Air India to pay $2.5m more as premium to its insurer Marsh

National Aviation Company of India Ltd (Nacil), which is waiting for a government bailout, seems to be in a catch 22 situation over the issue of repairing one of its aircrafts which met an accident on September 4 while taking off for a Middle East destination. Industry sources point out though it is now around three months when the Air India’s air craft VT-ESM was damaged extensively by fire, the company is not repairing the aircraft though the entire repair cost will be borne by the insurers led by New India Assurance. Sources say, Air India will have to pay high additional premium over what it has already paid during its 2009-10 renewal of its policy on October 1, in case the insurance claim for the damage amount exceeds around $ 12 million.

Air India is already paying a hefty leasing charge of over Rs 3 crore every month for the damaged aircraft. The fact that Nacil has to pay additional amount for its renewal has come to light much after the renewal deal was completed by October 1, though the accident and any consequent claim out of that was known much before the final deal was placed in the London market. Nacil’s renewal deal, which had seen much controversy, the way it was awarded to a consortium led by Reliance General was completed in the London aviation market at the original tender price of $24.23 million. In an unprecedented move, the broker to Nacil deal, Marsh has gone ahead and has signed another deal quietly with the London-based reinsurers to pay additional premium of $2.15 million, in case the claim out of the damaged aircraft VT-ESM exceeds $ 12 million after 13 days of the original deal. However, commenting on the separate deal to pay the extra premium to the reinsurer, Marsh said it conducts its business with highest level of integrity and in compliance with laws. ``We as part of our professional conduct do not discuss client issues with media.

We can confirm, we have done this business with good professional standards,’’ said Sanjay Kedia , chief executive officer, Marsh India from Germany. However, various professional estimates done by surveyors show the repairing cost of the damaged aircraft will be around $ 17- $20 million, which is much more than the stipulated amount agreed between Marsh and London-based reinsurers for triggering payment of the additional premium. Going by the new arrangement, the moment Nacil repairs its aircraft and avails the insurance claim, it has to simultaneously pay the additional premium to the reinsurers. Replying to FE’s queries Jitendra Bhargava, executive director, Nacil who confirmed about the Marsh deal with the London-based reinsurers said Nacil has its own reasons for not repairing the aircraft, though it is paying leasing charges every month. ``We are yet to decide, what to do with the damaged aircraft.

It can no more be redeployed for flying overseas as we are now using new aircrafts in these sectors and the aircraft is too big for domestic sector. Also we cannot sell it now with good price as the aviation market is down with global recession. If we cannot redeploy the aircraft profitably then what is use of repairing it in a hurry?’’ he argued. However industry sources point out that the agreement for additional premium in case of the claim payment is matter of inefficient placement of the original AI deal by its insurers and broker. Air India as a part its 2008-09 insurance policy can recover the entire cost of repair from the insurance and reinsurance companies, which are also ready to write the claim cheque. In fact, AI can claim a maximum of $ 70 million for repairing any of its aircrafts.

But Air India whose way of handling of 2009-10 renewal has been subject to massive controversy from the beginning has its own compulsion for not availing this money from the insurers and utilising it for repairing the aircraft, said industry sources.

Source: The Financial Express

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DIAL may get more from land than expected

The GMR Infrastructure Ltd led Delhi International Airport Pvt. Ltd (DIAL), which is modernizing the Indira Gandhi International Airport, may raise Rs1,300 crore from the sale of 45 acres to developers, a jump of 42% from the Rs912 crore it had expected from the same parcels in January. The proceeds from the prime real estate south of Delhi are key to the funding of the project and a greater-than expected amount from the sale could reduce the burden on passengers.

Travellers are now paying Rs1,827 crore directly to fund the project by way of a so-called airport development fee levied on each ticket. “There is an improvement. We expect, because the market has picked up slightly, 10-20% better realization than what we achieved in the first eight (parcels),” said Sidharth Kapur, chief financial officer (airports), GMR Group, the majority stakeholder in both Delhi and Hyderabad airports.

(By Skyline College) 

Hitech landing facility on three runways to reduce flight delays

Flyers may expect less number of flight delays during fog this winter, with all the three runways of the Indira Gandhi International (IGI) airport in Delhi being equipped with the Instrumental Landing System. The second runway, after the recarpeting work and installation of Category I ILS, is ready and in operation from November 18. We will now have all three runways for operations during fog,. an IGI Airport spokesperson said. 

