as more and more co-pilots are upgraded to commanders. Total number of Foreign Pilots employed by various aviation companies has come down from 526 last year to 340 at present.

To cover the shortage of type rated pilots, validation of foreign pilots is done as per rule 45 of Aircraft Rules, 1937. Indian Pilots who are inducted by Airlines and are eligible to become PIC as per the policy of Airlines are being trained by them to phase out Expat Pilots. As a follow up, cases of Foreign Aircrew Temporary Authorization - FATA Pilots are processed on the basis of information furnished by each Airline with phase out programme of expat pilots. The Government has allowed issue of FATA up to 31st December, 2013 on case to case basis.

37. AAI has found a way to recover at least some of the Rs 290 crore owed to it by Kingfisher Airlines by allowing lessors to take back aircraft it had leased to Kingfisher Airlines in return for a fee of Rs 10 crore for Airbus 320 and Rs 2.5 crore for ATR. AAI on 27th December refused to give its nod to the airline proposal to restart operations without first recovering its dues.

38. Minister of Civil Aviation Shri Ajit Singh on 20th December reviewed in detail the functioning of Air India which included revenue generation and cash flow management, status of implementation of Computerized Management System for Pilots and Cabin

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Crew, Status of operations of B-787 and other matters envisaged in the TAP/ FRP. Shri Singh expressed concern over the estimated monthly average cash flows of Air India for the period October-March of the current Financial Year which shows a net shortfall of Rs. 404 Crores per month with inflows being at Rs. 1348 Crores and outflows estimated to be Rs. 1752 Crores. He said that though there is an overall improvement in the performance of Air India, it is important that the revenue generated should meet the costs incurred. The Minister asked Air India to go into minute operational details to cut the costs including costs incurred on overseas offices, salaries, fuel and office expenses. The Minister directed to examine the necessity of deputing staff abroad for assisting Air India /embassies for ticketing etc. since now-a-days these facilities are available online. He further asked Air India to negotiate with public sector oil marketing companies for the same discount as they are providing to international and domestic carriers. The Minister said that Air India should think out of the box to change its image of being a public sector unit and transform it to a commercial organization.

39. AAI is getting a software to analyze aircraft movement time on runways, taxiways and the technical area due to an alarming increase in TOGA – take off go around. If a pilot is found to be unable to vacate runway in a certain time, then the matter will be reported to the concerned airline for corrective training of the pilot but if an airline is found guilty than the matter will be referred to DGCA. AAI was forced to take this step as aircraft movement in India is increasing.

40. AERA has rejected the suggestion that the ADF at the Mumbai Airport be reduced and the period for its collection be extended further. At present the period of collection is estimated till April 2021.

41. MoCA has asked DIAL to bring down the interest rate charged on Air India’s dues to a rate it pays to its borrowings.

42. KGS Aranmula International Airport, developing India’s first private airport, has offered 10% sweat equity and the post of chairmanship to the Kerala Government. The construction of the Rs 2,000 crore project is expected to begin in January 2013. The airport would have a capacity to handle 1,000 passengers at a time and could cater to A- 320 and B747 aircraft.

43. IATA Chief Tony Tyler has said that foreign airline would not pick up stake in cash- strapped Indian carriers till steps are taken to stem the high costs of aviation operations in India.

44. AAI Board has decided to create an authority for ANS which is a change from its earlier plans to corporatise ANS and a proposal has been sent to MoCA, which will get a Cabinet approval for the same. Carving out a separate organisation for ANS operations is set to impact AAI’s revenues hard, as ATC operations account for over 60% of the airport operator’s revenue. To avoid loss of revenues, AAI has resisted corporatisation of ATC services and favoured the creation of an organisation that would function as its subsidiary. Revenue from ATC operations include charges for route navigation facilities, terminal navigation and instrument landing. The recommendations to make ANS a separate company have been made by various committees including Naresh Chandra Committee in 2003 and Roy Paul Committee in 2007.

