Dubai: Indian expatriates in Dubai celebrated their nation's 62nd Republic Day on Wednesday.
This year, the celebrations were held at the Indian High School.
The event began with hoisting of the tricolour flag by Vayalar Ravi, Minister of Overseas Indian affairs and Civil Aviation, in the presence of Sanjay Verma, the Consul General of India to UAE. As the Indian flag unfurled to the tune of the national anthem, patriotic fervour filled the air.
The consul general then read out extracts from the Indian President Pratibha Patil's address to the nation on the eve of the republic day, to community members of all ages and sections of the society gathered at the school. It was followed by a march past and performance by the Indian High School children.
The event was themed as ‘The celebration of India… of Indian High School… Jai Ho!'
2. GVK Power to build airports in Bali, Java
MUMBAI | BANGALORE: Hyderabad-based infrastructure development company GVK Power and Infrastructure (GVKPIL), which also runs the airports at Mumbai and Bangalore, will develop international airports at Bali and Java in Indonesia.
This will be the company's first successful agreement with a foreign government for an international project after its failed attempt for modernisation and upgradation of the Male airport in Maldives last year. The company signed a memorandum of understanding (MoU) with the Indonesian government on Tuesday for execution of these projects right from conception to design to operating and managing these airports with an exclusivity clause.
"The Indonesian airport projects are strategically the next move for GVK. Java and Bali are growing very fast. We have to get a feasibility study done for traffic, investment and terms to be submitted to the Indonesian government," GV Krishna Reddy, chairman, GVKPIL, told ET.
He, however, did not gives any specific details outlining the project but it is estimated that the group will pump in close to $3billion to $4 billion in the development of these greenfield projects. GVKPIL will be partnering for these projects with Indonesian government's special purpose vehicle for airport development and a board for foreign investments.
Aviation experts feel because nothing much is happening in India in terms of projects to be bid under public private partnership, Indian companies which have obtained expertise in airport operations are now flexing muscles in the international arena.
"GVK has ambitions to build international airports and for this it needs to have airports abroad under its portfolio. The development of airports closer home like the one in Indonesia will help it create that critical mass which will help it bid for airports internationally," said Amber Dubey, director, (Aerospace and Defense) at consultancy firm KPMG.
Bali's current international airport is in its capital Denpasar, and is the third largest airport in Bali, GVK has proposed to develop an airport in the northern part of Bali.
3. Foreign airlines clamour for more India seats
It looks like a battle of wits. Foreign airlines are clamouring for more seat entitlements from and to India, even as domestic carriers have finally got permission to raise capacities in select international sectors. With international traffic from India growing, the two sets of airlines are clamouring for more seats, but the government, it appears, is not obliging everyone.
Officials in the ministry of civil aviation acknowledged that requests are pending from countries such as Qatar, UAE, Singapore and Germany for increased seats and new destinations within India. Emirates, Qatar Airways, Singapore Airlines and Lufthansa are seeking increased business from India.
“The UAE wants a fresh bilateral with more seats and destinations from India. Currently, Emirates is allowed 54,000 seats a week. Qatar’s current entitlement is 23,000 a week. Singapore Airlines, Qatar and Emirates - all want more seats from and to India. Lufthansa wants to bring in the A380 and this obviously means more seat entitlements. But we are studying each request carefully. Since 2009, only about 7000-8000 new seats have been allowed and these were offered to Qatar Airways - they have failed to use even these. Instead of concentrating on allowing more seats to foreign airlines, we want Indian carriers to also increase their share in the international air traffic pie,” the officials said.
They pointed out that among domestic airlines, permission has been granted to Kingfisher and IndiGO to operate flights to Colombo from destinations other than Chennai - the Chennai-Colombo route is already being serviced by Air India and SpiceJet. In addition, Jet Airways has been allowed the Bombay-Rome route (apart from its daily service to Milan) and another service between Bombay and Amsterdam - this route has no flights by any Indian airline as of now.
Also, IndiGo has been awarded permission to go to Singapore - a route where full-service carriers Air India, Jet Airways and Kingfisher are already operational.
So how will this help Indian carriers with overseas ambitions? The officials said that there should be a 10% increase in international flights by Indian carriers in the coming months. Indian airlines presently account for four of every ten international flights to and from India.
4. Aviation industry adjusts course amid changing market
Airports, airlines and aircraft manufacturers are navigating through a lingering economic storm and structural changes in the industry toward new destinations, industry executives say.
For an industry that has lost $60 billion over the last 10 years, new directions are needed.
On one hand, airlines increased profitability while holding the line on seating capacity in 2010. But fewer seats meant reduced passenger traffic at U.S. airports, which reduced airline revenue and increased costs per enplaned passenger.
"Our fares have gone up and the number of seats haven't gone up, which is keeping our passenger traffic down," said Jeff Mulder, Tulsa airports director.
At Tulsa International Airport, daily airline seating capacity is 5,500 seats, down 13 percent from 2007. Airline passenger traffic last year was 2.84 million, down 1.46 percent from 2009.
Mulder said the airport's revenue comes primarily from airline landing fees and terminal space rentals. In addition, non-airline revenue include parking, rental cars, fuel flow fees and retail and food concessions.
Predicted revenue in the $52.26 million 2011 Tulsa Airports Improvement Trust budget is down 2.5 percent for the year to date. The fiscal year began July 1.
"During fiscal year 2010 our airline costs per enplaned passenger increased to $7.62 from $6.95 due to the loss of passengers and an increase in airline rates," the airport staff said in its "Assessment & Action Plan for 2011."
"The forecast cost per enplaned passenger for the FY-2011 budget is $7.64."
During 2010, the airport lost Frontier Airlines' service to Denver but added larger aircraft service to Atlanta on Delta Air Lines. In February, American Airlines is eliminating its weekend nonstop service to Miami, but United Airlines is beginning new nonstop service to Washington Dulles International Airport in April.
With domestic growth relatively stagnant, airports, airlines and aircraft manufacturers are looking for new airline entrants, international traffic, global airline alliances and foreign carriers to improve their outlooks.
TAIT board members last week approved $75,000 in incentives to the first airline that begins a nonstop route to an international gateway airport on either the East or West coast.
TAIT also proposes to increase revenue by instituting a customer loyalty program. It also wants to construct a 2.5-acre car travel plaza just east of the Hilton Gardens Inn that would generate lease, concession and fuel revenue.
But real growth in the industry may have to come from outside the United States, industry analysts say.
"The real story is that the airline industry has achieved something not present in the 32 years since deregulation: stability and overall solid management," said Boyd Group International in its "Dealing with Hard Realities: Aviation Predictions Year 2011."
"There are no loon-airlines starting up trying to make up losing fares by capturing passenger volume. There are no indications of significant additional capacity coming on line. And, as the fare increases announced in the last week of December 2010 clearly indicate, carriers are looking over the horizon and pro-actively planning for future shocks to the system - in this case the near-certainty of spikes in fuel prices."
Robert Herbt, founder of AirlineFinancials.com, agreed that the airlines' capacity restraint enabled them to raise fares, which are up 14 percent in the last year.
"There is enough passenger demand in the next year to work through another 15 to 20 percent fare increase," Herbst said. "If fuel prices stay $100 (per barrel crude oil) or less, airlines will do well this year. If fuel gets up too high, it's going to be hard for airlines to raise fares enough to cover their costs."
U.S. passenger traffic was an estimated 715.7 million people in 2010, up 1.2 percent from 2009.
Global airline traffic rose an estimated 5.3 percent, analysts said.
The Boyd Group said 2011 won't see strong passenger growth - less than 2.5 percent, at best.
"The recession is not over," the Evergreen, Colo.-based consultants said. "Regardless of the pap coming from Washington, unemployment and underemployment are not significantly improving. ... Taxes are going up - that means less discretionary dollars and less business travel. ... Fuel is going up."
Airlines are hoping to combat the domestic trends by taking advantage of international growth opportunities.
American Airlines, which employs 7,000 people at Tulsa International, lost $471 million or $1.41 per share in 2010 while capacity growth was up 1 percent.
American and other U.S. carriers anticipate future growth and revenue will be in international markets.
