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Nigerian Ambassador to UAE Decries Lopsided Air Traffic Rights against Nigerian Carriers

Chinedu Eze in Dubai

The Nigerian Ambassador to the United Arab Emirates (UAE), Mr. Mohammed Rimi, has said there is a need for domestic airlines to reciprocate air traffic rights the Federal Government of Nigeria signed with other countries to ensure that Nigeria benefits from such agreements.

Rimi, who made this known during the corporate dinner to celebrate the inaugural flight of Air Peace to Dubai via Sharjah, stated that this is why the federal government is giving full support to the airline operations to UAE.

He urged the airline to be consistent and efficient in order to survive the competition in the ever-busy route, assuring them that if Air Peace is able to maintain its operations in the next six months, it would entrench itself in the market.

“Air Peace is now recognized as a flag carrier based on the BASA (Bilateral Air Service Agreement) and whatever the airline is doing will be linked to Nigeria. So the airline is representing Nigeria, therefore, it should do everything in accordance with diplomatic requirements. The only thing the government can do is to provide diplomatic and political support, as I also call on Nigerians to support this airline,” Rimi said.

Also, stakeholders in the aviation and financial sectors have expressed optimism that Air Peace would survive in the market and break the jinx that Nigerian carriers don’t succeed in international operations.

They noted that Air Peace started its international operations by breaking the record with its load factor, which was over 80 percent filled with a return flight that was also well booked.

Speaking at the ceremony also, the General Manager of Fidelity Bank, Ken Okpara, said he was confident that the airline would sustain the new route because the Chairman and Chief Executive Officer of Air Peace, Allen Onyema, has proven himself to be a disciplined, passionate and determined entrepreneur, and this is why Fidelity bank is strongly behind the project.

According to Okpara, “For us at Fidelity Bank, we are quite excited because we have seen a very committed, passionate professional and shrewd entrepreneur in the person of Onyema, who is spearheading the Air Peace vision. We have also seen a dream come true. This is a function of the fact that if you believe strongly and you have a vision, with the right structure, you will be able to achieve whatever you are committed to. History is being made today.

“The partnership Air Peace has with Fidelity Bank is an enduring one. It is not just a bank-customer relationship. It has been there from the beginning, and what is clear is that it is associated with the way the bank has been doing things over the years. We ensure the institution puts the right kind of structure in place. Beyond funding is the fact that we have been involved in advisory services, hand-holding and providing guidance.”

He explained further that the aviation sector requires a high capital outlay but sadly, a lot of the airlines have closed shop, adding that Air Peace has kept growing because it has the right structures, funding, and equipment.

“For us as a bank, it is about helping Air Peace to put the right kind of structure that will enable them not only remain sustainable in business but excel. We provide them the right kind of funding and put the right infrastructure in place. So, it is a total relationship which is in the long term,” Okpara added.

On his own, Onyema stressed that if Air Peace must succeed on the Dubai route, the Nigerian Government must support it, as the airline cannot do it alone.

“We can only do our best but the rest lies with the government. The government must stop unfair competition in this sector. The United States Government did it when the Gulf carriers swooped on them. The policy of multiple designations and multiple frequencies for foreign carriers are detrimental to our economy.

“Nigerian airlines will not grow under such a policy. The government must help us grow the sector and not stifle it, but I know President Muhammadu Buhari is a nationalist who is ready to support Nigerian carriers. Aviation is a very tough business, so I plead with Nigerians and the government to support Air Peace. We promise to give Nigerians modern equipment and unparalleled services,” he said.

Country Manager of Air Peace in UAE, Reham Mustafa, expressed happiness that the plans to create jobs for the people have become a reality, pledging the airline’s unwavering and quality services.




The luck of the Vikings

Maybe badly buffeted Norwegian Air will experience a resurgence. Maybe it’ll thrive again. Maybe it’ll survive only in another form under another ownership. Maybe it’ll go bankrupt. 

With Norwegian Air as its single international carrier at Stewart Airport, the Port Authority of New York and New Jersey is building a $53-million terminal addition there exclusively for international travelers. It takes a lot of available capital and quite a bit of risk tolerance for an airport owner to spend that kind of money on such a wobbly entrepreneurial partner as Norwegian has turned out to be. Port Authority has both. 

