Turkish Cargo Ad

FlyingTypers Logo
   Vol. 16 No. 62
Thursday August 3, 2017

Final Countdown For Air India

     As the government prepares for the final countdown of the Air India sale slated for the end of March 2018—the national carrier is burdened with a massive debt of Rs 50,000 crore ($751.6 mn)—the move has raised the hackles of the carrier’s unions.

Letter To Minister

Ashok Gajapati Raju      A letter to the Civil Aviation Minister Ashok Gajapathi Raju (left) dated June 14, 2017, from a forum of seven unions—AI Air Corporate Employees’ Union, AI Employees’ Union, AI Aircraft Engineers’ Association, United Air India Officers’ Association, AI Engineers’ Association, AI Cabin Crew Association, and AI Service Engineers’ Association—predicts “massive protests” if the government moves ahead with the NITI Aayog’s (the National Institution for Transforming India, the premier policy ‘Think Tank’ of the government) suggestion to sell off the national carrier.
      It is no surprise the unions are worried (to say the least) that there could be job losses if a private entity buys the carrier.
       The letter to the minister said:
      “We urge you not to accept the hurried recommendations by the Niti Aayog, and not to force the employees of Air India to agitate which will lead to industrial unrest and disharmony.”

Losses Trimmed PAX Business Up

      Pointing out that the government’s move would mean the death of the 64-year-old national carrier, the letter went on to state that the sale had come at a time when it was “showing all-round progress, profitability and over 33 percent increase in the numbers of passengers.”
      A few days ago, in fact, the airline reported that it expected an operating profit close to Rs 300 crore ($45 mn) for FY17, up from Rs 105 crore ($16 mn) in 2015-16. Air India has said that it increased core revenue, ancillary income, and operating ratio in 2016-17 while trimming losses.
      An Air India executive was quoted saying the carrier had improved its load factor to 76.4 percent from 75 percent last year. “This may seem marginal, but consider the huge capacity deployment by private carriers on domestic routes,” he said.

Private Sector Mouthpiece?

J B Kadyan      Squarely blaming the Niti Aayog for being a “spokesperson of the private sector,” the unions’ missive said that the body was acting “unilaterally, arbitrarily, and illegally” and had not sought the views of the stakeholders in the sale move.
      J. B. Kadyan, Secretary General, ACEU (Air Corporation Employees Union), speaking to a media outlet, said that the unions would first approach the government to stop the sale but “if they don’t listen to us, we will agitate.” Kadyan also said that Niti Aayog CEO Amitabh Kant had not even evaluated Air India’s assets before filing his report.
      He also alleged that Kant had written his report “sitting in a room” in 15 days. Kadyan also emphasized: “We are not responsible for the mess of Air India, government policies are.”
Amitabh Kant      Kant, (left)on his part, justified the move.
      He said: “We did a recommendation on Air India in just 15 days’ time, it was very clear from its analysis and statistics of its financial performance that it will do better if you structure it with a private partner.”
      The Niti Aayog CEO also said it was the Aayog member’s belief that “government is very good at some things and pathetic at other things.
      “It should get out of areas where it’s very bad and it should take out resources which are not in productive area.
      “There is no rationale of government to put money into an airline which is just taking 14 percent of market share.
      “Private sector has done pretty well and our analysis showed that the resources required are huge and need to be put in education and health.”

The Long & Winding Road

      The Air India sale story has seen many twists and turns. The carrier has received financial infusions from the government and worked out plans for a turnaround, but nothing has helped.             However, over the last fortnight, the government has adopted a fast-forward mode with the Civil Aviation Ministry preparing a Cabinet note that would decide the future action for the debt-ridden national carrier, including possible privatization.
Arun Jaitley      In fact, Union Finance Minister Arun Jaitley stated that the government was in favor of completely exiting Air India if a suitable investor was available.
      He said that if 84 percent of the aviation market could be run by private airlines there was “no reason why it cannot go to 100 percent.”
      Reports also confirmed that the government decided for the sale of Air India in one go.
      In a single stroke, the government would cede control by reducing its stake to either below 49 percent, or exit the national carrier completely.
      A senior government official was quoted saying that “no investor, domestic or foreign, will be interested in buying a minority stake in Air India.
      “There won’t be a 10, 15, 20 percent stake sale.
      “It has to be privatization at one go.
      “The decision is whether the government will bring down its ownership to below 49 percent or exit altogether.”