In 2011, American will begin joint business agreements with its Oneworld global airline alliance partners British Airways, Iberia and Japan Airlines.
American executives said earlier this month that the Oneworld agreements and the strengthening of its "cornerstone" markets of New York, Miami, Chicago, Dallas-Fort Worth and Los Angeles could provide the company $500 million in revenue in the next year.
In 2010, while American's domestic traffic rose 0.7 percent, international traffic increased 5.6 percent - including 15.7 percent growth in the Pacific.
The trend hasn't escaped notice by the aircraft manufacturers.
Boeing Co., in its "Current Market Outlook 2010-2029," forecasts delivery of 30,900 airplanes valued at $3.6 trillion over the next 20 years.
Much of that growth is expected in the Asia/Pacific region, Boeing said.
"With China and India leading the growth among emerging markets, the region's economy will grow at a rate of 4.6 percent per year for the next 20 years," Boeing's forecast says.
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1.Air NZ to increase capacity on Chch-Hokitika route
Air New Zealand is moving to fly larger aircraft on its Christchurch to Hokitika route.
The route is currently operated by subsidiary Eagle Air's 19-seat Beech 1900D and Jetstream 32 aircraft but from April another subsidiary, Air Nelson, will also fly scheduled return services using its 50-seat Bombardier Q300 aircraft.
New Civil Aviation Authority approval for Hokitika Airport means it can now accept scheduled Q300 flights.
The move will see the route's capacity increase 12.6 percent to 1200 seats a week.
The Q300 will operate a morning return service on Mondays, Wednesdays and Fridays, with an additional return service on Friday evenings.
Some existing flights had been reorganised to accommodate the new services and spread frequency to meet demand.
There were no plans to offer a Christchurch-Westport flight, said Air New Zealand spokeswoman Andrea Dale.
A six-month Eagle Air trial for flights between Christchurch and Westport was scrapped in December 2009 due to lack of demand.
2. Air NZ grabs stake in Virgin Blue
Air New Zealand became “a substantial shareholder” in Australia’s Virgin Blue Group, having recently formed a trans-Tasman alliance with its former rival.
The Kiwi carrier notified the Australian and New Zealand Stock exchanges that it had taken a stake of more than five per cent in Virgin Blue as part of a planned acquisition of a shareholding of 14.99 per cent.
Air New Zealand has paid A$145 million, or 44 cents per share, for this shareholding which was completed with Air New Zealand’s current cash resources.
Air New Zealand, which is majority owned by the New Zealand Government has obtained Australian Foreign Investment Review Board approval to purchase the Virgin Blue stake, a shareholding which would keep the total foreign ownership of Virgin Blue within the statutory limit of 49 per cent.
Sir Richard Branson’s Virgin Group holds 26 per cent of the Virgin Blue Group’s stock.
Air New Zealand chief executive Rob Fyfe released a statement after the market closed saying his airline had no intention of making a takeover bid for Virgin Blue and that he had told Virgin Blue’s chief executive this in a telephone call.
The investment in Virgin Blue is part of Air New Zealand’s strategy to develop scale and reach in this region. The Tasman alliance with Virgin Blue was the first step in this strategy.
“This investment cements the emerging relationship between our two airlines and demonstrates the confidence we have in Virgin Blue both as an entity and as a partner for Air New Zealand,” Fyfe said.
Virgin Blue CEO John Borghetti welcomed Air New Zealand as a shareholder and said the tie-up with Air New Zealand was a key part of the group's strategy to build an international network, alongside its core local business.
"We see this as an endorsement to our game change program," he said.
Now we will have to wait and see what the ACCC thinks of the move - and whether it will have any influence on the regulator's view of the alliance between the two airlines, an alliance that has already received qualified approval from the ACCC..
3. Govt share change would provide greater liquidity
Air New Zealand says "a change in the Government's shareholding while retaining a majority stake would have no influence on Air New Zealand's business but would provide greater market liquidity for shareholders".
In his first major speech of the year, Prime Minister John Key this morning said the Government is looking at selling some of its existing shares in Air NZ, while maintaining a majority stake.
It is also eyeing partial sales of other key state assets, including the three big energy generators and coal company Solid Energy as it looks to lower its borrowing.
The Government owns 76.5 per cent of Air New Zealand after it bailed the airline out with $885 million of taxpayer money in 2001.
It invested another $149 million in 2004 as part of a rights issue, taking its total investment to $1.03 billion.
Goldman Sachs JBWere aviation analyst Marcus Curley says it had been broadly expected that a partial sell down of the Government's stake in Air NZ would be among the shortlisted assets.
"I don't think the market is going to be hugely surprised with this. What the statement does today is firmly bring it on to the agenda."
Air NZ has poor liquidity for a company with a large market capitalisation, Curley says.
Improved liquidity would attract the attention from investors in New Zealand and overseas.
A counter investment by Air NZ's new Australian alliance partner Virgin Blue does not appear to meet the Government's test of a "widespread and substantial New Zealand ownership", Curley says.
Air New Zealand last week bought a 15 per cent stake in Virgin Blue to gain further exposure to the benefits of their trans-Tasman alliance and possible future cooperation on long haul routes.
Air New Zealand shares were trading at $1.43 this afternoon, down 2c and compared to the Government's average buy-in price of $1.29 each.
The airline paid the Government a dividend of $56.3m last year.
4. Market boosted by aviation sector
Auckland International Airport led gainers on the NZX 50, reaching a 2-½-year high in the wake of its upbeat economic report last week.
Air New Zealand rose after posting a jump in traffic for December.
The NZX 50 rose 5.615, or 0.2 per cent, to 3358, heading for its third daily advance. Trading was quieter than usual, with Wellington market participants away for the anniversary day holiday.
Auckland Airport rose 1.8 per cent to $2.29. The shares reached the highest level since mid-2008, extending their gains since the company released a report showing it may account for almost 20 per cent of national gross domestic product and sustain more three quarters of a million jobs by 2031, based on the flow of freight and passengers through the airport.
Air New Zealand, the national carrier, rose 0.7 per cent to $1.43 after traffic figures showed the airline carried 1,322,000 passengers December, 10 per cent more than the same month a year before.
Load factor rose by 1.3 per cent to 86.3 percent compared to the previous period, with revenue passenger kilometers up 7.7 per cent to 2,861 million.
Much of the increase was built on the back of a 10.9 per cent increase in short haul passenger numbers to 1,140,000, broken down to a 10.7 percent lift in the domestic market and a 13.9 per cent increase in Tasman/Pacific.
APN News & Media, which publishes the New Zealand Herald and operates the Radio Network, was unchanged at $2.40 on the NZX after it said the diversified nature of its operations is likely to offset the effects of Queensland floods, with minimal impact on the bottom line.
The company that said while it expects the Queensland economy to rebound strongly once mop-up operations are complete, advertising revenues from small businesses, retailers and real estate are expected to remain under pressure, having already shown some signs of weakness ahead of the floods.
Hallenstein Glasson Holdings, the clothing retailer, fell 1.2 per cent to $4.05.
New Zealand's retailing sector remains under pressure, with November's core retail sales declining 0.2 per cent to $4.24 billion, the second monthly decline. A gain of 0.5 per cent was expected, based on a Reuters survey.
The New Zealand dollar will probably stay within recent ranges this week as investors prepare for the Reserve Bank to keep interest rates on hold this week.
Five of six economists and strategists in a BusinessDesk survey expect the kiwi will respect recent price-action and stay in the middle of its medium-term range between US74 cents and US76 cents ahead of this week's central bank meetings in New Zealand and the US.
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The lone dissenter expects the kiwi to head lower amid heightened expectations of rising interest rates in China.
Economists expect central bank Governor Alan Bollard will keep the official cash rate at 3 per cent after New Zealand dodged a double-dip recession last year, and last week's benign inflation and tepid retail sales data won't have given him reason to tighten rates early.
Analysts now expect Bollard will start lifting rates in September, with 68 basis points of hikes priced in over the next 12 months, according to the Overnight Index Swap curve.