After the second of two air disasters, Norwegian was forced to ground its 18 Boeing 737 Max airplanes indefinitely back in March. It already had been having recurrent troubles in some of the Rolls-Royce engines in its fleet of 16 Boeing 787 Dreamliners, so Norwegian was not exactly an ambitious airport’s reliable partner. But so far the airline’s been hanging in there, still attracting passengers with its low ticket prices to Europe.

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Last Thursday, a journalist from industry website One Mile at a Time opined that the Boeing 737 Max situation had just gone from bad to worse, and that “the timeline for the plane returning to service has probably slipped quite a bit.” The FAA, the federal agency which grounded the 737 Max, had “recently found [another] potential risk that Boeing must mitigate” before the plane could return to service. Industry experts remain divided as to when the planes will be permitted to fly again. After a full quarter-year of intense scrutiny after that second fatal crash in March, they’re still anticipating a time frame of several months rather than a few days before the Max can operate again. There’ll be tests and more tests.       

No matter what happens with Norwegian, the 2500-acre New York Stewart International Airport will remain where it is: 67 miles north of Manhattan. For the past two years, the Newburgh airport has hosted the pioneering low-cost air carrier’s strategy of providing transatlantic service out of secondary metropolitan airports. In all, airport owner Port Authority has invested close to $200 million in Stewart. What’s an additional $53 million? Port Authority has bought into the Norwegian business plan as a way of accelerating Stewart’s evolution. 

Just 14 months ago, Port Authority executives explained the agency’s new strategy to a reporter for The New York Times. Other airlines would be encouraged to offer flights at Stewart if Norwegian and domestic low-cost carrier Allegiant continued to succeed there, they said. Stewart was part of a growing trend of low-cost carriers utilizing secondary airports on the outskirts of major cities, reporter Christine Negroni wrote. 

Stewart general manager Ed Harrison was on vacation last week and this week and was unavailable for comment. A phone call to Port Authority media head Cheryl Albiez received no response prior to press time.

After two years of Norwegian’s service, generating over a half-million paying passengers, the encouragement offered by the example of the carrier’s success to “other airlines” hasn’t reached the point of additional international airlines offering flights to and from Stewart.  

Despite its straitened circumstances, already debt-laden Norwegian appears to have been reasonably successful at the former army base outside Newburgh. Its bet that European passengers will tolerate $20 one-way bus rides between Stewart and Times Square if airline fares are low enough has attracted an audience on both sides of the Atlantic. There’s a substantial market for what Norwegian has been offering at Stewart. With the peak flying season approaching, there will be greater demand for passenger seats this year. Given the present circumstances, there’s no way Norwegian will be able to turn a profit serving that increased demand. But it’ll try. 

With fewer, larger planes flying to fewer destinations since the March 737 Max groundings, Norwegian still has a solid customer base. In 2018, Stewart had its best year in a decade in terms of passenger traffic, with 690,411 revenue passengers, of which 366,130 were domestic passengers and 324,281 flew on Norwegian. This April, Norwegian managed to tally 18,561 revenue passengers at Stewart, only 4025 fewer than it had in the same month of the previous record year. To the budget-minded passenger, its low-cost flights between Stewart and Dublin are an aviation bargain.   

Port Authority plays the very long game. Its bet on Stewart Airport is like paying a premium for the additional protection of an insurance policy. The place is a safety valve, a potential future resource. With 138.5 million airline passengers using all Port Authority airports in 2018, an increase of almost six million passengers over the previous year, Port Authority handles more airline passenger traffic in less than two average days in its system as it does at Stewart in an entire year. The increase in air passengers in the system in 2018 alone was about nine times Stewart’s total traffic.

The interstate agency’s budget for 2019 calls for spending $3.7 billion in its capital plan and $3.3 billion for operations. Port Authority raises the money it needs not from government taxes but through tolls, fees and other user charges. Its quasi-governmental monopoly position has earned it a unique privileged position in the financial community. For a wonderful story about what Robert Moses was able to do with this position, read writer and researcher Robert Caro’s compelling classic The Power Broker.

