Companies & Sectors
Aviation waited in wings for a new policy
The grand scheme, however, still hangs in the balance and awaits the union cabinet's approval
 
If the revival of an airline and return to profitability of some others marked the highlights in 2015 in Indian aviation, the year also went by without the government spelling out its long-awaited policy for the sector.
 
All that the civil aviation ministry managed in the last 19 months was to come up with a draft national civil aviation policy (NCAP) which, nonetheless, has some far-reaching implications.
 
Among the proposals is one to scrap the 5/20 norm, which stipulates a minimum five years of operations and a fleet of 20 aircraft for oversees flying rights, and to peg a minimum tariff of no more than Rs.2,500 per ticket for each flying-hour.
 
The grand scheme, however, still hangs in the balance and awaits the union cabinet's approval.
 
"Draft NCAP has contemplated many interesting proposals to promote growth in the aviation sector," Amber Dubey, partner and head of aerospace and defence at global consultancy KPMG, told IANS.
 
"Its vision to enable 300 million domestic ticketing by 2022, although ambitious, highlights the potential of the Indian aviation sector."
 
In addition, aviation was among 15 industries in which foreign equity norms were eased in the year gone by.
 
Moreover, India's passenger traffic demand grew at a stellar pace.
 
Official data from the Ministry of Civil Aviation showed that passengers carried by domestic airlines between January and November 2015 grew by 20.41 percent at 73,382,000.
 
Sector-based experts pointed out that low crude oil prices helped to bring down fares which supported the rise in passenger traffic.
 
"Aviation fuel makes up for 30 percent of the cost of running an airline, at record low levels, airfares have reduced which in turn has led to the increased passenger load that we see today," Rajiv Chib, director for aerospace and defence with PwC, told IANS.
 
Besides fares, lower oil prices gave a jolt of fortune to the sector which till a year back was reeling under heavy losses on account of expensive jet fuel.
 
"Whenever fuel cost as a percentage of total cost falls near or below the 40 percent level, airlines start reporting profits. Further, oil price reduction leads to a tempering of the airfares which stimulates demand, thus increasing load factors of airlines," Kuljit Singh, partner for infrastructure practice at EY, told IANS.
 
For the industry the year saw the dramatic turnaround of one of the country's earliest budget carriers - SpiceJet - what with another having crashed towards bankruptcy led by industrialist Vijay Mallya.
 
The crashing budget airline was piloted back into a stable financial trajectory by one of its co-founders, Ajay Singh, who bought out the stake of erstwhile promoter Kalanithi Maran and KAL Airways earlier in the year.
 
Under his leadership the airline soon recovered lost ground, garnered fresh funding, posted three consecutive quarters of profit and is in the process to augment capacity.
 
The airline set new benchmarks in Indian aviation by achieving over 90 percent load factor (PLF) for seven consecutive months since May and reported the highest PLF amongst its peers for the last nine months.
 
"The biggest reason behind SpiceJet's revival is the hands-on approach of the new owner-cum-CMD Ajay Singh. He understands the industry and the airline inside out," Dubey elaborated.
 
"His presence brought in a lot of confidence to passengers, employees, lenders and suppliers."
 
The company's scrip price appreciated by 379 percent from Rs.13.9 on December 16, 2014, to Rs.66.55 on December 16, 2015.
 
Jet Airways too showed a marked recovery as the company recorded two consecutive profitable quarters after a gap of eight years.
 
But IndiGo was the one which landed with big bucks thanks to its grand initial public offer (IPO) during the just concluded year.
 
The company's Rs.3,018 crore IPO became the biggest in nearly three years on the Indian exchanges and marked an over-subscription by 4.95 times.
 
"Listing of IndiGo is a great development for the industry as this will ultimately benefit airlines such as Spicejet, Go Air, to raise capital which they may urgently need to grow, to pay down debt and to consolidate their operations," Singh said.
 
The financial turnaround did not stop with just private players, even Air India made headlines by announcing that it expects to post an operating profit of Rs.6 crore for the current fiscal.
 
"Lower fuel prices, aircraft availability, increased cabin manpower, aggressive marketing and promotions coupled with improved operational performance are the factors contributing to its growth," Chib cited.
 
Nevertheless, the rainbow weather was disrupted with concerns over exceptionally high fares that even had Prime Minister Narendra Modi worried!
 
Other incidents, like the flip-flop over the status of a proposed new airport in the National Capital Region (NCR) showed a power tussle between the senior and junior minister, who run the show at the Rajiv Gandhi Bhavan which houses the civil aviation ministry.
 