The kiwi rose to US75.82 cents from US75.46 cents last week.
http://philippinesaviationnews.blogspot.com/26
1. Manila airport on heightened alert again
MANILA, Philippines—The authorities have placed the Ninoy Aquino International Airport on heightened alert in the wake of Tuesday’s deadly bus bombing on Edsa, deploying twice the usual number of security guards and increasing patrols by bomb-sniffing dogs.
The heightened alert came a day after airport officials announced a similar heightened state of alert at the airport following a terrorist attack on an airport in Moscow.
Vicente Guerzon Jr., the Manila International Airport Authority’s assistant general manager for security and emergency services, said the 600 security guards has been doubled, and so has the 60 members of the Philippine National Police Aviation Security Group assigned at the airport complex.
He said airport police were also conducting more patrols and intensifying intelligence activities.
“We're gathering and sharing intelligence with other agencies to update our security assessment,” he said in an interview.
So far, he said there have been no intelligence reports indicating the NAIA might be the target of a terrorist attack.
“We're also regularly having K-9 patrols at the three terminals,” he added. Security personnel also routinely check incoming passenger buses and taxis for any suspicious packages, Guerzon said.
He said the authorities have also begun the process of acquiring full-body X-ray scanners by next year.
Guerzon said his office had submitted the terms of reference for the “high-value” acquisition to the bids and awards committee.
He said they would also hold talks with the Commission on Human Rights to discuss the parameters of the use of the full-body scanners, noting that the equipment has drawn resistance in places like the United States.
The raised alert level at NAIA also came in the aftermath of the bombing at a Moscow airport that left more than 30 persons dead and several dozen others injured.
MIAA General Manager Jose Angel Honrado earlier said he was closely monitoring the situation in Russia and watching out for information that might point to the NAIA terminals as a possible target.
2. Pilot schools to be moved out of NAIA
THE CIVIL Aviation Authority of the Philippines (CAAP) wants aviation schools to transfer to regional airports to decongest from the Ninoy Aquino International Airport (NAIA).
Ramon S. Gutierrez, CAAP officer-in-charge, told reporters at the sidelines of an aviation summit last week the state-owned Manila International Airport Authority (MIAA) will take charge in the implementation of the plan.
“The plan is still in principle and we are actually expecting resistance from the aviation school administrators, owners and students as most of them are foreigners. Most of the foreign students want to attend an aviation school near NAIA because they go to their home countries from time to time,” he said.
However, Mr. Gutierrez said allowing regional airports to house the aviation schools would translate to additional revenues as most of these airports have lower flight frequencies compared with NAIA.
“This will be part of CAAP and MIAA’s immediate plans. This will give these small airports additional revenues as they only generate revenues from air navigation fees for the airports,” he said.
Mr. Gutierrez said his agency broke even last year with close to P3 billion in revenues.
“Our revenues last year will be just enough for the maintenance but will not be enough for capital expenses. It will not be enough to maintain 86 airports. We will give the schools the preference which regional airport they would want to go to,” he said.
In July last year, CAAP ordered an audit of all 63 aviation schools in the country as the agency discovered that fake licenses had been issued to some student pilots.
3. How friendly are the Philippine skies?
In an effort to enhance competition in an already vibrant airline industry, the Philippines is taking a major step towards easing restrictions within the commercial aviation sector. Government has announced that an executive order will be issued that will further liberalize the air transportation industry by allowing international airlines to use secondary gateways, a privilege previously exclusive to domestic carriers. Along with the increase in the number of stakeholders and the regulatory challenges, tax is certain to be an issue intertwined with flying in and out of the Philippine skies.
The taxation of revenues of international carriers, regardless of whether they have so-called "permanent establishments" in the Philippines, has been the subject of debate since the concept of Gross Philippine Billings was introduced by Presidential Decree (PD) 69 in 1972.
In the recent decision of South African Airways vs. Commissioner of Internal Revenue, G.R. No. 180356, promulgated Feb. 16, 2010, the Supreme Court held that "if an international air carrier maintains flights to and from the Philippines, it shall be taxed at the rate of 2.5% of its Gross Philippine Billings, while international air carriers that do not have flights to and from the Philippines but nonetheless earn income from other activities in the country will be taxed at the rate of 32% (now 30%) of such income." In so ruling, the High Court dismissed claims that international carriers without landing rights in the Philippines are exempt from paying income tax. The Supreme Court effectively reiterated its ruling in the landmark 1987 case of British Overseas Airways Corp. that offline carriers with local general sales agents are considered resident foreign corporations doing business in the Philippines, thus tickets sales are subject to corporate income tax under Sec. 28 (A)(1) of the Tax Code.
Prior to the South African Airways case, the taxation rules on foreign carriers were not as clear. Under PD 1355, which amended the 1977 Tax Code, gross Philippine billings (GPB) include gross revenue derived from the sale of tickets in the Philippines covering the carriage of passengers from anywhere in the world and cargo or baggage originating in the Philippines. In the 1997 Tax Code, however, GPB was redefined to only include the "amount of gross revenue derived from carriage of persons, excess baggage, cargo and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document."
This new concept had raised issues on the taxability of offline carriers on their income from the sale of tickets in the Philippines through their local agents. At first blush, it appears that since these carriers do not transport passengers and cargo from the Philippines, they are not subject to tax since they do not derive taxable GPB as defined under the 1997 Tax Code. This also meant that offline carriers cannot thus be considered as nonresident foreign corporations doing business in the Philippines.
However, in the case of Air Canada vs. Commissioner of Internal Revenue, CTA (First Division) Case No. 6572, promulgated Dec. 22, 2004, the CTA held that offline carriers are considered resident foreign corporations since they are doing business in the Philippines. Citing Supreme Court rulings, the CTA reasoned that a foreign airline selling tickets in the Philippines through its local agents shall be considered as engaged in trade or business, as these activities show continuity of commercial dealings performed in pursuit of business purpose. Such ruling was sustained by the CTA En Banc in the appeal made by Air Canada (CTA EB No. 86, promulgated Aug. 26, 2005).
The Supreme Court sustained the Air Canada ruling in the South African Airways decided in 2010.
In the South African Airways case, the Supreme Court noted that there are no specific criteria as to what constitutes doing business. The Supreme Court held that the term "engaged in business in the Philippines" implies "continuity of commercial dealings and arrangements" which includes the performance of acts pursuant to the purpose and object of the business organization, such as the appointment of a local agent. Since the sale of tickets -- the activity which produces the income -- is done in the Philippines even if the carriage of person, baggage, cargo or mail is done outside the Philippines, it is a Philippine-sourced income subject to tax.
From these rulings, it can be inferred that the courts steadfastly held to the source principle in Philippine income taxation, which contemplates the idea that an alien is subject to Philippine tax if he or she derives income from sources within the Philippines. This is not at all contradictory to the subject of tax on GPB because the situs of taxation is still the primary consideration. In case of airlines with landing rights in the Philippines, the determination of the situs of taxation is the service which is provided in the Philippines, i.e., the carriage of persons or cargo from the Philippines. For offline carriers, on the other hand, the determination of the status of tax is the place of sale of tickets, such that if the tickets are sold in the Philippines, the income from these sales is subject to tax.
International airlines that will take advantage of Government’s pocket open skies policy will be subject to the GPB tax regime since they would carry passengers from domestic locations and fly them to international destinations.
Now that the Supreme Court has clarified the rules on the taxability of foreign carriers, the willingness to open the market to cross-border investments could very well result in more revenues for Government, increased participation of foreign players and improved services from local airlines at competitive prices that will benefit the flying public.
4. P80-million fund for NAIA's VOR not included in P4-billion deal — CAAP
MANILA, Philippines (PNA) — Civil Aviation Authority of the Philippines (CAAP) Director-General Ramon Gutierrez on Thursday said that the P80-million would-be fund to purchase new aviation equipment is not included in the P4-billion aviation deal.
Gutierrez said the P4-billion aviation deal between the government and the Thales-Sumitomo Group that Senator Estrada had questioned was accorded in 1998. “Ours is different. The P80-million fund was only meant to buy a new very high frequency omni-directional range (VOR) for the Ninoy Aquino International Airport (NAIA).”
According to him, the P4-billion contract was intended for the modernization of the whole air traffic control system of the country.
