TPG Capital eyes stake in IndiGo

Leading global private equity fund TPG Capital (formerly Texas Pacific) is in talks with budget carrier IndiGo to pick up a 10-15 per cent stake in the airline. Top executives of the airlines have started negotiations and the deal is expected to happen in the next few months, according to investment banking sources. "IndiGo is considering dilution of promoters’ equity and are is in talks with TPG for a possible sale of shares," a source said. When contacted, Rahul Bhatia, managing director of InterGlobe Interprises, which owns the airline, said that the company was not looking at any dilution of promoters’ equity. "We do not have any plans to dilute equity. We have enough funds to take care of the future requirements of the airline," he said. InterGlobe Enterprises and the former president and chief executive officer of US Airways, Rakesh Gangwal, had jointly promoted IndiGo.

However, sources close to TPG said that that the private equity firm is exploring investment opportunities in the aviation sector in the country and Indigo is one of its target companies. "As the ATF (aviation turbine fuel) prices went up and airlines were forced to reduce fares, valuation of the industry came down in 2006. Though airlines were interested in PE placements, not many players were interested. Now its the time of consolidation and global PE firms will have a major role to play," said an analyst from Lehman Brothers. If successful, the transaction will make TPG's first aviation investment in India. TPG was in talks with Air Deccan before Kingfisher air chairman Vijay Mallya acquired a 26 per cent stake recently. The group was also in talks with SpiceJet. However, these transactions failed either due to differences over valuation or the airlines were not ready to offer a higher stake in the company.

Mallya had offered Rs 550 crore for 26 per cent stake in Air Deccan while ICICI Ventures had invested $50 million for 19 per cent stake in Air Deccan in 2005. TPG, which manages over $30 billion assets across the world, is one among those PE players that have made substantial investments in the aviation sector. It has invested in Continental Airlines, Rynair, Australia's Qantas and has also placed a bid for Midwest Airlines. IndiGo is expeccted to use private equity finance for its expansion plans. It has placed a $6 billion order to acquire 100 Airbus A320 family aircraft. The airline has so far received 11 Airbus A320-200 and another 89 are on order. It receives one brand new plane every four to six weeks. By 2010, IndiGo plans to serve 30 Indian cities with a fleet of 40 A 320 aircraft.

Ethiopian Airlines to launch new flights to India

New flights are expected to be launched by Ethiopian Airlines which will tap into the growing markets in China and India, says Ethiopian Airlines Chief Executive Girma Wake. Mr Girma announced that the airline was considering increasing the number of weekly flights to China from 11 to 14, along with plans to make Addis Ababa its gateway to Africa. Last week, the airline estimated a 106% increase in pretax profits for 2007 – 2008 to 448 million birr (USD 49.3 million). Despite the rising competition in the region from other foreign carriers such as Emirates, British Airways and KLM, Girma has remained supportive of Ethiopia’s ‘open skies’ policy. "Despite their entry, our (revenue) growth has been in the region of 20-25 percent.

Small African carriers should learn that there are very few African countries whose home traffic is big enough," he said. Mr Girma also believed that Ethiopian Airlines would look to the Far East to increase its growth in the future rather than the U.S or Europe. "India and China will have a lot of traffic to Africa in the future. They are investing more in Africa and their people are getting richer. Now they will look for tourism," he said.The carrier is currently one of three African airlines, including South African Airways as well as Kenya Airways, responsible for changing Africa’s expanding airline industry through their use of current model planes as well as their safety records.

Jet Airways trying to shape up JetLite

Jet Airways is facing a tough time to turn around Air Sahara, after acquiring it for $340 million around three months back. While a part of the difficulties lies in the poor condition of Air Sahara’s fleet, a different work culture of Sahara employees is only adding to the problems, according to Garry Kingshott, CEO of JetLite (new name of Air Sahara). For Kingshott, the primary focus is on issues like revamping the condition of poorly kept fleet and jets grounded for years and make employees fit into Jet Airways’ vision of a professionally-managed airline. And, Kingshott’s problems only increased with aviation ministry’s finding last month that JetLite had the maximum number of delayed flights. To deal with all these and put the airline back on track, the Australian CEO has charted out a turnaround roadmap and started working towards this goal.

