19 Jun 2017

India Aviation Industry Newsletter 19 June

Government may clear decks for Air India divestment this week The Union Cabinet is likely to clear stake sale in Air India this week after deciding between a complete and partial divestment of state-owned airline. Despite being granted a nine-year bailout package a few years ago, national carrier Air India has amassed debt of around Rs 45,000 crore. The officials devised a Cabinet note containing NITI Aayog's proposal of a complete selloff and the Civil Aviation's bid in a partial sale of the airline's assets to reduce its debts. India's Aviation Ministry seeks 2-month delay of GST India's Aviation Ministry sought to postpone implementation of the country's biggest-ever tax reform to give airlines more time to bring their ticket-booking software up to speed.The move marked the first effort by a central government entity to postpone the planned July 1 nationwide rollout of the Goods and Services Tax, which will replace more than a dozen existing indirect taxes. Indian aviation sector to get USD25 bn investment by 2027: Morgan Stanley As per an ET report by Anirban Chowdhury, India, the third largest domestic air travel market, is estimated to see an investment of USD 25 billion in the next decade in the airports sector, a demand for 935 more planes and traffic growth of 13%, Morgan Stanley said. Through the UDAN scheme to bring small cities and towns to the air transport network, the government is taking the right step to increase connectivity and also boost utilisation of airports, thereby helping those become more profitable, Morgan Stanley said in report on Indian aviation. The report said the share of air travel in air and rail travel combined in India will grow to 15.2% by 2027 from 7.9% now. “India's domestic air passenger traffic reached 100 million in 2016, behind only that of the US (719 million) and China (436 million) and ahead of Japan (97 million). We forecast a 13% domestic air traffic compounded annual growth rate (CAGR) 2016-26, the highest such rate of any key region globally and higher than India's 11% CAGR 2011-16,” said the report. India and Russia strengthen bilateral ties in aviation India and Russia agreed to strengthen bilateral cooperation in the aviation sector by setting up joint ventures in the field of manufacturing, as India is predicted to become the third largest global aviation market by 2020. “The Regional Connectivity Scheme of the government of India provides an opportunity for strengthening cooperation in joint production and setting up of joint ventures in India in the field of aviation manufacturing to serve the demand created,” according to vision documents, issued after the talks between Prime Minister Narendra Modi and Russian President Vladimir Putin. The move is aimed to cater to increasing exports and demands of India’s regional air connectivity scheme. Indian flights can use UAE airspace to reach Doha Timely intervention by the Indian embassy has ensured that Indian airlines to Qatar can now use the UAE airspace to reach Qatar capital of Doha, Indian envoy said. Following the air embargo by Saudi Arabia, Bahrain and the UAE, flights from key Indian destinations had experienced a delay of up to an hour as they had to use airspace of Pakistan and Iran to reach Qatar. "Flights from Kerala had to fly 50 minutes extra and 20-25 minutes for those from Mumbai. This meant that either hike in air fares or cut in baggage allowances. It had become a real issue as the airlines were losing money. The schedules too had to be altered. We were among the hardest hit country as we have 600,000 people in Qatar," Indian Ambassador to the UAE Navdeep Singh Suri. Singapore Airlines subsidiaries look to expand India presence Tigerair and Scoot, the no-frills subsidiaries of Singapore Airlines that will merge by July-end, are looking at expanding its footprints in India by tapping international travellers from Tier-2 cities and secondary markets in the country. The airlines, which will start functioning under a single brand 'Scoot' from July 25 after the merger, believes that the international connectivity from Tier-2 cities in India is "currently untapped" and is an area where it sees a "lot of growth opportunities". With over 1,000 aircraft set to be on order, India is poised to become the third-largest buyer of commercial passenger planes in the world, with only the US and China ahead of it. The aircraft order book of the Indian airline industry will soon touch 1,080, which would mean that for every aircraft in service, there will be 2.2 aircraft on order, said a report released by the Centre for Asia Pacific Aviation (CAPA). Acumen Aviation © 19 June All Rights Reserved.