He said since the CAAP has diminutive resources and cannot be able to procure such device, the Manila International Airport Authority (MIAA) will make the financial arrangement while the aviation agency takes care of the services. From its original P120-million funds they requested, the budget was slashed to P80-million.
However, the P80-million is P2-million short of the VOR’s original price in the foreign market. He disclosed that he was considering a Korean company that was offering a VOR that is worth P80-million. “But we could not grab it until we know that it is the same brand that we are currently using,” Gutierrez said.
Another foreign company has offered the CAAP of equipment leasing which cost only P50-million. “Malaki ang matitipid, sa open bidding, but, we are inclined to buy a new one because its life span is approximately 10 to 12 years.”
The old VOR made headlines when it conked out on June last year that triggered the cancellation of at least 50 domestic and international flights at the three terminals of the Ninoy Aquino International Airport.
The glitch was additional burden to the Philippines when it was working out for getting back the category 1 status after the United States Federal Aviation Administration downgraded the Philippine aviation to category 2 in 2008.
Asked if he is optimistic that the European Union would lift restrictions once the foreign evaluators resume inspection in September, this year, he said they are still preparing for such assessment.
The Philippines is one of the countries in the world that has been blacklisted by the European Community where the country’s all airlines are banned from flying to any European bloc because of “serious safety deficiencies” in the Philippines’ regulation of carriers.
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1. Air Canada says it must ship lab monkeys
TORONTO -- Air Canada has dismissed a call from a U.K.-based animal rights group that is demanding the airline stop shipping lab monkeys in cargo holds.
Air Canada spokesman Peter Fitzpatrick said the Canadian Transportation Agency ruled in 1998 that the airline could not refuse to carry animals which are destined for laboratories.
The British Union for the Abolition of Vivisection brought the issue to light last weekend, complaining that Air Canada transported 48 lab monkeys from China to Toronto's Pearson International Airport.
2. Travel Notebook: Canadian tourism to India to grow dramatically
English-speaking Canadians are interested in sports and hobbies. French-Canadians are more into spiritual visits and yoga when they visit India.
That’s one of the findings in a study released this week by India tourism.
Officials held a news conference in North York to highlight The Year of India in Canada, an attempt to boost Canadian visitors to one of the world’s most intriguing and fastest-growing countries.
McMaster University professor Norman Archer conducted a study in the fall of last year and said Canada is the fifth-leading source of tourism revenue in India. Some 221,000 Canadians visited in 2009, and he predicts 336,000 will make it by 2015.
“India is not yet in the top 10 spots for Canadian travellers, so there’s room for improvement,” he said.
Archer said nearly 8,000 people participated in a survey about what they like and don’t like about India. The country was rated highly in terms of value and pricing, as well as food. Cleanliness of public washrooms was the subject of a variety of replies, he said, and others noted that tourism websites could use some improvement.
He said 37 per cent of respondents agreed with the statement that locals were warm and helpful, while 46 per cent strongly agreed.
Archer said he found it fascinating that French-speaking Canadians ranked issues such as spiritualism and yoga so highly, whereas English-speaking respondents seemed to stress having fun and taking in sports. India isn’t noted around the world for its skiing, but Archer said there’s plenty of it in the north. There’s also considerable interest in golf and fishing in India.
VIRGIN DROPS TORONTO
Virgin Air last week quietly snuck out of town, dropping its Toronto flights to and from Los Angeles and San Francisco and adding California flights to Dallas/Ft. Worth.
It’s a blow to Toronto tourism, which had Virgin chief Richard Branson in town last year promoting Toronto’s virtues after the June 10 inaugural flights.
Virgin officials said they hope to return to Toronto but that they were focusing on more “lucrative markets.”
PAY TO PEE?
Ready for new airline fees for travelling with an infant or perhaps bringing a carry-on bag?
George Hobica, founder of the travel website Airfarewatchdog.com, predicts airlines will be tempted to adopt new fees to compensate for higher fuel costs. After all, U.S.-based airlines collected more than $6 billion from such fees in the first nine months of 2010.
Hobica drafted a list of possible charges, some of which he said have already been imposed in the U.S. or Europe. For example:
Infant fee: A charge to hold a baby on your lap during a flight. Europe’s Ryanair charges 20 euros, or roughly $30, each way.
In-person check-in fee: A charge to check in with an airline employee instead of doing so online or at a kiosk.
Credit card fee: A charge for buying tickets with a credit card. Hobica says foreign airlines already charge a fee to passengers who don’t pay for their tickets with cash.
Carry-on bag fee: A charge to bring luggage in the cabin that doesn’t fit under the seat. Florida-based Spirit Airlines added a charge of up to $45 for such bags last year.
Ryanair has floated the idea of making passengers pay for the toilet, but nothing has come of it.
Although new airline fees in the last few years have prompted many travellers to choose a different mode of transportation, Hobica says most are resigned to it.
But after publishing his list of possible fees on Airfarewatchdog.com, he said the most common response from website visitors was, “Don’t give the airlines any ideas.”
3. Ontario minister says U.A.E. spat could cost billions
OTTAWA — The Harper government's spat with the United Arab Emirates over airline landing rights could cost Ontario businesses billions of dollars in future contracts, a provincial cabinet minister says.
"Local politics is getting the best of us. Canada has a very strong brand in the Middle East. I do not want to see it sullied in this manner," Sandra Pupatello, Ontario's economic development and trade minister, said Tuesday.
"Our companies from Ontario are the best in class when it comes to hospital builds. We have huge opportunities in the order of multibillion-dollar contracts and I don't want to put those at risk."
Pupatello was speaking from Dubai, where she's heading a trade mission of 20 Ontario health services companies. She cited the huge expansion in health services in the financial hub of the Persian Gulf country as a great opportunity.
Pupatello accused Prime Minister Stephen Harper of behaving like a protectionist -- not the free trader he says he is -- by denying two U.A.E. airlines additional landing rights in Canada to protect Air Canada.
"I don't know if the feds are picking some populist position because there's an election in the offing," she said. "If you actually had to push them on the facts I'd expect some consistency. Why are we negotiating a EU-Canada free trade agreement?"
The diplomatic dispute has escalated with the U.A.E. kicking Canada out of a key military base and imposing expensive travel visas in retaliation for denying the extra landings.
The decision over denying the U.A.E. the extra landing rights split Harper's cabinet.
Defence Minister Peter MacKay has questioned the decision because it ultimately led to the Canadian Forces expulsion from Camp Mirage, a key supply base for the mission in Afghanistan.
But Transport Minister John Baird led a strong defence of Air Canada. He insisted that allowing the U.A.E. carriers greater access to Canada's airports could cost Air Canada tens of thousands of jobs.
Pupatello doesn't buy that.
"Air Canada is a very strong airline, and when I recognize what the ask is, to add a couple of flights, in my view is not going to break the back of a strong airline," she said.
Pupatello said she agrees with former Liberal prime minister Jean Chretien's criticism of the Harper government, which he levelled on a trip to Saudi Arabia this week.
"I think this problem has not been well managed," Chretien told the publication Arabian Business while attending a conference in Riyadh. "I hope they will resolve the difficulty because we need good relations with this part of the world."
U.A.E. officials were reportedly infuriated with Harper after he questioned the loyalty of their country in a recently published interview.
The U.A.E. gave Canada rent-free access to the Camp Mirage base, in the desert outskirts of Dubai, and also offered free medical care to injured Canadian military personnel.
Like Chretien, Pupatello urged Harper to find some middle ground to settle the dispute. Ontario wants to deepen economic ties in the Middle East, but Pupatello said Ottawa has made that more difficult.
She said the people Ottawa has annoyed are the same people that control the fate of future business with Ontario companies.
"The decision-makers are quite frankly the people that engage with the federal government. They need to see us in a good light. They want to work with us and we hope that this difficult relationship doesn't spill over so that our companies ultimately don't get this opportunity."
4. Central American airline opens new routes
Copa continues to expand and starting June 2011 it will open three new destinations to the cities of Toronto, Canada; Porto Alegre, Brazil and Nassau, Bahamas.
Copa Airlines, subsidiary of Copa Holdings, SA {NYSE: CPA} announced that from June 2011, in order to offer more options to passengers, it will increase daily flight frequencies to various countries in its extensive route network, it will offer more convenient schedules and will open three new destinations to the cities of Toronto, Porto Alegre and Nassau.