To start with, JetLite has retained only 2,300 of Air Sahara’s 4,100 employees who it felt could fit into Jet’s vision of ontime passenger-friendly performance. Then, it is also going to lease up to 15 planes till 2009, before deliveries of the previously ordered 10 Boeing 737s begin. "Of these, four will replace classic 737s and the balance eight to 11 will be added to the fleet for expanding service. We have offers from three leasing companies," he said. Sahara had a fleet of 24 leased aircraft, 17 Boeing 737s and seven Canadian Regional Jets (CRJs). "When Jet acquired the airline, only 10 737s and two CRJs were flying. Obviously the fleet was not in a terrific condition. We have tied up with Bombardier and Air Canada Technical Services for the CRJs. Today 15 Boeings and three CRJs are flying. By October-end, we expect a majority of the fleet back in air," Kingshott said, with his focus mainly on improving ontime performance.

Pilots now have to report an hour before departure time instead of earlier 45 minutes. "Thanks to better maintenance, our ontime performance is much better now," he said. Currently the airline operates just under 100 flights daily to 34 cities and this number will climb to 147 from September, when all Boeings are expected to be flying again. Kingshott refused to give any figure on how much will the turnaround cost. "This will be an insignificant amount to what we can earn by having the planes in air, on time," is all he said. The on-time performance is weighing so heavily on JetLite that it is not pulling out planes from flying to either paint them in new livery or reconfigure them in a single class seating. Only five of the 17 Boeing 737s have got a single all-economy configuration. "We can't pull out aircraft to replace three rows of seats," Kingshott said.

New civil aviation requirements for disabled passengers

The Office of the Directorate-General of Civil Aviation (DGCA) has issued new civil aviation requirements for disabled passengers that are scheduled to come into effect from Wednesday. According to the new requirements, "no airline shall refuse to carry physically challenged or incapacitated persons or persons with disabilities," as long as they "do not pose a threat" to the safety of other passengers or the evacuation procedure for the aircraft. Airlines will also not be permitted to limit the "number or types" of disabled passengers on a particular flight, except "where required for operational reasons." The procedure for limiting disabled passengers will also be documented. Airlines will now also have to run "sensitisation and developing awareness" training programmes for staff.

There have been increasing calls from rights groups for clearer guidelines on the transportation requirements of disabled passengers following the prevention of Rajeev Rajan a cerebral palsy patient and activist with Vidyasagar, a non-governmental organisation for the disabled from boarding an Air Sahara flight in Chennai on June 18 for failing to produce a medical certificate. In an effort to clarify aviation requirements for disabled passengers, the DGCA issued a draft on July 25 on its website, specifying the new guidelines for airlines and "inviting comments" on the new recommendations. The DGCA said the new recommendations were to come into effect on August 15. Dhanasekharan, a representative of Vidyasagar, said that the August 15 deadline did not give disabled rights groups enough time to respond to the recommendations.

"We were shocked to discover that the deadline was August 15," Mr. Dhanasekharan said. "By just putting it on the DGCA website, how can they expect all of us to be aware of it?" Vidyasagar has written to the DGCA asking it to extend the deadline for implementing the new requirements. "Before they put the requirements into effect, the DGCA has to have a consultation with disabled groups as after all we are the stake-holders," Mr. Dhanasekharan said. "They clearly seem to not want any suggestions from us." Mr. Dhanasekharan alleged the new requirements were "ambiguous." "They have used the word 'incapacitated' to define the disabled," he said. "What do they mean by incapacitated? And what is 'severe' disability? All this needs to be clarified with the stake-holders before they are implemented."