Major Write-off In The Wings

      Meanwhile, the Cabinet note mentioned that the government had decided to write off almost half of the carrier’s estimated liabilities of Rs 60,000 crore ($9019 mn). “While the write-off is of the carrier’s liabilities not backed by assets, the government might also incur an expenditure for the settlement of the sovereign-backed part of AI’s aircraft loan of about Rs 21,000 crore ($3156 mn),” the official pointed out.

Let’s Make A Deal

      Apparently those who lent to the carrier have reportedly had “informal talks with the government” and expressed their willingness to negotiate Air India’s loan settlement, including the re-setting of interest rates. Incidentally, according to a rough estimate by the Civil Aviation Ministry, the Maharaja’s assets—including its 115-strong aircraft fleet, land parcels, buildings, flying/landing rights, and parking slots at airports across the world—“are worth around Rs 25,000-30,000 crore ($3758 mn - $4509 mn).”

Of The Minority?

      One of the major issues the government will have to resolve is of holding a minority stake in the carrier.
      While the government has made it clear it’s unlikely a foreign investor will be allowed to participate in the privatization process, it cannot stop foreign airlines from picking up stakes because the present Foreign Direct Investment (FDI) rules allow foreign airlines to buy up to 49 percent stake in Indian airlines.

Singh A Song Of Air India?

Ajay Singh      The rule—along with a recent interview with SpiceJet Chairman Ajay Singh—has given rise to widespread belief that SpiceJet could be one of the buyers of Air India if it is put up for sale.
      In an interview to the daily Times of India at the end of May this year, in replying to whether Air India would be a good buy for anyone if the government put it on the block, Singh said that though AI had immense value, “it has a massive mountain of debt.
      “The debt,” Mr. Singh declared “(almost Rs 50,000 crore or $7516 mn) makes it completely unviable.
      “There is a massive working capital debt, which is very difficult to repay.
      “In its current form, it does not appear to be a viable proposition.”
      As to whether such a buy would be feasible if the government took on a large part of the debt, the SpiceJet boss said:
      “That is hypothetical.
      “One will have to look at what is finally on offer.
      “There is no doubt AI is a big brand and has great assets as well.”
      The unions’ threat to go on strike could not have come at a worse time.
      Countering a prolonged strike in Air India is the last thing Air India management or the government want.
      Today, the government finds itself between a rock and a hard place as far as Air India is concerned.

Tirthankar Ghosh

Chuckles for August 18, 2014

USACIA Must Attend Event

     In 2017 it doesn’t matter where you are—you’re there, and there you are!
     We are all part of the same air cargo universe, and in 2017 as U.S. air cargo goes, so goes the world.
     That is part of what makes the U.S. Air Cargo Industry Summit (USACIA) the center of global power and influence. Held in Washington, D.C., from October 4-6, it’s the top must-attend event for local and international industry movers and shakers out to make a difference.

Voice of Experience

     “Freight forwarders and their airline partners work in a constantly changing industry where customers expect highly efficient deliveries in the shortest possible time.
     “We are expected to be the experts in navigating the regulatory and legislative challenges that threaten to delay shipments so vital to our customers and worldwide commerce.”


     “Our collective critical role in the supply chain is why the Airforwarders Association (AfA) supports CNS in its upcoming USACIA event in Washington this September 6, 2017.”

The Mandate

     “The CNS mandate is to represent, lead, and serve the whole U.S. air cargo value chain, helping its members to achieve their respective business strategies.
     “USACIA provides a forum for forwarders and carriers to collectively share ideas, network, and learn about new and existing regulations and the laws that impact our operations.”

Opportunities Abound

     “The forum also provides an opportunity to meet and discuss our issues with the politicians and regulators who have such a profound influence on the freight transportation industry.
     “I plan to participate and moderate a few of the panels at the one-day conference to not only share forwarder perspectives but learn new information as well.”
     “I also look forward to seeing as many AfA members as possible at USACIA so that we can join the discussion while learning how to make our industry even more successful.”
Brandon Fried
U.S. Airforwarders Association Executive Director

Sign Up Here: https://www.cnsc.net/events/Pages/usacia.aspx

Subscription Ad

Modern Air Cargo Took Off From Frankfurt

     To some, it may seem like only yesterday; to others, the mention of it evokes little to no emotion at all. But 70 years ago next summer air cargo flights saved Berlin, Germany, during the long summer of 1948 and winter of 1949.