"With the opening of these new destinations and increased frequencies from our Hub of the Americas in Panama City, Copa Airlines continues to expand coverage and reaffirming its leadership in Latin America and the Caribbean, offering more international destinations than any another hub in Latin America," stated Pedro Heilbron, president of the airline.
Heilbron also said, "The Hub of the Americas remains the most effective and convenient connection in the continent and the increase in frequencies of our flights will allow us to significantly improve daily arrival and departure schedules, so to continue to offer better connectivity and more options as well as frequent flights and connections throughout the day - even up to six connecting flight options for some markets."
TUESDAY, JANUARY 25, 2011
http://indianairlinesnews.blogspot.com/25
1. India okays airline expansion
India's airlines are optimistic they will be able to capture a larger share of international travel now the country's aviation ministry has granted fresh flight rights to a number of overseas destinations.
The biggest winner is tipped to be Jet Airways India, which has been okayed for new services to Europe, including flights to Rome and Amsterdam from Mumbai. Jet also has been given additional rights for flights Mumbai-Kuala Lumpur, Bangalore-Bangkok, Delhi-Bangkok, Mumbai-Abu Dhabi, Mumbai-Dubai, Mumbai-Male and Thiruvananthapuram-Sharjah.
Another carrier, SpiceJet, will now be able to fly to Colombo from Mumbai and add flights on the Chennai-Colombo route, while Kingfisher can fly to the Sri Lankan capital from Mumbai and Trichy.
And IndiGo has been okayed for daily services to Bangkok, Singapore and Dubai from New Delhi and Mumbai.
2. Air India reaches deal on fuel dues
Air India Ltd has agreed to partially pay off its dues to oil marketing companies and negotiated a daily payment system for the next 45 days, after which it hopes to repay in full.
The national flag carrier owed Rs. 2,300 crore to state-owned Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd in early December, when the oil firms discontinued credit to the airline on a directive from the oil ministry, as Mint reported on 10 December.
Air India has now agreed to pay a lump sum of Rs. 475 crore, or a little more than one-third of the Rs. 1,200 crore it received as equity infusion from the government this month.
The agreement was reached in a meeting of Air India chairman Arvind Jadhav, oil ministry’s additional secretary and financial adviser P.K. Sinha and officials from oil companies and the aviation ministry, said two officials present at the meeting, asking not to be named.
“They have got a relief,” one of these officials said. “They have also promised to pay some more money from receivables as and when they get it from other government departments.”
Air India also agreed to pay Rs. 13.5 crore daily for the next 45 days.
The oil companies sought a daily payment of Rs. 17.5 crore, but the airline refused. “It’s a national carrier and one of the oldest customers of the oil companies. They can’t just abandon the airline when it is going through a bad phase,” said the second official.
“The airline gets Rs. 22 crore a day from internal accruals, it can’t be asked to pay Rs. 17.5 crore straightaway.”
An Air India official said the payments will be made from the equity infusion.
“The equity is mainly to be used for repaying aircraft loans and interest, besides oil companies and aircraft vendors,” said the official, requesting anonymity.
The carrier hopes to make the rest of the payment to oil companies from the money it is due to receive from some government departments.
For example, it is yet to receive Rs. 335 crore for providing a dedicated fleet to fly the President, vice-president and Prime Minister over the past three years.
The fleet, led by Air India One, includes five jumbo jets parked in the capital for exclusive VVIP travel.
A proposal to raise the payment for this service to Rs. 800 crore a year is awaiting the finance ministry’s clearance.
The government has made a total equity infusion of Rs. 2,000 crore in the debt-laden carrier and promised another Rs. 2,000 crore for the next fiscal.
Like the national carrier, large private carriers such as Kingfisher Airlines Ltd and Jet Airways (India) Ltd have also defaulted on fuel payments in the last two calendar years, when the aviation industry was hit by the global economic slump and a steep hike in fuel prices.
3. Aviation Newsletter - January 17 to January 21, 2011
The report stated that board has approved delivery financing of three B-777-300ER aircraft and one GE-90 spare engines with US Exim support worth US$475-million
Top Stories
IndiGo rises to joint No. 2 with Kingfisher
IndiGo Airline has become the India's No. 2 airline equaling Kingfisher Airlines in December, and Air India-domestic to take the No. 3 spot, according to a report. The report stated that Kingfisher and IndiGo had a market share of 18.6%, the Jet-JetLite combine was ahead with 25.4%. Indigo flew 9.71 lakh passengers in December 2010 compared with Kingfisher’s 9.72 lakh, adds report.
Air India mandates ICICI to refinance loans for buying A-320 aircraft: report
National Carrier Air India Board has given a mandate to ICICI Bank to refinance Rs55bn loans to purchase 21 A-320 aircraft, according to a report. The report stated that board has approved delivery financing of three B-777-300ER aircraft and one GE-90 spare engines with US Exim support worth US$475-million
The board also gave its nod to Air India to dispose off four A 310 passenger aircraft along with the simulator, adds report. There are reports that the most important decision of Pawan Arora as CEO of Air India Express in the company, did not come up for discussion.
In Focus Stories
Indian airlines break 5mn barrier in December
Indian airlines carried more than 50 lakh domestic passengers in December, setting a new landmark in the aviation industry, the latest data released by the Directorate General of Civil Aviation (DGCA) showed.Airlines carried 52.13 lakh passengers in December, up from 44.87 lakh passengers carried in the same period of the previous year, reporting a growth of almost 16%.
The total domestic passengers carried by the Scheduled Airlines of India in November were 48.75 lakhs as against 46.17 lakhs in October 2010. During January-December 2010, domestic airlines carried 520.21 lakh passengers compared to 438.40 lakhs in 2009.
The total domestic passengers carried by the Scheduled Airlines in the fourth quarter of 2010 (October to December) were 147.05 lakhs.The total domestic passengers carried by the Scheduled Airlines in the third quarter of 2010 (July to September) were 119.84 lakhs.
The total domestic passengers carried by the Scheduled Airlines in the second quarter of 2010 (April to June 2010) were 134.78 lakhs.The total domestic passengers carried by the Scheduled Airlines in the first quarter of 2010 (January to March 2010) were 118.54 lakhs.
Low-cost carrier IndiGo became the third largest domestic passenger airline in the country for the fourth quarter of 2010.IndiGo carried 25.89 lakh passengers, followed by Air India's domestic arm at 25.42 lakh passengers. They were followed by Spice Jet (20.01 lakh), Jet Lite (10.85 lakh) and Go Air (9.79 lakh).
Kingfisher Airlines carried 27.81 lakh passengers, closely followed by Jet Airways with 27.28 lakh passengers
Domestic News
Air India plans to lease 40 Airbus, Bombardier Planes: report
Air India Ltd has sought bids to lease as many as 40 Airbus SAS and Bombardier Inc. aircraft, according to a report. The report stated that the airline wants to lease 10 Airbus A320s, 10 A330s and as many as 20 CRJ-700 planes. Air India has a fleet of 135 planes and is expecting 30 more aircraft deliveries in the next few years, adds report.
Kingfisher flight makes emergency landing in Bangalore: report
Kingfisher Airlijnes flight IT 4817 from Bangalore to Hyderabad returned to Bangalore International Airport within ten minutes of take-off after the right engine of the aircraft caught fire, according to a report. Kingfisher spokesperson Prakash Mirpuri has reportedly said the aircraft was forced back to the airport after the flight commander received a warning alert.
IndiGo to operate international flights from August: report
IndiGo has reportedly said that it was granted permission by the aviation watchdog to operate international flights from August this year. The report stated that permission came after the LCC fulfilled all the regulatory requirements of completing five years of operations and possessing a minimum of 20 aircraft.
Jet Airways registers 8.5% growth in domestic operations in December 2010
Jet Airways has posted passenger load factors for December 2010. The airline has registered a buoyant 15.3% growth in international revenue passenger traffic carrying 4.23 lakh guests in December 2010 as compared to 3.67 lakh in the same period last year.