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45. Airlines are pushing for a new approach to distribution that would allow then to personalize their offers to ticket buyers and better distinguish their products from rivals. IATA will unveil the terms of conditions of reference for pilot programmes in January 2013 to test its proposed interface between carriers and ticket distributors and travel agents. Under the new standard, called “dynamic airline shopping”, travelers would submit information about themselves and the journeys they were hoping to make, and airlines would respond with customized offers. That differs from the current system, whereby airlines file all their fares with Global Distribution System - GDS, which agents and websites access when searching for tickets. The change would allow airlines to give customers a better idea of what they were buying-showing, for example, the angles of seats or whether checked baggage was included in the fare. IATA will devote net year to testing the interface and obtaining feedback from the industry and in the middle of 2014 the implementation should begin.

46. CCI has said that the suspension of flights by Kingfisher Airlines may be a reason for soaring airfares although there is no evidence as yet of price cartelization.

47. Centre for Monitoring Indian Economy in its report has said that air traffic growth may decline by 2.5% in FY13 as travel is being impacted by higher fares, grounding of Kingfisher Airlines and overall subdued consumer sentiment.

48. From 1st January 2013, passengers traveling by air do not need to carry a hard copy of their tickets to enter the airport as the government has made any electronic proof of tickets as valid. BCAS has issued orders for acceptability of soft display of ticket on laptop, tablets, smart phone at the entry point of the airport.

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2. AIRPORTS

2.1 Bangalore International Airport Pvt. Ltd.

1. BIAL greeted its 50 millionth passenger since the Airport opened in May 2008 on December 19th, additionally it handled half a million Aircraft Movements (ATMs) last month as well. This milestone ushered in multiple celebrations at the airport. While the 50 millionth passenger was greeted by the airport’s management with a surprise hamper, they also declared an entire year’s free usage of the F&B offering as a gift to the passenger. The employees of the airport also gathered together for a historical photo session forming the words 50 million.

2. BIAL initiated process of implementation of Airport Collaborative Decision Making (ACDM) at the airport with the launch of the logo in December ’12. Keeping the spirit of collaboration; the logo was unveiled by all the major stakeholders of the project; AAI- ATC, BIAL, Airlines, Ground Handlers. The logo gives an identity to the project reflecting collaboration is the key to achieve successful implementation of A-CDM.

3. Shriram Salunkhe, AVP, Landscape was conferred the Best Horticulturist of the Country Award by The Indian Nurserymen Association in December ’12. This award recognizes his relentless efforts and contribution to the Indian landscape industry. The main criteria considered for this award was the size and quality of the landscape projects he executed in his career and their constructive impact in landscape industry in India. These awards are conferred every year during General Body convention of INA.

2.2 Cochin International Airport Pvt. Ltd.

1. CIAL is set to become the first airport in the country to use solar power for running its utility grid system. A Kolkata-based solar module manufacturing company, Vikram Solar, would install a 100 kWp solar power facility at the airport.

2. CIAL has decided to construct a New International passenger Terminal to meet the increasing passenger traffic and has invited suggestions from user community for consideration. Based on the traffic forecast study the new terminal is planned for a peak hour handling capacity of 4000 pax and to meet the projected traffic growth till year 2025. The Terminal is expected to cost around Rs 450 Crores.

2.3 Delhi International Airport Pvt. Ltd.

1. AERA had issued a Consultation Paper No.32/2012-13 on Review of levy of Development Fee at IGIA, New Delhi. After stakeholder’s comments, AERA issued an Order with a decision to slash the ADF at Delhi Airport by 50 to 54%. From 1st January 2013, international passenger will pay Rs 600 against Rs 1300 and domestic passenger will pay Rs 100 against Rs 200 and the 3-year ADF recovery period for Delhi Airport is extended by two years i.e. up to April 2016.