Considering the magnitude of Port Authority spending, the agency’s dropping a quarter of a billion dollars over the years into future prospects at Stewart becomes less profligate a gesture. Last Tuesday, the Port Authority announced plans to spend — excuse me, invest — additional billions over the next decade on such big-ticket airport items as a monorail air-train project to LaGuardia, replacing the Newark Airport air-train, and the continuing redevelopment of JFK.




Centre open to 100% stake sale in Air India

NEW DELHI: The government may be willing to completely exit loss-making Air India during the sell-off process, although a final decision will be taken by a panel of ministers, a top official indicated on Saturday.

“A general feeling (in the government) is that if people want to have full (control), let them have it. But I will be able to tell you only when a specific decision is taken. My personal view is that I do not see any conflict for the government,” department of investment and public asset management (DIPAM) secretary Atanu Chakraborty said.

The government recently restarted the process to sell Air India after putting it on hold last year due to poor response, although volatility in crude prices was cited as the reason. While Niti Aayog had proposed the sale of entire stake, the government had offered 74% stake to a strategic investor, which was seen as one of the reasons for low interest level.

The decision on the quantum of stake to be offered will now be taken by a panel of ministers as the government looks to close the deal before the end of the current financial year. “We would now like to do it much faster, having done most of the paper work,” Chakraborty said.

Along with a “reiteration” for the Air India stake sale, finance minister Nirmala Sitharaman had also announced a review of the foreign direct investment ceiling for the aviation sector, a move which is expected to allow greater shareholding by foreign carriers, who can currently buy up to 49%.

“My understanding is that FDI in aviation is 100%. The cap is again on substantial ownership and effective control (SOEC) guidelines, which is 49% and certain directorships. The second cap is on Air India as a nationally owned carrier. Once it is not nationally owned it will go through 100% so that’s a signal in the budget. SOEC is much more complicated because there is some reciprocity, there are a lot of issues involved that the budget does not mention. That’s an issue which needs to be grappled with,” the secretary said.

The SOEC norms are seen as a stumbling block in the aviation sector as the 100% FDI cap is of little use given that control or the Indian carrier has to remain with Indians. Chakraborty, however, said that interest in Air India may not be missing due to the SOEC norms, given that Etihad had invested in now-defunct Jet Airways and may still return through the insolvency process.




Air India Mumbai-Newark flight makes emergency landing in London after bomb threat

An Air India flight to the US made an emergency landing in London this afternoon over a bomb threat. The flight — AI 191 service between Mumbai and Newark — has been taken to an isolated spot at the London Stansted Airport, according to the latest reports.

The flight had left Mumbai early today morning and was flying to the Newark Liberty International Airport in New Jersey, US.

The airport was briefly shut down during the Air India flight’s landing. The runway re-opened later and is now fully operational, the airport said in a statement.




Air India moves quickly on 2nd sale bid, Ashwani Lohani calls unions on Monday

Mumbai: Acting quickly on the government’s second attempt to sell the financially-crippled national carrier Air India, its chief Ashwani Lohani has called a meeting of all the 13 unions Monday to discuss the terms of privatization, according to sources.

The government Friday reiterated its intent to exit Air India with finance minister Nirmala Sitharaman stating in the budget speech that the government will go ahead with privatization of the flag carrier and has just earmarked a paltry 1 lakh from the budget for the airline, that has been somehow keeping afloat.

The Narendra Modi government in its first term had also attempted to exit from the airline business but failed to get a buyer, forcing it to defer the plans.

“The government has directed the Air India chairman and managing director to meet all trade unions and discuss the privatization move,” a source close to the development told media.

Finance minister Nirmala Sitaharaman while presenting the budget said, “in view of the current macroeconomic parameters, the government would not only re-initiate the process of strategic disinvestment of Air India, but would also offer more central enterprises for strategic participation by the private sector.”

Lohani along with AI board members are expected to meet all the 13 unions Monday, the source added.

These unions are Air Corporation Employees Union, Air India Employees Union, Indian Airlines Technicians Association, All-India Aircraft Engineers Association, Indian Commercial Pilots Association, Indian Pilots Guild, Air India Aircraft Engineers Association, Air India Cabin Crew Association, Air India Engineers Association, Aviation Industry Employees Guild, All-India Service Engineers Association and United Air India Officers Association.

The meeting assumes significance considering that a number of unions among these 13 have in the past vehemently opposed the sale of the airline.