Security scare for Kingfisher Mumbai-Bhubaneshwar flight
Shortly after Kingfisher Airlines flight IT 3141 took off from Mumbai for Bhubaneshwar, the commander received a cautionary alert from one of the on-board systems. In keeping with Kingfisher Airlines’ policy of placing guest safety and comfort above everything else, the commander decided to return to Mumbai and get the alert investigated before proceeding to the destination.
Pratt & Whitney, Air India showcases cutting edge Eco Power Engine Wash Technology
Air India announced it has performed 124 Pratt & Whitney EcoPower engine washes to date, saving more than 540,000 gallons of fuel worth $1.9 million USD while reducing its carbon dioxide (CO2) emissions by approximately 5,300 metric tons. Pratt & Whitney is a United Technologies Corp. (NYSE:UTX) company.
British Airways lists Top Five Indian destinations for 2011
To help travellers plan their visit to India well, British Airways has released its list of five must-visit Indian destinations for 2011.
With the landmark cricketing event, World Cup 2011, being held in India, Bangladesh and Sri Lanka is expected to influence the travel calendar this year.
International News
Meggitt buys Danaher unit for US$685mn
Meggitt Plc has agreed to buy Pacific Scientific Aerospace from Danaher Corp. for US$685mn to expand its range of fire-fighting products. According to reports, the purchase of PSA, which also makes generators, electric motors and other safety gear for aircraft, will be funded by selling as many as 69.8 mn shares, equal to about 9.09% of the company, to new and current institutional investors.
Adding the Danaher unit will allow Meggitt to bundle together more products for aircraft including Boeing’s 787 Dreamliner and the Airbus A380 superjumbo as production accelerates. Meggitt paid 8.7 times earnings before interest, tax, depreciation and amortization and it estimated savings of about $5 million in 2011, rising to about $18 million by 2014, said a financial daily.
Boeing 787s resume test Flights for Certification: report
Boeing Co has reportedly said that its delayed 787 aircraft had resumed the test flights required by government regulators before it can make its first customer delivery. The report stated that Boeing restarted 787 test flights a month ago after finding a "fix" for the problem that led to an onboard fire during a flight on Nov. 9. Another two planes would restart certification flights in a week or so, adds report.
Air New Zealand plans to acquire up to 14.99% of Virgin Blue: report
Air New Zealand Ltd. has reportedly said that it has received approval from the Australian Foreign Investment Bureau to buy up to 14.99% of Virgin Blue Holdings Ltd. The report stated that the company is planning to buy between 10% and 14.99% of Virgin Blue but has no intention of making a full takeover offer for the firm
Embraer closes out 2010 with 246 jets delivered
Embraer delivered 92 jets during the fourth quarter of 2010 (4Q10), 30 of which to the commercial aviation market, 61 to executive aviation, and one to the defense segment. Thus, the Company closed out 2010 with 246 jets delivered.
Fly thru with AirAsia
AirAsia’s guest on multiple-flight travel from India can do so without having to apply for a transit visa with Fly-Thru – A service that enables guests on multiple flight travel to perform a single check-in for their original and connecting flights right through to their final airport of destination.
Fly-Thru is available to guests travelling on selected AirAsia (short-haul) and all AirAsia X (long-haul) flights transiting through Kuala Lumpur whose original and forward flights have a connecting time of between 90 minutes and six hours.
Delta swings to fourth-quarter profit
EasyJet shares sink 10% on interim statement: report
Air New Zealand plans to acquire up to 14.99% of Virgin Blue .
http://newzealandaviationnews.blogspot.com/25
1. Air New Zealand's Tie With Virgin Challenges Qantas In Australia
Air New Zealand (Baa3 stable) announced it paid AUD145 million ($145 million) to acquire a 15% stake in Virgin Blue (unrated), the operator of Australia's second-largest airline. This credit positive investment will help Air New Zealand diversify its earnings from an overconcentration at home and provide exposure to Australia's larger market. For Qantas Airways Ltd. (Baa2 stable), operator of Australia's largest airline and parent of the country's third-biggest carrier, Jetstar (unrated), the investment serves as a further sign of Virgin's growing competitive challenge to Qantas in the airline's home turf.
The investment will weaken Air New Zealand's credit profile only slightly, as the carrier can use cash reserves to pay for it. However, Air New Zealand will probably not receive dividends in the near term as we expect Virgin to continue to invest in expanding its fleet as it steps up the competition with Qantas. Nevertheless, the purchase will give Air New Zealand a presence in Australia, one of the world's most profitable aviation markets, while sparing the carrier the cost of doing the actual flying.
Currently, Air New Zealand relies on its home market, where it has an 80% market share, for virtually all its earnings. As competition accelerates, we expect carriers to create more such "virtual networks" through multiple channels of cross-ownership, alliances, and code sharing. Air New Zealand, Virgin, and others will likely search for ways to acquire greater scale and network connectivity with leaner fleets.
In Australia, Virgin Blue has maintained a nearly 30% market share, positioning itself as a leisure line between Qantas's full-service offerings for business travelers and low-cost carriers (LCCs) such as Tiger Airways and Jetstar, the latter of which Qantas wholly owns. In 2010, Virgin Blue announced a shift to target the profitable business market, dominated by Qantas, while at the same time maintaining a leisure market offering. To do so, Virgin Blue is increasing the frequency of flights on key trunk routes and investing in additional, wide-bodied capacity to cater to transcontinental routes to Perth, a nexus for Australia's natural-resources industry.
Exhibit 1 (attached)shows market shares by carrier in 2010.
Virgin Blue previously announced new routes into Europe via Abu Dhabi's Etihad (unrated), into the US via Delta Air Lines (B2 stable), and across the Tasman Sea via Air New Zealand. These routes will not deliver direct incremental earnings to Virgin Blue, but the airline will benefit from channeling Etihad and Delta's customers into its domestic network. Previously, this type of international alliance and global reach was a competitive strength that differentiated Qantas.
Attached exhibit 2 shows the steep rise in the share of international arrivals carried by Virgin Blue and its partners, year to date.
This development increases competition for Qantas, as it brings Virgin Blue's range of offerings closer to that of Qantas for international travel and will require Qantas to reduce prices to keep load factors at acceptable levels. Virgin Blue has cheaper fares than Qantas, and is therefore well positioned to win market share. Qantas is already grappling with rising oil prices and subsidiary Jetstar's low yields, which bedevil the entire LCC segment. The additional threat from the Virgin Blue-Air New Zealand tie-up will add to pressure on Qantas's margins just as renewed passenger demand was helping it recover from the effects of the global recession. In 2000, Air New Zealand tried unsuccessfully to enter Australia by acquiring Ansett Airlines, which subsequently collapsed. By contrast, this latest move costs little but has a larger potential payoff. It may, however, be a tough fight. Qantas, with its dual-brand strategy and entrenched, leading position in Australia, has shown in the past that it knows how to counter competitive challenges.
2. Market boosted by aviation sector
Auckland International Airport led gainers on the NZX 50, reaching a 2-½-year high in the wake of its upbeat economic report last week.
Air New Zealand rose after posting a jump in traffic for December.
The NZX 50 rose 5.615, or 0.2 per cent, to 3358, heading for its third daily advance. Trading was quieter than usual, with Wellington market participants away for the anniversary day holiday.
Auckland Airport rose 1.8 per cent to $2.29. The shares reached the highest level since mid-2008, extending their gains since the company released a report showing it may account for almost 20 per cent of national gross domestic product and sustain more three quarters of a million jobs by 2031, based on the flow of freight and passengers through the airport.
Air New Zealand, the national carrier, rose 0.7 per cent to $1.43 after traffic figures showed the airline carried 1,322,000 passengers December, 10 per cent more than the same month a year before.
Load factor rose by 1.3 per cent to 86.3 percent compared to the previous period, with revenue passenger kilometers up 7.7 per cent to 2,861 million.
Much of the increase was built on the back of a 10.9 per cent increase in short haul passenger numbers to 1,140,000, broken down to a 10.7 percent lift in the domestic market and a 13.9 per cent increase in Tasman/Pacific.
APN News & Media, which publishes the New Zealand Herald and operates the Radio Network, was unchanged at $2.40 on the NZX after it said the diversified nature of its operations is likely to offset the effects of Queensland floods, with minimal impact on the bottom line.