2. DIAL on 13th December became the first airport in the world to secure BSA (Business Software Alliance) Certification in Standards-based Software Asset Management (SAM) for Organizations, a program known as CSS(O). The first and only enterprise-level

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certification, CSS(O) affirms an entity is compliant with its software license agreements and its SAM processes are aligned to the International Organization for Standardization (ISO) SAM standard. The certification make passenger travel far more secured through genuine software ensuring timely and accurate display of your flight information, smooth baggage checking process, secured wi-fi usage inside the terminal, prevention of malware and pirated software. It includes each and every single IT related thing that a passenger may come in contact at the Delhi Airport.

3. In order to tide over dense fog, DIAL has installed flight information display system at several spots at the airport terminal for reducing the number of flight delays and cancellations and to ensure smooth flow of flight information on real-time to passengers. DIAL has also increased seating areas, help desks and beverage counters. Advanced fire tenders have also been deployed at critical locations in all low-visibility operations to respond to any emergency.

4. DIAL will install a standby Runway Visual Range - RVR at its runway to cut delays and cancellations due to malfunctioning of RVR systems. RVR system will be fitted at 3 points: beginning, middle and end. The system provides RVR and visibility every 10 seconds with the facility to calculate the average every one minute. The system has the capacity to provide VR up to 50m to ATC and will give live information on the Met website through cable signals and radio wi-fi. It works on both on an electric battery standby and solar panels.

2.4 GMR Hyderabad International Airport Pvt. Ltd.

1. GMR Aviation Academy (GMR AA), the Aviation Training Arm of GMR Group, announced the launch of its first batch of IATA courses (3- month part-time) in Travel & Tourism, Airport Operations and Air Cargo at Rajiv Gandhi International Airport.

2. RGIA was awarded the “Best Cargo Airport and Best Cargo Terminal of the year” by Air Cargo Agents Association of India during 39th Annual Convention held at Istanbul from 22nd – 25th November, 2012. The award recognized efforts and progressive initiatives taken by RGIA and motivates to achieve many more milestones towards the vision of transforming RGIA into “Logistics Hub of India.”

3. RGIA has gifted an Airport Model to Nizam’s Museum at Hyderabad to be displayed along with miniatures of other historical monuments after the City Museum approached GHIAL for a model of the airport to be shelved as an archive. Rajiv Gandhi International Airport last year was voted as one of the wonders of Hyderabad.

4. RGIA has commissioned a dedicated and exclusive Cargo Apron, capable of handling Code F (e.g. Boeing747-8F, B747-400F, Airbus A380 types) aircrafts. In an effort to bridge all the missing links and maintain cold chain integrity, RGIA through its unique Customer Feedback initiative called “VoC” (Voice of Customer) consolidated valuable feedback from its customers and stakeholders on improving business and service levels for the trade. Based on the feedback and interactive meetings it was learnt that Code-F aircraft parking stands in close proximity to the terminal would ensure the cold chain integrity in addition to processing in Pharma Zone, as ambient temperatures and

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consequently tarmac temperatures can be quite high in India during most part of the year. Lufthansa’s cargo aircraft was the first to use the New Cargo Apron.

5. GHIAL has partnered with Andhra Pradesh State Road Transport Corporation for introducing the Luxury Express Bus Services at the airport from 14th December, 2012. To ensure that passengers and visitors to the airport have a low cost, yet a very comfortable option to reach the airport, RGIA had earlier introduced ‘Aeroexpress’ bus services which became very popular over the period. Now, to take airport bus service to the next level, ‘Pushpak–Airport Liner’ has been introduced between RGIA and the twin cities. All Pushpak buses are of AC, low floor TATA Marcopolo vehicles, powered by 240 HP rear mounted engine with auto transmission system.

