Major improvements have been made in aviation sector: Patel. Mangalore: The Union Minister of State for Civil Aviation, Mr Praful Patel, has said that the country will be in the top-five civil aviation markets in the world in the next five years.

Inaugurating the new integrated terminal building of Mangalore airport here on Saturday, he said that the country’s civil aviation sector was not recognised in the world until a few years ago. Today, India is the ninth largest civil aviation market in the world.

“Within the next five years, India will be in the top-five civil aviation markets all across the world. That, I think, is a great achievement in the remarkably short period of time,” he said. Stating that substantial improvements have been made in the civil aviation sector in the country, he said today flying is no more a luxury for the common man.

Mr Patel said that country’s infrastructure is undergoing a sea change under the leadership of the Prime Minister, Dr Manmohan Singh.

For the first time there is a Cabinet Committee on Infrastructure headed by the Prime Minister. That is why projects were being monitored and implemented on time, he said.

Runway extension

Later in an informal chat with presspersons, Mr Patel said that the runway of Mangalore airport will be extended by another 1,000 ft, from the existing 8,000 ft.

Asked when the airport will get international status, he said that one of the requirements for declaring Mangalore as an international airport is the 9,000 ft runway. That is why it has been decided to extend the runway by another 1,000 ft. The work for this will be awarded soon, he said.

The extension of runway is essential for handling larger aircraft to international destinations in West Asia and beyond that. The extension will help bring larger cargo aircraft for import and export out of Mangalore, he said.The Union Government will take a decision on declaring Mangalore as an international airport at the earliest, he added.

 Source: The Hindu Business Line

The Minister for Civil Aviation, Mr Praful Patel, has cleared the proposal for allowing SpiceJet, the Delhi-based low-cost airline, to start international operations.

Official sources told Business Line that the Ministry of Civil Aviation will now write to the Directorate-General of Civil Aviation (DGCA) to allow the airline to start operations on specific routes.

The airline meets the Government criteria for starting international operations as it completes five years of operations in May and has a fleet of more than 20 aircraft. The airline is likely to start its international operations with flights to Kathmandu, Dhaka and Colombo some time in June, sources in the DGCA said, pointing out it takes some time to get manuals and other procedures approved for starting the operations.Jet Airways, JetLite, Kingfisher, Air India and Air India Express are the other Indian carriers permitted to operate abroad from India, while about 70 international airlines fly regularly to India.

SpiceJet will connect 19 Indian cities from April 15 when it starts daily flights to Agartala. Since its first flight in May 2005, the airline has attracted considerable investor interest. In 2005, the US-based private equity investor W.L. Ross invested Rs 345 crore in the company. Currently, some investors, including Religare, are said to be interested in picking up a stake in the airline

It reported a net profit of Rs 108.9 crore for the quarter ended December 31, 2009 against a loss of Rs 18 crore a year before.

Source : The Hindu Business news

Despite volcanic ash and Bharat bandhs, which threatened to clip the wings of airlines coming out of recession, carriers may be ending the fourth quarter on a good note. A comparison between the three listed players, Kingfisher Airlines, Jet Airways and SpiceJet, shows the trend is definitely on an upswing — the three have a market share of 26 per cent (Jet Airways and JetLite together), 23 and 11.9 per cent respectively, according to the Directorate General of Civil Aviation (DGCA) figures.

Jet Airways is expected to break even in FY11 in domestic and international operations. The carrier, which gets 56 per cent of its revenues from international operations, has also seen its international operations stabilising, with most international routes breaking even.

Similarly, Kingfisher has also made a foray into the international market and has launched operations on eight international routes recently, while SpiceJet is planning to go global from June onwards. While it looks like the increase in passenger traffic might help airlines in offsetting the effect of high aviation turbine fuel (ATF) prices, the large debt on the books of the biggies could be a spoiler. Jet Airways has debt of about Rs 14,000 crore, while Kingfisher owes over Rs 6,000 crore.

HSBC Global Research mentions that Jet Airways is looking to cut its interest cost by lowering high-cost debt through selling a plot of land in Mumbai, a sale and leaseback of its fleet and raising funds by equity dilution. This restructuring is expected to show benefits in FY11.

It has also been reported that both Jet and Kingfisher are looking at raising Rs 2,000 crore through qualified institutional placements and other instruments to bring down debt.

The DGCA figures showing the percentage change over the month, indicate that demand has grown faster than the capacity. “These figures indicate improved yields and capacity utilisation for the aviation industry. If you look at any airline’s biggest expenses, it would be ATF and their interest burden. If the yields of the carriers are better than the effect of ATF, then Q4 will be better than Q3,” says Gokul Chaudhri, partner, BMR Advisors.

According to Centrum Research (January 5, 2010), SpiceJet’s improved operational performance would result in a turnaround, that is, it may report its first full year of profit in FY11E (estimated). Factors that would likely contribute to the turnaround are expected to be the recovery in domestic pax traffic and its rationalised capacity. The report further says that despite a likely dilution of 109 per cent, SpiceJet’s restructured balance sheet will possibly be leaner with near zero debt.

An analyst at Centrum Research had earlier said that despite rising crude oil prices, the impact has been offset to a large extent by the hardening of the rupee vis-a-vis the dollar. However, if airlines raise prices, operators may see a fall in loads as the sector is price-sensitive. Jet had earlier mentioned that it will be raising its airfares by 10-15 per cent. Airlines have been adding capacity since last July to meet the rise in demand.

While Jet and SpiceJet have both recorded a profit in the third quarter of about Rs 106 crore and almost Rs 109 crore, respectively, Kingfisher is still in the red with a loss of about Rs 420 crore. Analysts expect Jet and SpiceJet to turn profitable in FY11, while Kingfisher will take longer to break even.

Chaudhri from BMR Advisors believes there are four factors that will shape the fourth quarter. “Capacity utilisation, yields, hardening of the interest rate and increase in ATF are four factors that will determine Q4 results for the aviation industry,” said Chaudhri. However, he cautioned that the cumulative effect of these may be positive or negative and can be determined only after the results are actually out.

 Source: Business Standard