The company that said while it expects the Queensland economy to rebound strongly once mop-up operations are complete, advertising revenues from small businesses, retailers and real estate are expected to remain under pressure, having already shown some signs of weakness ahead of the floods.
Hallenstein Glasson Holdings, the clothing retailer, fell 1.2 per cent to $4.05.
New Zealand's retailing sector remains under pressure, with November's core retail sales declining 0.2 per cent to $4.24 billion, the second monthly decline. A gain of 0.5 per cent was expected, based on a Reuters survey.
The New Zealand dollar will probably stay within recent ranges this week as investors prepare for the Reserve Bank to keep interest rates on hold this week.
Five of six economists and strategists in a BusinessDesk survey expect the kiwi will respect recent price-action and stay in the middle of its medium-term range between US74 cents and US76 cents ahead of this week's central bank meetings in New Zealand and the US.
The lone dissenter expects the kiwi to head lower amid heightened expectations of rising interest rates in China.
Economists expect central bank Governor Alan Bollard will keep the official cash rate at 3 per cent after New Zealand dodged a double-dip recession last year, and last week's benign inflation and tepid retail sales data won't have given him reason to tighten rates early.
Analysts now expect Bollard will start lifting rates in September, with 68 basis points of hikes priced in over the next 12 months, according to the Overnight Index Swap curve.
The kiwi rose to US75.82 cents from US75.46 cents last week.
3. NZ shares rise; Kathmandu gains
New Zealand shares rose for the second time in three sessions, as positive offshore leads help stoke investors' appetite for local stocks.
Kathmandu Holdings paced gainers on the exchange while Restaurant Brands NZ fell.
The NZX 50 Index rose 6.41 points, or 0.2%, to 3359.06.
Within the index, 22 stocks rose, 13 fell, and 15 were unchanged. Turnover was $84 million.
Stocks on Wall Street rose for a second day, with the Standard & Poor's 500 Index closing 0.6% up at 1290.84, after chip-maker Intel announced a successful share buy-back plan, while packaging company Rock-Tenn agreed to buy rival Smurfit-Stone Container.
Kathmandu rose 2.9% to $2.16, the highest level in over six months.
Last week the outdoor clothing retailer upgraded its earnings forecast, with profit likely to rise by as much as 26% to between $18.5 million and $19.5 million for the six months ending Jan 31 on the back of stronger earnings.
The stock was further boosted by the December BNZ BusinessNZ performance of service index, which showed a significant recovery in confidence among retailers, with rose to 56.9 in the month, up from 46.3 in November.
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A reading above 50 indicating activity is expanding, while a reading below 50 indicates contraction.
Air New Zealand, the national carrier which bought a 15% stake in Virgin Blue Holdings for $189.5m, rose 2.1% to $1.45.
Virgin today said it expects first half net profit to be down more than 50%, due to the floods, a slowdown in consumer spending and disruptions to the airline's check in system last September.
It expects to post a net profit after tax of A$23 to A$26 million for the six months to December 31, down from A$62.5 million in the prior corresponding period of 2009.
"Air New Zealand's management recognise that the New Zealand aviation market is small and in order to expand and become a bigger player they have to look further afield," said Grant Williamson, a director at Hamilton Hindin Greene.
"Investors are hoping that this go into the Australian market is going to be more success than last time."
Pyne Gould was unchanged at 36 cents after executives were rewarded with 4.4 million new shares in the financial services company as a thank-you for the merger of the firm's Marac unit with Southern Cross and Canterbury building societies.
The managers are getting shares equivalent to 0.5% of the company, at 36.74 cents each, worth $1.6 million, according to a statement from chairman Bruce Irvine.
The gratuity will slice $1.4 million off Pyne Gould's 2011 profit and cut $300,000 from the earnings of the new merged entity, Building Society Holdings this year and by $100,000 in 2012.
"I think this is a very strong incentive for directors and staff to perform, though some investors might view it as excessive," Williamson said.
Charlie's Group, the juice maker that extended its footprint in Australia's Cole supermarkets, was unchanged at 20 cents after beating sales forecasts by $900,000 in the second half of last year.
The company's sales hit $21.9 million in the six months ended December 31, beating the $21 million forecast, and 29% ahead of 2009's revenue.
Chief executive Stefan Lepionka said most of the growth came in Australia, where it broke into Coles last year, though New Zealand sales were also up 3.6% cent from the same period a year earlier.
It kept forecast profit at $1 million for the period.
Restaurant Brands NZ, the fast food franchise operator, fell 2.8% to $2.44, pacing decliners on the NZX 50 for a second day.
The stock was second best performer on the NZX 50 last year, gaining 64% over the past 12-months, but has battled to find traction this year, and is now trading at its lowest level since October.
OceanaGold, the gold miner, fell 2.2% to $3.60 after it announced that it was taking full control of mining at its Reefton Gold Mine from April 1, and with a significant increase in operations at the mine, situated on the outskirts of Greymouth.
Stracon Mining has been operating and maintaining OceanaGold's mining equipment fleet under an agreement at the operation since mining started in 2006.
Goodman Fielder, the Australian food ingredient manufacturer, fell 0.6% to $1.73.
The stock has regained some of the ground it shed after chief executive Peter Margin announced his resignation on Jan 18, but still trading lower than $2 highs seen in November.
4. Putting the romance back into flying
You may have noticed that over the holiday period Air New Zealand finally took delivery of the first of its five Boeing 777-300ER aircraft.
It's been a much-anticipated arrival because this is the plane which will introduce cuddle-class - a flat bed made from three seats - plus slightly more room and the ability to order snacks via the video screen in economy; improved seats and a menu that includes the likes of tapas, pizzas and gourmet burgers in premium economy; and freshly cooked meals prepared on demand in business premier; plus a swish new decore and an inflight entertainment service which includes access to YouTube and provides news updates.
Innovations like those have already seen Air NZ named as Air Transport World's Airline of the Year and Conde Nast Best Long Haul Leisure Airline and the aviation industry is watching closely to see what effect they have on passenger number and profits.
Having checked out the new ideas on the ground some months ago, at Air NZ's so-called test hangar in Fanshawe St, I was very keen to try the actual plane for myself. Unfortunately, the delivery flight kept being postponed until it got to the point where it would have wrecked our plans for a family Christmas, so I had to pull out.
However, those who were able to experience the various innovations in action seem to have been hugely impressed.
In handing over the plane, Boeing's vice-president for the 777 aircraft, Larry Loftis, said Air NZ's interior was "the best in the air".
And the company's vice-president for sales and marketing, Marlin Dailey, said the airline was demonstrating once again "that they are a forward-thinking airline with revolutionary ideas".
Perhaps more significantly, even the cynical scribblers on the trip appear to feel the same way.
Veteran Australasian aviation journalist Geoffrey Thomas commented in his electronic magazine Flightpaths that when passengers on the delivery flight boarded for the first time, "quiet awe was the reaction and a sense of privilege that one was witnessing aviation history".
After experiencing the new plane in action he concluded, "While New Zealand may be at the bottom of the world, its airline is at the top of its game."
Unfortunately, the average passenger won't be able to see for themselves whether this really is a new era in aviation for a while - the cuddle-class seats, for instance, have yet to be approved by the Civil Aviation Authority - but over the next few months the 777-300ERs will run on more routes until by next year most long-haul flights will be covered.
Could this truly be the plane that puts the romance back into flying? That's a big ask. But it'll certainly add a bit of excitement to an industry that has often seemed to be mainly intent on squeezing ever more passengers into an ever smaller space.
http://philippinesaviationnews.blogspot.com/25
1.Pilot schools to be moved out of NAIA
THE CIVIL Aviation Authority of the Philippines (CAAP) wants aviation schools to transfer to regional airports to decongest from the Ninoy Aquino International Airport (NAIA).
Ramon S. Gutierrez, CAAP officer-in-charge, told reporters at the sidelines of an aviation summit last week the state-owned Manila International Airport Authority (MIAA) will take charge in the implementation of the plan.
“The plan is still in principle and we are actually expecting resistance from the aviation school administrators, owners and students as most of them are foreigners. Most of the foreign students want to attend an aviation school near NAIA because they go to their home countries from time to time,” he said.