But the real bolt from the blue came in from of the fair business practices regulator -- the Competition Commission of India (CCI) which penalised Jet Airways, IndiGo and SpiceJet for indulging in anti-competitive practices.
 
Nonetheless, all three airlines that time said that they were considering challenging the order.
 
Highlights of 2015:
 
* Government comes out with a draft civil aviation policy
 
* Among many proposals is one to scrap the 5/20 norm
 
* Policy aims at pegging a minimum tariff for each flying-hour
 
* Policy on hold awaits cabinet's approval
 
* Passenger traffic grows by 20.41 percent during January-November
 
* Sliding crude oil prices lowered fares and strengthened airlines balance sheets
 
* Dramatic turnaround of SpiceJet under industrialist Ajay Singh
 
* IndiGo's Rs.3,018 crore IPO oversubscribed
 
* Air India hopeful of posting an operating profit of Rs.6 crore
 
* Flip-flop over the status of a proposed new airport near Delhi
 
* CCI penalises airlines for indulging in anti-competitive practices.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article. 

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Bankers to strike work on January 8
Around 340,000 bank employees across the country would strike work on January 8 to protest the violation of bilateral settlement by the five associate banks of the State Bank of India (SBI), a top leader of All India Bank Employees' Association (AIBEA) said here.
 
The five associate banks of the SBI are State Bank of Mysore, State Bank of Patiala, State Bank of Hyderabad and State Bank of Bikaner and Jaipur.
 
"Nearly 340,000 bankers would strike work on January 8. The strike is to protest against the violation of bilateral settlement by the five associate banks of SBI and their attempt to force unilateral service conditions on employees," C.H. Venkatachalam, AIBEA general secretary, told IANS here on Monday.
 
According to him, it is the AIBEA that has given the strike call.
 
Explaining the rationale behind the strike call, Venkatachalam said the service conditions in the SBI are different and based on the agreement between the SBI management and the employees' union.
 
On the other hand, the service conditions of the five SBI associate banks are common with those of other banks.
 
"In May 2015, a common settlement was signed between Indian Banks' Association (IBA-management body) and All India Bank Employees' Association (AIBEA) which defined the duties and remuneration of the employees for undertaking various jobs in the banks," Venkatachalam said.
 
He said the five SBI associate banks are parties to the settlement and hence governed by the settlement terms.
 
"But the managements of the five associate banks are implementing the service conditions of the SBI, which is illegal and violation of the settlement," he said.
 
Asked why the strike has been called early in the year, he said the union had deferred the strike call given for December 1 and 2, 2015, on the intervention of deputy chief labour commissioner, Delhi.
 
"The bank management is forcing its rules without any discussion with the unions from the New Year onwards and hence we are forced to respond," Venkatachalam said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article. 

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COMMENTS

Subramani P K

11 months ago

The bank employees strike should be banned under the essential services act and necessary action taken for violation if they still go on strike. First & foremost a proper study of the working of all banks should be undertaken mainly the productivity, responsibility, accountability etc of employees and salary & perks fixed accordingly & uniformly for all banks irrespective of whether it is SBI or subsidiaries or nationalised & so on. Just like corporate employees they should be evaluated annually & their increment & promotion decided. Poor performers should be given a fair chance to improve & if they don't dispense with them on VRS. Make the banking system user friendly & affordable.

TIHARwale

11 months ago

There should be no negotiations let indefinite strike continue so that AIBEA gets knocked down.

China fines shipping companies for price fixing
 At least eight international sea freight shipping companies were fined 407 million yuan ($62.86 million) for price fixing, Chinese authorities said on Monday.
 
The companies included Japan's NYK Line and "K" Line and Chile's CSAV, Xinhua cited the National Development and Reform Commission (NDRC) as saying.
 
After more than a year of investigations, authorities found the companies involved had exercised price manipulation for shipping vehicles and engineering machinery on major lines for at least four years, violating anti-monopoly laws.
 
The statement said the companies had reached agreements of "mutual non-aggression" and cooperated to jointly raise prices, adding they frequently communicated on bidding and price inquiries to control prices and divide territory.
 
The practices restrained market competition, boosted shipping costs and harmed the interests of exporters, importers and consumers.
 
The NDRC imposed fines of four to nine percent of the companies' revenues of their related China business in 2014.
 
NYK Line was exempted from penalty as it actively reported the monopoly agreement and provided major evidence, while EUKOR Car Carriers Inc. received the highest fine of 284 million yuan.
 
EUKOR said in an online statement that it has been informed of the investigation's progress and its legal rights and will accept the decision.
 
"We will do everything possible to avoid similar situations going forward," EUKOR CEO and president Craig Jasienski said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article. 

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