2.5 Mumbai International Airport Pvt. Ltd.

1. AERA vide Order No. 29/2012-13 dt. 21st December 2012 has issued order in the matter of Determination of Development Fee in respect of CSIA, Mumbai. As per the order the rate of DF is determined as Rs 100 per embarking domestic passenger and Rs 600 per embarking international passenger. This levy will commence from 1st January 2013 and is estimated to continue up to April 2021.

2. MIAL has seized seven Kingfisher planes for non-payment of airport dues totalling Rs 53 crore. MIAL has already served two notices to Kingfisher demanding clearance of dues which pertain to parking charges, navigation and other services offered by MIAL in the normal course of airlines operations. MIAL has also served an eviction notice to Kingfisher Airlines, which used to operate out of domestic terminal 1A where it has rented out offices and check-in desks, as it owes Rs 22 crore to MIAL.

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3. AIRLINES

1. Paramount Airlines is working on a revival plan after British court awarded Rs 1,650 crore compensation in a law suit. DGCA had already given its nod to the airline to restart operations a couple of months ago and the airline is now in discussion with foreign carriers for investment.

2. Prayag Group, Kolkata based, has launched helicopter services in Bengal with an investment of nearly Rs 100 crore. The company will cater helicopter chopper service mainly to corporate houses to locations across West Bengal from January 2013 and will use Bell 407 helicopter with a capacity to carry 6 passengers. The company is planning to expand the service to the North-Eastern region and is also planning joy ride services and pilgrim tourism.

3. Chhattisgarh Aviation Academy is launching air taxi service in 7 cities of Chhattisgarh i.e. Raipur, Bilaspur, Korba, Raigarh, Ambikapur, Jashpur and Jagdalpur in the first phase. The state Government has granted permission to the academy and permission will be effective from June 30, 2013.

3.1 Air India (AI)

1. AI SATS has announced extension of its ground handling service partnership with Cathay Pacific Airways with the launch of the airline’s flight operations to GHIAL, Hyderabad.

2. Air India has initiated the launch of the Computerized Management System - CMS for Cabin Crew deployed on both Wide Body and Narrow Body aircrafts. The CMS has Cabin Crew web Portal wherein the Cabin Crew are able to see the programme on ARMS on a daily basis. Personal details of Cabin Crew can be accessed by crew and changes can be made by them, which will be verified by the nominated Crew Web Portal Administrators. Roster was uploaded in ARMS for Mumbai Based Cabin Crew to facilitate smooth continuation for the planned roster of December. This system will reduce the scope of subjectivity and favouritism as it will be a more transparent method of Crew Management System.

3. AI has appointed international property consultant DTZ as the transaction advisor for monetizing its 108 realty assets in India and abroad in a bid to lower its debt burden.

4. AI management is proposing shifting “excess” pilots belonging to erstwhile (IA) to southern bases from northern India, which is facing shortage of pilots. The move is aimed at cutting “wasteful expenditure” and bringing down delays. There are more than 40 excess IA commanders based in Delhi. Several lights originating from the south had to be delayed due to non-availability of pilots.

5. AI will stop services to airports in north-eastern region like Tezpur, Lilabari and Shillong from 1st January 2013, following non-payment of over Rs 100 crore due for 2 years by the North East Council - NEC. The NEC finances ’s operations each year through viability gap funding of Rs 50 crore to Rs 60 crore in line with a MoU between

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the two. AI is now planning to redeploy the 60-seater ATR turboprops on profitable routes.

6. AI will get Rs 6,000 core as equity infusion from the government this fiscal as against the Rs 10,600 crore equity infusion promised in the first year. AI is also considering asking for compensation from Boeing for precious flight hours lost due to recent snags in the new Boeing 787 Dreamliner. AI is also drawing plans to deploy the five new Boeing 787 Dreamliners, which is expected to be received during the next few weeks, on the Sydney, Melbourne, Singapore, Bali and Istanbul routes.