By February next year, the Airports Authority of India (AAI), which is in charge of the runways, would also finish the installation of ILS on Dwarka side, he said. After the recarpeting and installation of CAT-I ILS, which cost around Rs 30 crore and was not part of Operation, Management and Development Agreement (OMDA), the runway would be available for landing of CATI compliant aircraft when the visibility is up to 550 metres. .Earlier, this runway could not be used even during mild fog, when visibility was more than 550 metres, as it could be used only when the visibility was more than 1,600 metres,. the spokesperson said. In order to make the main runway (28/10) available for operations under the Category III-B fog, when the visibility drops up to 50 metres, airport operator, Delhi International Airport Limited (DIAL), will undertake photometric test of the runway lightings.
(By Skyline College)



We have started preventive maintenance on main runway (28/10) from Saturday which will continue for 10 days. It would be carried out for four hours daily, during non-peak hours,. the airport official said. Later, when the fog is over, the DIAL will undertake recarpeting work of the main runway, which is due since late 80s. .The recarpeting work on main runway would be over by the end of June next year, so that when the new terminal building is commissioned in July, all the three runways are available, the airport official said. 

The Government, in an effort to reduce congestion and passenger inconvenience during the fog, has asked all airlines to deploy their CAT-II/III compliant aircraft during fog hours in the morning during winter season. Also DIAL has made available 55 CAT-III compliant bays, out of which 36 are for domestic flights. They have been asked not to allocate CAT-III-equipped parking stand at domestic apron area for CAT-III non-compliant aircraft.



MBA, BBA, Mass Communication and Travel & Tourism institute in Delhi and Gurgaon. 

DGCA pulls up airport panel for `incomplete' meetings on delays

Director General of Civil Aviation Nasim Zaidi has pulled up airline and airport officials for the airport local committee's failure to maintain the full quorum at daily discussions on on-time performance of airlines, aimed at solving issues related to delays if any. A senior airport official said the DG pulled up the officials when he was in Mumbai on November 20 for the OMDA review meeting. The committee to examine on-time performance of airlines was formed in July, after the Civil Aviation Ministry decided on such local panels for Delhi and Mumbai airports.

A full meeting of the committee would ideally consist of a minimum of eight representatives of Indian carriers and one official each from Air Traffic Control (ATC) and the Mumbai International Airport Limited (MIAL), with the latter responsible for convening the meetings. The meetings are held daily. "It becomes difficult to spare manpower daily for an hour or two for the performance meeting," said an airport official. "These meetings do take place and are being chaired by MIAL. There were quorum issues but the meetings are going on and we are filing daily reports with the attendance to the DGCA," said an MIAL official.

The on-time component at airports is good. Now we're focusing on other requirements to minimise delays. We have asked them to continue the meetings, as it is a very important component to improve on-time performance," said the DG. The average on-time performance at airports across India is at 75 per cent, with the Mumbai and Delhi airports ranked among the most delay-prone in terms of arrivals. Also, the current reconstruction of the secondary runway and re carpeting work carried out every Tuesday has significantly delayed morning departures out of the Mumbai airport.
Source: The Indian Express

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British Airways may revive Qantas tie-up

British Airways Plc could revive plans for a tie-up with Qantas Airways Ltd, using its merger with Spain’s Iberia Lineas Aereas de Espana SA as atemplate, Chief Executive Officer Willie Walsh told. The Iberia model would allow Qantas to retain a separate brand and home base, Walsh said, according to the report. There are no plans to pursue atie-up at present, and the “quite negative” political reaction in Australia to a proposed deal last year would be a “major hurdle,” he added. British Airways has agreed to combine with Iberia to boost its network amid a slump in international travel that contributed to a record first-half loss. The carrier abandoned merger talks with Qantas last year after the airlines failed to agree on whom would control the new company.

(By Skyline College)

Air India to renegotiate terms of $9.5b loans

Cash-strapped Air India (AI) will shortly renegotiate credit terms with foreign lenders including Exim Bank of the US, Kfw and other European banks to stagger out repayment of its $ 9.5 billion debt beyond 12 years and secure a moratorium of 3-5 years. This is aimed at gaining more time to mobilise funds for making repayments. Renegotiating the credit terms also would translate into deferred aircraft acquisition as the two are linked. AI had signed an arrangement for $7.5 billion credit from US Exim Bank in October 2006 to purchase 68 new aircraft from Boeing on government guarantees. The carrier has also borrowed about $2 billion from European banks, including German government-owned Kfw, to buy 43 aircraft from Airbus. “The loan is to be repaid in 12 years. Considering our financial health, it is not possible to repay it on time,” a senior official of Air India said on the condition of anonymity.