Berlin Airlift Is 70 In 2018

     Almost 70 years ago the first all-cargo flights took off from Berlin and the Berlin Airlift was front-page news for over a year.
      Fair to say, the Airlift fastened the world’s attention and sparked imaginations to the possibilities of air cargo.
      Today we can only guess who is still left among us from that time. Thousands of flights operated 24-7 above 3 corridors across the German Democratic Republic between June 26, 1948, and August 27, 1949, via a mixed fleet of more than 300—mostly American—military aircraft. The mission was to supply a city and all of its 2.1 million inhabitants. Today, Berlin lives on to tell the story.    

Lest We Forget

     But lest we forget, the birth of modern air cargo came at a cost as more than 100 people—Americans, British, French, and Germans—lost their lives flying supplies during the blockade.

What Was Carried

     Aircraft payloads during the Airlift were the bare bones stuff of life—coal, food, gas, and everything else from eggs to flour and other products.

Frankfurt Airlift Memorial Park

Looking at Tomorrow Today

     No doubt summer 2018 will recall the Berlin Airlift, with events occurring on both sentimental and political levels.
      But right now we are glad to share, dear reader, that you don’t have to wait to revisit those memories. History is alive at Frankfurt International Airport with aircraft and memorials dedicated to this pioneering air cargo event.
      The Berlin Airlift Memorial Park can be visited today. It’s within walking distance of Frankfurt Cargo City Süd, which is also close to a small hostelry called “InterCity Airport Hotel,” which once served the pilots and crew who flew the Berlin Airlift.
      Here you can wrap yourself in all of this history and enjoy some wonderful hospitality in a great restaurant and a revolutionary airport hotel modernized for the 21st century.

Memories Still Flying High

     Passengers, airline crews, and others still utilize InterCity. They gather at the hotel for top rate breakfasts and lunches.
      The hotel further celebrates its decades of service with vintage photos as its badge of continuing service.
      A short walk up and down the halls of the first floor is a true step back in time, with fabulous pictures of historic early post-war era Frankfurt.

Frankfurt Airport Sculpture

A Garden Party

     The photos of the airport operations are great, but the topper is the original 1940s theme centerpiece of Frankfurt Main in the garden outside: a globe of the world sits atop an obelisk, an aerial route ringing its surface, above which a bird of peace sits perched, a golden palm branch in its beak.
      In nice weather tables are arranged outside, offering visitors a trip back in time where they can enjoy a drink or meal the way people once did so many years ago.

Anton Wuestefeld and Geoffrey Arend

Anton The Magnificent

     Credit InterCity General Manager Anton Wüstefeld for his deft touch. He has created and maintained this hostelry at the airport.
      InterCity FRA is a wonderful place to stay, get a great meal, or just talk over old times in the JU52 saloon with bartender Harry, surrounded by the one-of-a-kind pictures, aircraft models, and other memorabilia.
      Later you can enjoy a walk over to the nearby Zeppelin Museum or the Berlin Airlift Memorial.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
Access specific articles by clicking on article title
Vol. 16 No. 59
Where Cargo Reaches The Ruling Class
Chuckles for July 25, 2017
Picture Of The Day
Rocky Was An Original
Vol. 16 No. 60
DHL Humanitarian Exceeds The Need
Chuckles for July 28, 2017
Cargo Security To The Dogs
Coca Cola Cole & Delta Cargo
Etihad Numbers Tank In 2016
AFS Action For India

Vol. 16 No. 61
Women In Charge - Powering AA Cargo
Chuckles for July 31, 2017
Business Booms As Q4 Looms

The Airport From Hell?

Publisher-Geoffrey Arend • Managing Editor-Flossie Arend
Film Editor-Ralph Arend •• Special Assignments-Sabiha Arend, Emily Arend •• Advertising Sales-Judy Miller

fblogoSend comments and news to geoffrey@aircargonews.com
Opinions and comments expressed herein do not necessarily reflect the views of the publisher but remain solely those of the author(s).
Air Cargo News FlyingTypers reserves the right to edit all submissions for length and content. All photos and written material submitted to this publication become the property of All Cargo Media.
All Cargo Media, Publishers of Air Cargo News Digital and FlyingTypers. Copyright ©2017 ACM, Inc. All Rights Reserved.
More@ www.aircargonews.com

recycle100% Green