7. AI has repaid Rs 5,000 crore of short term loans it owed to state-owned banks in November 2012 and is expected to repay the remaining part of its short term debt, amounting to almost Rs 2,400 crore by December end. AI owes over Rs 4,064 crore in outstanding ATF bill to state owned oil companies. Of the outstanding, a sum of Rs 2571.73 crore is overdue payment.

8. AI Express will soon start functioning independently of its parent airline and be able to operate as a separate entity with its own pool of pilots. The move is aimed at smothering the operations of AI Express which has been struggling with its flights schedule as it uses the same pilot pool as AI to operate its near 200 flights a week. AI Express was recently forced to restructure its network and withdraw some flights in the winter schedule because of pilot shortage. In its Board meeting held on 13th December, AI Express has decided to utilize its fleet of 21 aircraft more optimally and to augment the commander force which would increase the productivity to minimum of 11 hours from 9 hours at present.

9. AI on 10th December launched a special promotional return fares on its international destinations. The scheme is valid for out-bound travel to the Far East and near east.

10. AI Board has approved Rs 768 crore proposal to hive off engineering and ground handling services into two wholly owned subsidiaries as part of its turnaround plan from January 2013.

11. During April-September 2012, the passenger revenue of AI has gone up Rs 328.9 crore, an improvement of 6.1% and the load factor has improved from 69.30% to 70.90%.

12. AI has connected Delhi with Agra, Varanasi and Khajuraho from 26th December. AI will also launch daily flight services from Kolkata to the capitals of Jharkhand, Bihar and Odisha from 1st January 2013.

13. AI is revising the basic pay of 28,000 employees on its payroll which will lead to a saving of at least Rs 156 crore a year. AI has a revenue shortfall of a least Rs 400 crore a month. AI is also rationalising senior executives positions, as recommended by the Dharmadhikari committee on pay and wage rationalisation.

3.2 Kingfisher Airlines (KFA)

1. The 17-bank consortium that funded KFA met on 17 December and it was informed that Vijay Mallya will pump in Rs 425 crore so that the airline can resume ‘limited Page 15 of 24

operations’. KFA has been asked by DGCA to furnish a concrete plan on issues such as “adequate working capital, airworthiness of planes and settling employee dues” failing which its licence will not be activated which expires on December 31, 2012.

2. KFA on 20th December submitted its application for renewal of its operating licence to DGCA and on 24th December submitted a ‘limited restart plan’ that aims to begin operations with 5 Airbus A-320s and 2 ATRs, going up to 11 ATRs and 10 A-320s after 10 weeks of flying. KFA would require about Rs 652 crore over the next 12 months for running its operations. On 29th December, DGCA sought additional details regarding the funding plan and demanded a letter of financial commitment from the UB Group and Kingfisher that it would invest Rs 652 crore. DGCA has also asked KFR to clear employee’s dues at one go before being allowed to resume operations. On 31st December, KFA licence expired.

3. Karnataka High Court on 5th December directed KFA to deposit 50% of the total amount of Rs 371 crore that the company is required to remit to the Income Tax Department as tax deducted at source from its employees and payments made towards company expenses. The high court has also asked KFA to furnish bank guarantee for the remaining amount.

4. Four Airbus planes of KFA has been taken back by the leasing company ILFC following non-payment of lease rentals and two jets have been seized in Mumbai by the service tax department after the airline defaulted on tax dues to the tune of Rs 63 crore.

5. KFA has capped foreign portfolio investment in the company at 3%, carving space for a foreign investor to buy as much as 46%. KFA has also sought an exemption from Sebi to allow it to sell a stake to a foreign carrier without an open offer, which is a mandatory for domestic companies selling a stake of over 25% to foreign entities.

3.3 SpiceJet

1. MoCA has cleared the proposal of SpiceJet to operate the Singapore flight service from Madurai.

2. SpiceJet has launched its second international flight from Kochi connecting Dubai. It is also launching 4 weekly flights on the Delhi- Guangzhou route from February 8 2013 and direct, daily flights on the Delhi-Riyadh flights from January 4, 2013.