Mihin Lanka unveils flights to Buddhagaya

Mihin Lanka will expand its route map to Buddhagaya, India. The low cost carrier will launch a new non-stop service between Colombo and Gaya international airport from September 2. The route will be served by an Airbus A320 in economy and premium economy. The new service to Buddhagaya comes as a result of Mihin Lanka’s philosophy, "Where new doors of opportunity to the people to explore and experience the wonders of the world." Buddhagaya emerged as Mihin Lanka’s sixth destination for giving travellers access to low fares and unique onboard services. New route will be ideal for pilgrims and holidaymakers around the world. "We are excited to expand to Buddhagaya, one of the holiest places of Buddhism and bringing our growing network to the Indian State of Bihar," said head of commercial for Mihin Lanka Sugath Rajapakse. Gaya becomes third Indian city to be served from Colombo following launch of flights to India two months ago. Mihin Lanka will offer one round trip flight on Sunday to Buddhagaya beginning September 2 with the option of second frequency.

Kingfisher Airlines to paint Air Deccan red

In the next few months Air Deccan will become synonymous with its parent Kingfisher Airlines. Its entire aircraft fleet, livery, cabin crew and the ground handling infrastructure would be in colour red (against the current light blue) to bear a close resemblance with the existing format of Kingfisher Airlines. According to a source in the airline industry, the Air Deccan name would be retained, but its bare hand logo will be replaced by the logo of Kingfisher (bird). Additionally, the flying horse logo of the UB Group would don all Air Deccan aircraft. The brand Air Deccan would also be re-written in red against white background. "These changes are part of our marketing research exercise which has shown that brand Air Deccan had tremendous recall in the economy class air traveller. However, except the name, all the existing infrastructure of Air Deccan would be changed to be in line with the Kingfisher Airlines format, which is perceived as a premium carrier," sources said.

A Kingfisher Airlines spokesperson refused to comment on the issue. "We cannot comment on any of the changes, but these would be in conformity with the result of the massive market research activity undertaken to refurbish Air Deccan," the spokesperson said. In the next few weeks, the ticketing counter of both the airlines would sell common tickets and maintain joint ground handling operations. The other activities include flight synergy, where both the airlines would re-schedule their operations to avoid any cannibalisation. The executives of these airlines are framing a joint 'winter flight schedule' to utilise the fleet efficiently. "We are working on a joint-winter schedule, which would soon be submitted to the regulator, Director General of Civil Aviation, for necessary approval. The flights on common destinations and on similar timings would be changed for better utilisation as the joint-fleet that would go up from the current 73 aircraft to 87 aircraft in the next few months," sources said. Air Deccan would be positioned as a performance carrier in the long run.

YouTube.com showcases India's tourism potential

The Tourism Ministry has tied up with the Google's video-sharing platform, YouTube.com to showcase the country's tourism potential. The Ministry, known worldwide for its "Incredible India" campaign, have made promotional videos available to the YouTube, the eighth most trafficked website. From the Himalayas to the sun kissed beaches of Goa, or the boat ride in the backwaters of Kerala are now just a click away. Launching the videos on the YouTube, Tourism Secretary Shilabhadra Banerjee said the venture would help boost India's image aboard. "This is to maximise the reach of the Incredible India campaign worldwide. It is important to not only project what India was and what India is today, but what attractions it holds for the people of the world. I think it is an excellent example of using technology for projecting India's image abroad," Banerjee said. At present 18 film and other videos have been uploaded on the site. Shailesh Rao, Managing Director, Google India said the arrangement, the first of its kind with any government, would help boost India's tourism income.

"Videos that have been placed here are wonderful depiction of the wonder that India is today. And we really hope that we can play a small part in helping the world to understand how attractive India is as a place... a destination for visiting," Rao said. According to a recent survey, YouTube.com has about 48 million users in the US itself. YouTube, started in early 2005, was taken over by Google in October last year. Apart from giving the net users a vast bank of videos from across the globe, it also gives registered users, option to upload unlimited number of videos. Tourism arrivals to the country have increased by 78 percent and foreign exchange earnings by 122 percent over the last five years. In the first seven months of 2007, foreign exchange earning through tourism stood at 4.51 billion dollars, which is 18.2 percent increase from 3.95 billion dollars from same period last year. The World Travel and Tourism Council has predicted India's annual growth rate at 8.8 percent over the next decade, the highest in the world. India is targeting 10 million tourist arrivals by 2010.

