Tuesday, December 27, 2011

DGCA & DRI investigating corporates for customs evasion while using foreign-registered aircraft

NEW DELHI: Flying around in private planes registered overseas may be convenient and perhaps even fashionable in India Inc, but the country's aviation regulator and premier tax investigating agency are determined to force a crash-landing to possible misuses in this growing corporate fad.

The Directorate General of Civil Aviation and Directorate of Revenue Intelligence (DRI) are investigating whether corporate groups and tycoons regularly using such foreign-registered aircraft within the country have complied with Customs rules applicable on the use of such planes, both in letter and spirit.

These rules bar foreign-registered aircraft from being kept in the country for more than six months, lest they attract import duties.

But the authorities say many of these planes are predominantly used in India, flown out to neighbouring countries before the six-month period and brought back again for use in India, avoiding paying Customs duty in the process.

"The DGCA had raised this issue... The DRI looked into the matter and has now initiated an investigation," said an official with the aviation regulator. A Customs department official confirmed that the DRI had initiated a formal investigation.

The DRI recently issued a show-cause notice to Bharat Hotels, owners of Lalit hotels, as part of its investigation into the use of foreign-registered aircraft within the country, a move that culminated in the company choosing to settle with the Customs authorities by paying .`21 crore as duty in cash and bank guarantees.


The company did not respond to ET's queries despite numerous reminders. The agency, which started looking into the issue after the DGCA wrote to the finance and civil aviation ministries in April this year about possible abuse of laws in the use of such aircraft, is working with a list that contains around a dozen corporate names.

This list, prepared by the aviation regulator, also details the type of aircraft and their usage patterns. The DGCA had been keeping a close watch on flight schedules and movements of many such aircraft. Many of the industrial groups named in the list told ET that they were in full compliance with the rules.

JetLite engineer suspended for mid-air oil leakage

The Hindu - New Delhi,December 27, 2011 - PTI

A JetLite engineer has been suspended pending investigation after he allegedly left behind a tool in the engine cavity of a Ranchi-Mumbai flight which led to oil leakage and closure of one of the two engines mid-air.
However, there was no threat to the 130 passengers on board flight S2-722 on November 13, an airline spokesperson maintained.
But the Boeing 737 landed at Nagpur under emergency conditions.
On getting indications about fuel leakage, the crew shut down an engine as per standard operating procedure before making an “uneventful and safe” landing.
The airline's internal probe board found that the oil leak and low-oil pressure warning from one engine was caused by leakages from a hole in a drive pad. The hole was caused by the rubbing of an expander tool which was left in the cavity during maintenance of the engine the previous night.
Acknowledging that “an engineer did not follow the recommended procedure in accordance with the maintenance manual,” the spokesperson said “this oversight led to loss of engine oil during the flight.
“After rectification of the technical snag, the aircraft has been put back into service. The engineer concerned has been suspended pending investigation of the incident by the Directorate-General of Civil Aviation,” the spokesperson said.
The DGCA is yet to finalise its probe report, sources said. — PTI

Thursday, December 22, 2011

Delegation meets Minister

The Hindu - MADURAI,December 22, 2011

A delegation comprising members from Tamil Nadu Foodgrains Merchants' Association met the Union Civil Aviation Minister Ajit Singh at New Delhi, who took charge on Sunday last.
Submitting a memorandum led by its president S.P. Jeyapragasam and others, the members impressed on the minister to take up on top priority commencement of direct international flights to and from Madurai airport, which was given a facelift a year ago .
Bearing in mind the scope for bigger operations, the Airports Authority of India has provided huge infrastructure spending a little over Rs 100 crore. In the event of Madurai airport getting the international airport status, passengers from many southern districts from as far as Kanyakumari, Tuticorin and Tirunelveli could benefit as presently, a majority of them depend on Tiruchi airport to reach destinations such as Sri Lanka, Gulf countries, Singapore and Malaysia.
The presence of Customs and additional CISF personnel should be sanctioned for the airport, the delegation said and urged the minister to get things moving at the earliest.

Tuesday, December 20, 2011

Ajit Singh takes charge

The Hindu - NEW DELHI,December 20, 2011

Prime Minister Manmohan Singh on Monday introduced the newly inducted Minister, Ajit Singh, in Parliament.
The Prime Minister first introduced the Minister in Rajya Sabha and then in the Lok Sabha. Members of both the Houses greeted him with thumping of desks. Mr. Singh, chief of the Rashtriya Lok Dal, was sworn in as Cabinet Minister on Sunday and given Civil Aviation.
Earlier, after taking charge, Mr. Singh said that Civil Aviation was a “sensitive” portfolio.
He held a meeting with top officials of his Ministry at the Rajiv Gandhi Bhawan.