3. SpiceJet from 16th December has increased its excess baggage charges per kg from Rs 200 to Rs 250. The move is a part to increases the revenues by hiking the cost of incidental services.

4. SpiceJet has received all of the 15 Q400 NextGen Turbo propeller aircraft. With this, the carrier’s fleet size has increased to 51.

5. SpiceJet on 26th December announced that its shareholders have approved the company’s proposal to raise funds through issue of convertible debentures and warrants, on preferential basis, to its promoter Mr Kalanithi Maran. The fresh shares will raise the promoter’s shareholdings to 53.59%. The company has also increased its share capital to

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Rs 1,000 crore. The proceeds of the preferential issue would be issued for expansion programmer and working capital requirements. On 31st December, SpiceJet informed that it has raised Rs 126.5 crore through issue of securities to promoter Mr Kalanithi Maran and more than 1.71 crore equity shares pledged by Kal Airways have been released.

3.4 Jet Airways

1. Jet Airways may approach FIPB for permission to tweak its ownership pattern to facilitate an equity investment by Etihad Airways. Tail Winds Ltd. registered in Isle of Man owns 80% in Jet Airways and the balance stake is held by public shareholders. Etihad Airways is likely to pick 24% stake for Rs 1,600 crore.

2. Jet Airways on 2nd December sought government’s permission to lease 2 Airbus 330- 300s to deploy on the Mumbai-Newark (US) route as part of its A330s fleet replacement plans.

3. Jet Airways has expanded its codeshare arrangement with All Nippon Airways for enhanced network connectivity between Japan and India. The agreement will mean that passengers travelling on both Jet Airways and All Nippon Airways will be able to fly between Tokyo and Osaka in Japan to various points across India on connecting flights operated by both carriers.

4. Jet Airways has expanded its codeshare arrangement with Etihad Airways for the Abu- Dhabi-Paris route.

5. Jet Airways on 5th December inducted 5 new ATR 72-600 turboprop passenger aircraft to its fleet. The aircraft will seat 68 passengers in an all-economy layout and will connect tier II and Tier III cities to enhance regional connectivity. On 12th December, Jet Airways announced the planned induction of 4 new Airbus SAS A330-300 series aircraft into its fleet. Jet Airways inducted one Airbus SAS A330-300 on 12th December and is expected to take delivery of another plane by December end. The two aircraft will replace leased Airbus A300-200 aircraft.

6. Jet Airways is expecting its aviation academy to be functional from early next year in Mumbai. Jet Airways have received provisional clearance expect to receive a formal nod from the Corporate Affairs Ministry. Jet Airways is planning to set up similar centres in Delhi and Kolkata. As part of the plan, the academy will run certificate courses, ranging between one-and-half month to three months in the areas such as cabin crew, airport services.

7. Jet Airways on 13th December announced a convenient payment option for its customers, which allow them to book tickets online on the domestic carrier’s portal and pay by cash later, a move aimed at enhancing the airlines distribution network. “Cash on delivery” is available only for those customers who book their tickets through Jet Airways website. Jet Airways has tied up with GharPay to deliver the service.

8. Jet Airways has increased its excess baggage charges per kg from Rs 210 to Rs 250. The move is a part to increases the revenues by hiking the cost of incidental services.

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9. Jet Airways has announced the commencement of direct flight service between Mangalore and Dubai from January 3, 2013 and second flight to Dubai from Delhi from January 18, 2013.

3.5 Indigo

1. IndiGo Airlines is thinking of replicating its low-cost model by setting up a separate airline in Africa. This airline would operate between various African countries, as also within some African countries.