However, Mr. Gutierrez said allowing regional airports to house the aviation schools would translate to additional revenues as most of these airports have lower flight frequencies compared with NAIA.
“This will be part of CAAP and MIAA’s immediate plans. This will give these small airports additional revenues as they only generate revenues from air navigation fees for the airports,” he said.
Mr. Gutierrez said his agency broke even last year with close to P3 billion in revenues.
“Our revenues last year will be just enough for the maintenance but will not be enough for capital expenses. It will not be enough to maintain 86 airports. We will give the schools the preference which regional airport they would want to go to,” he said.
In July last year, CAAP ordered an audit of all 63 aviation schools in the country as the agency discovered that fake licenses had been issued to some student pilots.
2. How friendly are the Philippine skies?
In an effort to enhance competition in an already vibrant airline industry, the Philippines is taking a major step towards easing restrictions within the commercial aviation sector. Government has announced that an executive order will be issued that will further liberalize the air transportation industry by allowing international airlines to use secondary gateways, a privilege previously exclusive to domestic carriers. Along with the increase in the number of stakeholders and the regulatory challenges, tax is certain to be an issue intertwined with flying in and out of the Philippine skies.
The taxation of revenues of international carriers, regardless of whether they have so-called "permanent establishments" in the Philippines, has been the subject of debate since the concept of Gross Philippine Billings was introduced by Presidential Decree (PD) 69 in 1972.
In the recent decision of South African Airways vs. Commissioner of Internal Revenue, G.R. No. 180356, promulgated Feb. 16, 2010, the Supreme Court held that "if an international air carrier maintains flights to and from the Philippines, it shall be taxed at the rate of 2.5% of its Gross Philippine Billings, while international air carriers that do not have flights to and from the Philippines but nonetheless earn income from other activities in the country will be taxed at the rate of 32% (now 30%) of such income." In so ruling, the High Court dismissed claims that international carriers without landing rights in the Philippines are exempt from paying income tax. The Supreme Court effectively reiterated its ruling in the landmark 1987 case of British Overseas Airways Corp. that offline carriers with local general sales agents are considered resident foreign corporations doing business in the Philippines, thus tickets sales are subject to corporate income tax under Sec. 28 (A)(1) of the Tax Code.
Prior to the South African Airways case, the taxation rules on foreign carriers were not as clear. Under PD 1355, which amended the 1977 Tax Code, gross Philippine billings (GPB) include gross revenue derived from the sale of tickets in the Philippines covering the carriage of passengers from anywhere in the world and cargo or baggage originating in the Philippines. In the 1997 Tax Code, however, GPB was redefined to only include the "amount of gross revenue derived from carriage of persons, excess baggage, cargo and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document."
This new concept had raised issues on the taxability of offline carriers on their income from the sale of tickets in the Philippines through their local agents. At first blush, it appears that since these carriers do not transport passengers and cargo from the Philippines, they are not subject to tax since they do not derive taxable GPB as defined under the 1997 Tax Code. This also meant that offline carriers cannot thus be considered as nonresident foreign corporations doing business in the Philippines.
However, in the case of Air Canada vs. Commissioner of Internal Revenue, CTA (First Division) Case No. 6572, promulgated Dec. 22, 2004, the CTA held that offline carriers are considered resident foreign corporations since they are doing business in the Philippines. Citing Supreme Court rulings, the CTA reasoned that a foreign airline selling tickets in the Philippines through its local agents shall be considered as engaged in trade or business, as these activities show continuity of commercial dealings performed in pursuit of business purpose. Such ruling was sustained by the CTA En Banc in the appeal made by Air Canada (CTA EB No. 86, promulgated Aug. 26, 2005).
The Supreme Court sustained the Air Canada ruling in the South African Airways decided in 2010.
In the South African Airways case, the Supreme Court noted that there are no specific criteria as to what constitutes doing business. The Supreme Court held that the term "engaged in business in the Philippines" implies "continuity of commercial dealings and arrangements" which includes the performance of acts pursuant to the purpose and object of the business organization, such as the appointment of a local agent. Since the sale of tickets -- the activity which produces the income -- is done in the Philippines even if the carriage of person, baggage, cargo or mail is done outside the Philippines, it is a Philippine-sourced income subject to tax.
From these rulings, it can be inferred that the courts steadfastly held to the source principle in Philippine income taxation, which contemplates the idea that an alien is subject to Philippine tax if he or she derives income from sources within the Philippines. This is not at all contradictory to the subject of tax on GPB because the situs of taxation is still the primary consideration. In case of airlines with landing rights in the Philippines, the determination of the situs of taxation is the service which is provided in the Philippines, i.e., the carriage of persons or cargo from the Philippines. For offline carriers, on the other hand, the determination of the status of tax is the place of sale of tickets, such that if the tickets are sold in the Philippines, the income from these sales is subject to tax.
International airlines that will take advantage of Government’s pocket open skies policy will be subject to the GPB tax regime since they would carry passengers from domestic locations and fly them to international destinations.
Now that the Supreme Court has clarified the rules on the taxability of foreign carriers, the willingness to open the market to cross-border investments could very well result in more revenues for Government, increased participation of foreign players and improved services from local airlines at competitive prices that will benefit the flying public.
3. P80-million fund for NAIA's VOR not included in P4-billion deal — CAAP
MANILA, Philippines (PNA) — Civil Aviation Authority of the Philippines (CAAP) Director-General Ramon Gutierrez on Thursday said that the P80-million would-be fund to purchase new aviation equipment is not included in the P4-billion aviation deal.
Gutierrez said the P4-billion aviation deal between the government and the Thales-Sumitomo Group that Senator Estrada had questioned was accorded in 1998. “Ours is different. The P80-million fund was only meant to buy a new very high frequency omni-directional range (VOR) for the Ninoy Aquino International Airport (NAIA).”
According to him, the P4-billion contract was intended for the modernization of the whole air traffic control system of the country.
He said since the CAAP has diminutive resources and cannot be able to procure such device, the Manila International Airport Authority (MIAA) will make the financial arrangement while the aviation agency takes care of the services. From its original P120-million funds they requested, the budget was slashed to P80-million.
However, the P80-million is P2-million short of the VOR’s original price in the foreign market. He disclosed that he was considering a Korean company that was offering a VOR that is worth P80-million. “But we could not grab it until we know that it is the same brand that we are currently using,” Gutierrez said.
Another foreign company has offered the CAAP of equipment leasing which cost only P50-million. “Malaki ang matitipid, sa open bidding, but, we are inclined to buy a new one because its life span is approximately 10 to 12 years.”
The old VOR made headlines when it conked out on June last year that triggered the cancellation of at least 50 domestic and international flights at the three terminals of the Ninoy Aquino International Airport.
The glitch was additional burden to the Philippines when it was working out for getting back the category 1 status after the United States Federal Aviation Administration downgraded the Philippine aviation to category 2 in 2008.
Asked if he is optimistic that the European Union would lift restrictions once the foreign evaluators resume inspection in September, this year, he said they are still preparing for such assessment.
The Philippines is one of the countries in the world that has been blacklisted by the European Community where the country’s all airlines are banned from flying to any European bloc because of “serious safety deficiencies” in the Philippines’ regulation of carriers.
4. Turkish Airline announces new routes in 2011
Europe’s fastest growing airline company, Turkish Airlines will add new destinations on its rapidly expanding network this year. The world’s eighth-largest carrier by number of destinations, Turkish Airlines is planning to launch flights to 11 new destinations.
According to the flight programme confirmed by the Directorate General of Civil Aviation, Ministry of Transport, Turkish Airlines will begin to operate three weekly flights to Guangzhou (China) on January 30; four weekly flights to Los Angeles (US) on March 3, 2011; four weekly flights to Shiraz (Iran) on March 14, 2011.
Turkish Airlines is also planning to start new flights to Malaga (Spain), Salonika (Greece), Valencia (Spain), Toulouse (France), Manila (Philippines), Naples (Italy), Turin (Italy), Genoa (Italy) this year.
A Star Alliance member, Turkish Airlines flies to 171 destinations, including 130 international and 41 domestic routes.
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