Significantly, the government has earmarked a royal outlay of 1 lakh for Air India for the current fiscal as it expects to sell the airline this time around. Against this, the aviation ministry has got a budget allocation of 4,500 crore for the year.

AI had received 3,975 crore from government as equity infusion last fiscal, as per the documents.

The AI unions have consistently been opposing any bid to sell the Maharaja claiming that privatization is not a remedy pointing to the way Kingfisher and Jet Airways went belly up.

“First it was Kingfisher which folded up, and now it’s Jet Airways. The votaries of privatization, both in the government and outside, need to understand that denationalization alone can’t bring profitability and efficiency in the airline business,” a union leader had said.

As many as six airlines, all private, including Jet, Air Pegasus, Air Odisha, and Air Costa, have shut shops between 2014 and April 2019 for various reasons.




Jet Airways’ flying rights with 5 countries temporarily allocated to Air India: Govt

Bilateral flying rights with five countries, which were previously allocated to Jet Airways, have now been temporarily given to Air India till the end of the summer schedule of this year, Civil Aviation Minister Hardeep Singh Puri said Wednesday.

As Jet Airways ran out of funds, it had shut down its operations on April 17 this year which lead to a sudden rise in domestic and international airfares.

Also ReadJet Airways: NCLT admits insolvency petition moved by SBI

As a result, the central government decided to temporarily allocate the domestic slots as well as international flying rights of Jet Airways to other airlines who could start new flights immediately and fill the supply gap.

“Bilateral rights of Jet Airways have been temporarily allocated to Air India/Air India Express till end of summer schedule 2019 for the sectors as follows – India-Dubai at 5,852 seats per week; India-Hong Kong at 1,792 seats per week; India-Qatar at 5,670 seats per week; India-Singapore at 1,620 seats per week; India-UK at 4,788 seats per week,” Puri said in a written reply to a question in the Rajya Sabha.

The minister said the domestic slots for 22 flights, which were vacated by Jet Airways, have been allocated to Air India.

Also Read: Jet Airways Pilots to file a plea at NCLT for non-payment of salaries

These domestic Air India flights are running on the routes such as Delhi-Bhopal, Bhopal-Pune, Delhi-Raipur, Delhi-Bengaluru, Delhi-Amritsar, Chennai-Bengaluru and Chennai-Ahmedabad, he said.

Before a country’s airline can operate international flights to another country, the two have to negotiate and sign a “bilateral air services agreement”, which decides how many total flights (or seats) per week can be allowed to fly from one nation to another.

Once such an agreement is signed, each country is free to allocate these flying rights to its respective airlines.

Even after such flying rights are allocated to an airline, it must have slots at both the airports in order to start flight operations.

Slot is a date and time at which an airline’s aircraft is permitted to depart or arrive at an airport.

The slots are allocated by a committee that consists of officials from the Civil Aviation Ministry, airport operators, airlines, Indian aviation regulator DGCA, among others.

Jet Airways evicted from Siroya Centre

Jet Airways’ employees have been shunted out of the airline’s corporate headquarters in suburban Mumbai by its owners as the airline failed to renew its lease agreement.

The move may attract legal action as the distressed airline is undergoing an insolvency resolution process directed by India’s bankruptcy court.

Siroya Centre, located in Andheri (east) in the western suburbs of the city, had been leased to Jet and been its workplace for close to a decade. The evacutation move happened last night. The property has been already put up for lease through commercial real estate services firm JLL, its website showed.

A team of insolvency professionals headed by Grant Thornton’s Ashish Chhawchharia had also been working out of Jet’s office space in addition to what remains of Jet’s management. They will now either file a complain to the police or get a court order as a remedial action to stall the evacuation, said the person cited above.

Under the insolvency proceedings, there is a complete moratorium of all claims, proceedings, cases and notices to Jet. No property, asset of the airline—either in custody or used by it—can be attached by anyone.

The insolvency resolution process started after the National Company Law Tribunal last Thursday admitted a plea by Jet’s biggest lender the State Bank of India on repeated loan repayment defaults by the airline. Jet stopped flying on April 17, running out of funds to stay afloat and faling to raise cash. Its lenders have unsuccessfully been trying to find it a new investor.

Related: Jet Airways’ Pains are Others Gains