2. IndiGo has decided to increase its borrowing limit to Rs 10,000 crore which was Rs 2,500 crore previously.

3. IndiGo has introduced new daily flights connecting Delhi, Mumbai, Bangalore and Kochi from December10 and new daily and non-stop flights connecting Kolkata with Bangkok from 21st December. IndiGo will also operate daily flights to Singapore from Calcutta from 2013 summer and is also planning international flights to Kathmandu and Dubai and to Bagdogra and Silchar with in the country. IndiGo has also announced the commencement of new flights from Mangalore to Dubai in 2013.Indigo will also start its daily flights to Dubai from Trivandrum, Calicut and Mangalore.

4. IndiGo has reported operating loss of Rs 87.7 crore, operating revenue of Rs 5,552 crore and operating expenses of Rs 5,640 crore for 2011-12.

5. IndiGo is withdrawing its Mumbai-Singapore and Delhi-Singapore flights as part of its route-rationalisation exercise. High fuel costs and intense competition are said to the reason behind the move. IndiGo will redeploy its planes to start new services from Hyderabad and Chennai to Singapore.

3.6 GoAir

1. GoAir on 20th December announced that it would start daily flights between Ahmedabad and Kolkata from February 4. These same-day flights will go further to Bagdogra in West Bengal and Guwahati in Assam.

3.7 Air Mantra

1. Air Mantra has announced the launch of its flight services between Jammu and Kargil from 1st week of January 2013.

3.8 International Airlines

1. Cathay Pacific has launched Hong Kong-Hyderabad-Hong Kong flights from RGIA from 1st December 2012. The first flight to RGIA from Hong Kong landed on 2nd December and received a traditional water canon salute welcome at the airport.

2. Etihad Airways is increasing its flight frequency to Kozhikode beginning January 1, 2013 more than doubling its flights to Kozhikode from 3 to 7 a week.

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3. Turkish Airline is planning to double flights between Delhi and Istanbul and add Hyderabad and Kolkata as new destinations in 2013.

4. Virgin Atlantic has outlined plans to launch a domestic flying programme for March 31, 2013 saying it would strengthen connectivity for Indian passengers. The new schedule would connect Delhi, Mumbai with Manchester and Scotland via London Heathrow.

5. SilkAir will add three more flights a week to Hyderabad from January 1, 2013.

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4. CARGO

1. Agricultural and Processed Food Products Export Development Authority is assisting Tiruchi to set up a cold storage facility for storing perishables at the Air Cargo Complex at Tiruchi Airport. To be operational by March-end, the facility will have a capacity of 5 tonnes. The air cargo complex is also likely to get the Electronic Data Interchange for speedy processing and clearance of export/import procedure.

2. DIAL and the Rotary Club of Vaishali, through Rotary Blood Bank, organised a blood donation camp at IGI Cargo Complex on 5th December 2012.

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5. AERA APPELLATE TRIBUNAL

1. Appeal No. 01/2012 (with IA No. 07/2012 for stay) of Federation of Indian Airlines (FIA) Vs. AERA & Anr. (DIAL) came up for hearing on 7th December 2012. The Appellate Tribunal issued notice to the Union of India (UOI) and AAI and the matter was adjourned for 11th January 2013.

2. Appeal No. 03/2012 (with IA No. 09/2012 for stay) of Federation of Indian Airlines (FIA) Vs. AERA & Anr. (MIAL) came up for hearing on 7th December, 2012. The Appellate Tribunal informed that the notices have already been issued to AAI and UOI and they have been served on the parties. Despite service of notice, there is no appearance on behalf of UOI. The Appellate Tribunal directed that the UOI to be served through their standing counsel, if any. However, if there is no standing counsel, the notice shall be delivered to the concerned office of the Ministry of Civil Aviation and the matter was adjourned for 11th January 2013.

3. Application No. 01/2012 U/S 18(1) of Business Aircrafts Operators Association Vs. Mumbai International Airport Pvt. Ltd. (MIAL) came up for hearing on 7th December. The Appellate Tribunal listed the matter for 11th January 2013 and in the meantime, status quo as per the AAI circular be maintained. 4. Appeal No. 06/2012 (with IA No. 10/2012 for stay) of Federation of Indian Airlines (FIA) Vs. AERA & Anr. (DIAL) came up for hearing on 7th December, 2012. The Appellate Tribunal listed the matter for 4th January 2013 and in the meantime, pleading of the parties be completed.