Air Deccan to phase out old ATR aircraft

As part of the plan to phase out older ATR aircraft and replace them with new generation ATR 72-500 fleet to achieve overall efficiency, Air Deccan has returned two older 48 seat ATR 42-320 aircraft. As a start up airline in August 2003, Air Deccan had to rely on a small fleet of old ATR aircraft, ATR 42-320 and ATR 42-500 as these had lower lease rentals, were affordable, and well suited for non-metro routes. The airline’s rapid growth in terms of operations, network, and passengers has led to induction of new aircraft. The new aircraft consist of the brand new 180 seat Airbus A320 aircraft and the latest generation turboprop, ATR 72-500 aircraft.

Air Deccan now has a fleet of 43 aircraft comprising 20 brand new Airbus and 12 brand new ATR 72 aircraft. The new aircraft have been credited with increased cost optimization and time efficiency. It was found that the older ATRs (42–500 and 42 -320) used by the airline were plagued with incessant technical snags and maintenance issues. Chief Executive Officer, Air Deccan, Ramki Sundaram, said the airline has decided to replace the ageing ATR fleet with brand new ATR 72-500 aircraft in a phased manner. In July, 98.7 per cent of all flights took off on time (within one hour).

Etihad Airways to increase flights to India

Etihad Airways is to increase its flying programme by 21 per cent at the end of October when the airline will also bid to attract more travellers with the introduction of new flight timings to improve connecting services. The Abu Dhabi-based airline will boost its weekly flights from 564 to 716 for the global aviation industry's winter season which starts on 28 October with most of the increases set to take-off in the GCC, Europe and the Indian subcontinent. The extra flights will improve 17 routes across Etihad's global network including Bahrain, which doubles from 14 to 28 flights a week and Muscat jumps from seven to 21 flights a week. Etihad's strong network across the Middle East will be strengthened further with increases on routes to Doha, from seven to 14 flights a week, Amman from six to daily and Damascus from five to daily.

Etihad flights to Frankfurt will increase from seven to 10 a week, Geneva moves from three to four flights a week, Dublin goes from four to six flights a week and London Heathrow rises from 14 to 19 flights a week. James Hogan, Etihad Airways' chief executive, said, "Customers will benefit tremendously with the extra number of flights and a much improved timetable which will see better, shorter and more frequent flight transfer connections at our Abu Dhabi base. By adding depth and frequency to our expanding route network we are able to offer a simpler, more convenient travel experience for the flying public." The airline's services to the Indian subcontinent will receive a significant boost as Thiruvananthapuram and Kochi, Etihad's two Kerala routes, and the Bangladeshi capital of Dhaka, will all increase to daily flights.

Wipro set to enter JV with Boeing for MRO

Wipro Technologies is shoring up opportunities in the Maintenance Repair and Overhaul (MRO) business with the US-based Aviation major Boeing. Wipro Technologies will be providing software tools and technological support to carry out an array of aircraft checks and maintenance programs in Boeings MRO facility, which is slated to come up in Nagpur, Maharashtra. "We will make an entry into MRO space. That's the space for which we are going to consolidate all our strengths in Wipro now," said Partha Sarthi Guha Patra, Vice President Strategic Initiatives and Offset Programs. Boeing has already signed an MOU with the national carrier Air India to develop an airframe MRO. The JV of Air India and Boeing is also on a lookout for another partner with hardcore with MRO experience.

Boeing has announced to invest 100 million dollar into the Nagpur MRO facility in India. "25 per cent of 100 million dollar will go in setting up IT services applications. That's the piece we are looking at," says Parthasarathi Guha Patra. Most of the players jumping into the MRO bandwagon in India believe India has the capacity to grow as an MRO service and training hub in the region, not just for India, but even to cater MRO service to the Gulf countries, and Central and South East Asian countries. According to the Civil Aviation Ministry, the estimated $400-million (Rs 1,625 crore) Indian MRO market in engine overhaul, heavy checks, line maintenance, component maintenance and major airframe modifications is expected to grow at a compounded annual jump of 4.8% and is predicted to touch $1.1 billion (Rs 4,470 crore) by 2015.