Sunday, December 18, 2011

FDI in aviation may not find takers, warns IATA chief

The Hindu - Geneva,December 18, 2011 - PTI

A top aviation industry representative has expressed doubts whether allowing foreign airlines to invest in Indian carriers would attract them enough to put in money now, when the domestic industry was in a financial mess.
However, he strongly supported the need for further liberalisation of India’s FDI policy in aviation as well as slashing of high taxes on jet fuel.
“In today’s difficult environment, generally speaking, many airlines are trying to keep their balance-sheets strong rather than investing in other airlines. .... Investing in loss-making business is obviously not a winning strategy,” IATA Director General and CEO Tony Tyler told PTI in an interview here. Almost all Indian carriers have suffered losses in the past two years.
But Mr Tyler made it clear that if investment by foreign airlines was allowed, “then investments from different kind of sources will arrive. ... Certainly, Indian laws are very restrictive on foreign investments in airlines.”
If FDI policy was liberalised, “you will see foreign money coming into the aviation market, because it is a rapidly growing market. Therefore, aviation-friendly policies are required, particularly lifting the dead weight of taxation,” Mr Tyler said when asked about the proposal to allow foreign airlines to pick up equity in Indian carriers.
Describing India as a big aviation market, he said getting across the country by air was the best way. “We need good domestic air transport infrastructure to facilitate foreign investment.” To questions on high taxes in India on jet fuel, Mr Tyler said “globally, even in the bad days, fuel costs do not account for more than 30 per cent of the total costs of airlines (the world over). But in India, it is 45 per cent.”
Terming high fuel prices in India as the “main problem” which was having “a significant drag” on Indian carriers, the IATA chief said “it handicaps the whole industry. It pushes costs up. So fares have to be increased to break even. Then you will have less traffic and less revenue. It is a horrible spiral of cost. It is penalising the industry.”
He asked the government to set India’s aviation industry free by expeditiously reducing taxes, especially those on jet fuel, instead of “micro-managing” the cash-strapped sector.
Mr Tyler said the service tax on tickets and high taxes on jet fuel “should be reduced or eliminated“.
“We urge the Indian government to set the aviation industry free (from policy interventions like checking airfares). Concentrate on building infrastructure and the air navigation system. There is a lot the Indian government can do,” he said.
In India, Mr Tyler said the aviation industry contributed five per cent of the GDP, around Rs 291 crore in tax revenue, provided four million jobs and another seven million jobs through tourism and related activities.

Saturday, December 17, 2011

MRO facility lifts off

The Hindu - THIRUVANANTHAPURAM,December 17, 2011

A Rs.110-crore Maintenance Repair Overhaul (MRO) unit of Air India set up near the Thiruvananthapuram international airport was commissioned on Friday.
Union Minister for Civil Aviation Vayalar Ravi inaugurated the unit set up on 6.07 hectares given by the State free of cost at Chakka to the national carrier.
Minister for Ports and Excise K. Babu, Shashi Tharoor, MP, Director of Engineering, Air India, K.M. Unni, Chief Operating Officer of the Kochi-based Air India Express S. Chandrakumar, and Chief Engineer, AIE, H. R. Jagannath were present.
With the commissioning of the state-of-the-art MRO unit, the national carrier will be able to take care of all the engineering requirements in-house initially of Boeing 737-800 aircraft of Air India Express, the no-frills airline of the national carrier.
All engineering checks from transits to ‘C' can be undertaken at the unit that has 5,000 sq.m of workshop, warehouse, and office space. It is expected to put the State capital on the list of global off-shoring MRO destinations.
Later, addressing the gathering, Mr.Ravi said the operational efficiency of Air India Express and Air India could improve with the opening of the facility.
He said the repair and maintenance of aircraft would be carried out here instead of waiting for engineers from Mumbai or sending the aircraft to the MRO unit in Mumbai.
Mr. Ravi said the unit would create job opportunities for many and instructions had been given to those managing the facility to recruit local people.
Pointing out that Air India was passing through a crisis, Mr. Ravi said the daily income of the carrier had doubled due to the overwhelming support of the staff and the crew.
Mr. Ravi said steps had been initiated to commence full-fledged functioning of the Air India headquarters in Kochi.
Dr. Tharoor, who presided over the function, said the unit would emerge as a money-spinner for the national carrier once third party business was obtained. He hoped Air India would set up more back offices at the unit .
Mr. Babu, who was the guest of honour, said making available more land for the MRO unit and the airport was a challenge as the local people were opposing land acquisition.
Aid for the displaced
“The government is ready for coming out with a package for those losing land for the development of the airport,” he added. The controversies over the inaugural function of the MRO should have been avoided and the Civil Aviation Ministry was not to be blamed, he added.
Mr. Jagannath said an aircraft was expected to enter the hangar by next week for phase checks as the Director General of Civil Aviation (DGCA) had already given the clearance.
“The unit is to get the clearance from the Kerala Fire and Rescue Services. The second hangar of the unit will be ready for receiving aircraft by January middle,” he added.
Around 150 personnel will be taking care of the activities at the unit. Of them, 30 will be aircraft maintenance engineers (skilled) and 50 would be mechanics (semi-skilled).
The cleaning and other jobs would be outsourced and the local people would get priority in the recruitment, he added.