5. Appeal No. 11/2012 (with IA No. 11. 24 & 26) of Lufthansa German Airlines & Ors. Vs. AERA & Anr. (DIAL) came up for hearing on 7th December, 2012. The Appellate Tribunal listed the matter for 4th January 2013 and in the meantime, pleading of the parties be completed.

6. Appeal No. 10/2012 (with IA No. 14 & 23) of DIAL Vs. AERA came up for hearing on 7th December, 2012. The Appellate Tribunal listed the matter for 4th January 2013 and in the meantime, pleading of the parties be completed.

7. Appeal No. 12/2012 of International Air Transport Association (India) Pvt. Ltd. Vs. AERA & Anr. (DIAL) came up for hearing on 7th December, 2012. The Appellate Tribunal listed the matter for 4th January 2013 and in the meantime, pleading of the parties be completed.

8. IA No. 29/2012 (for extension of time) in Appeal No. 02/2010 of Mumbai International Airport Pvt. Ltd. (MIAL) Vs. AERA & Anr. came up for hearing on 14th December. The Appellate Tribunal extended time up to 15th January 2013 and informed that no further time shall be granted.

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6. TRAFFIC

1. IATA in its Industry Outlook for December 2012 has shown the wide variation in the domestic market for China, India, US and Japan. IATA also has forecasted growth in both travel and cargo for 2013.

2. As per the passenger traffic data submitted by various domestic airlines, the total domestic passengers carried by the scheduled domestic airlines in the month of November 2012 were 50.20 lakhs and in October 2012 were 45.55 lakhs. This shows that 4.65 lakh more passengers travelled in the month of November 2012 compared to October 2012. However, the number of passengers carried by the domestic airlines was 534.14 lakhs between January-November 2012 as against 550.33 lakhs during January- November 2011 showing the growth of -2.94%. Page 22 of 24

Growth 2011 2012 YoY - (-2.94%)

600

550.33 534.14

500

400

300

200

100 54.14 50.20 PassengerCarried lakhs) (in 0 YoY MoM 3. The market share of scheduled domestic airlines for the month of November 2012 is:

Air India (Dom), Jet Airways, 20.7% 18.3%

Jet Lite, 6.9%

IndiGo, 27.3% Spicejet, 19.5%

GoAir, 7.4%

4. The passenger load factor of scheduled domestic airlines for the month of November 2012 is:

Oct-12 Nov-12

90 83.9 78.6 77.3 77.4 80 73.8 75.5

70 74.7 77.2 70.2 69.7 60 67.5 69.2 50 40

30 Seat Factor Seat (%) 20 17.0 10 12.0 0 Air India Jet Airways Jet Lite SpiceJet GoAir IndiGo Air Mantra

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7. SOURCE

1. Airport Economic Regulatory Authority Appellate Tribunal (AERAAT) http://compat.nic.in/aera.html

2. Ministry of Civil Aviation http://www.civilaviation.gov.in/

3. Press Information Bureau http://pib.nic.in/newsite/mainpage.aspx

4. News Articles published in various newspapers.

5. Bangalore International Airport Limited

6. GMR Hyderabad International Airport Limited

Association of Private Airport Operators (APAO), 710, 7th Floor, Surya Kiran Building, 19 Kasturba Gandhi Marg, New Delhi, India. Ph: +91-11-41510916, Fax: +91-11-23329153 Web: www.apaoindia.com, e-mail: [email protected]

Disclaimer: The information contained in this newsletter has been collected from news/articles appeared in various newspapers and other publications and also collected from respective airport operators. APAO makes no warranties as to the accuracy or authenticity or completeness of the information.

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