Aviation Newsletter | November 2024

In this November 2024 edition of our newsletter, we bring you a concise analysis of the rapid growth in India's civil aviation sector, now the world's third-largest domestic market. As the industry evolves to improve connectivity, enhance operational efficiency, and embrace sustainability, we highlight key regulatory changes, major infrastructure approvals, and recent legal precedents that are shaping the future of aviation in India and globally.

We hope this issue offers valuable insights as we continue to track the latest developments and opportunities in this dynamic sector.

A. Key Updates - India

(a) The Directorate General of Civil Aviation ("DGCA") issues notice to Akasa Air over safety protocol lapse

November 29, 2024- DGCA has flagged Akasa Air for failing to follow safety protocols following an incident in March 2024 where one of its aircraft experienced a hard landing during a flight from Bagdogra to Bengaluru. A hard landing occurs when an aircraft touches down with excessive force, potentially straining the aircraft's structure and systems. According to industry regulations, such incidents require a thorough investigation and corrective action, including simulator training for the pilots involved.

The DGCA's audit revealed that Akasa Air did not meet the requirements. Instead of providing the necessary corrective training to the pilot, the airline closed the case with a counseling session. This has led the DGCA to issue a notice to Akasa Air requesting an explanation from the airline's head of training within 14 days.

Source: 100 Knots

(b) Bureau of Civil Aviation Security ("BCAS") imposes fine on IndiGo for aviation security violations

November 29, 2024- BCAS has fined IndiGo Rs 5 lakh for violating aviation security protocols under Rule 51 of the Aircraft (Security) Rules, 2023. The airline is currently reviewing the order, which was issued on November 27, 2024, and plans to appeal the decision before the appropriate appellate authority. IndiGo has stated that the fine will not have any material impact on its financials, operations, or other activities.

Source: Economic Times

(c) BKJ Airports enters airport management sector with significant investment plans

November 27, 2024 - BKJ Airports, a part of JK Jajoo Ventures, has secured concessions to manage ground handling operations at ten airports across India. The company plans to invest over Rs 1000 crore in the next five years as part of its expansion into the airport management sector. BKJ Airports aims to manage more than 50 airports globally and diversify its offerings in the aviation services market.

Source: Economic Times

(d) Directorate General of Civil Aviation ("DGCA") monthly report shows traffic rises by 5.3%

November 25, 2024- DGCA has issued its monthly report which recorded domestic air passenger traffic increase by 5.3% annual growth and 8.08% monthly growth, reaching 1.36 crore passengers. This has risen from 1.26 crore which was recorded last year. According to the report the market share of scheduled domestic airline has been majorly occupied by the Indigo Airline with 63.3% of total market share, whereas Air India stands on 2nd position covering market share of Air India.

Source: DGCA Website

(e) IndiGo recognized as '2024 Airline of the Year' by CAPA

November 25, 2024 - IndiGo has been named '2024 Airline of the Year' by CAPA - Centre for Aviation at the Global Aviation Awards for Excellence. The award acknowledges IndiGo's transformative role in expanding air travel accessibility in India and its efforts to enhance sustainability. CAPA highlighted the airline's growth in both domestic and international markets, as well as its strategic initiatives in improving operational efficiencies.

Source: Indigo, Media Report

(f) Japan Airlines and Indigo to launch codeshare partnership

November 25, 2024- Japan Airlines and IndiGo have announced a new codeshare partnership which is set to commence on December 16, 2024. This collaboration will enhance travel connectivity between Japan and India with Japan Airlines initially expanding its reach within India through IndiGo's extensive domestic network. The codeshare agreement will offer more travel options for passengers, allowing them to book flights on a single ticket between the two carriers.

The partnership, subject to government approval, will initially cover several domestic routes within India, including key connections from Delhi and Bengaluru to Japan Airlines-operated international flights. This move aligns with both airlines' efforts to foster stronger economic and cultural ties between India and Japan with further enhancing travel options for business, tourism, and leisure.

Source: Indigo, Media Report

(g) Air India to launch new aircraft maintenance training facility in Bengaluru

November 22, 2024 - Air India has announced plans to set up a Basic Maintenance Training Organization ("BMTO") at Bengaluru Airport City to develop skilled aircraft maintenance engineers. The DGCA-certified facility, expected to open by mid-2026, will offer a comprehensive 2+2-year Aircraft Maintenance Engineering ("AME") program. The first two years will focus on academic coursework while the final two years will provide practical training at Air India' s new Maintenance, Repair, and Overhaul facility which is also set to open in early 2026.

In collaboration with Bengaluru Airport City Limited, a subsidiary of Bangalore International Airport Limited, the purpose-built campus will span 86,000 square feet and include modern classrooms, laboratories, and qualified trainers. BMTO is a key part of Air India's transformation journey, addressing the airline's growing need for maintenance engineers as its fleet expands, and will foster a self-reliant workforce aligned with industry standards.

Source: Air India, Press Release

(h) India's domestic airlines fleet set to expand to 1400 Aircraft in five years

November 21, 2024- India's domestic airlines are expected to grow their fleet to 1400 aircraft within the next five years, up from the current 800 planes. This significant expansion is driven by major orders from airlines such as IndiGo and Air India. The growth reflects the increasing potential of India's aviation sector as highlighted by the Secretary of Civil Aviation during the 'Giving Wings to Dreams Awards 2024', organized by Women in Aviation India and the Ministry of Civil Aviation.

The Secretary also praised the success of the Rs 120-crore Production Linked Incentive ("PLI") scheme for drones, noting that it has helped beneficiary companies achieve a total turnover of Rs 1400 crore. The first PLI scheme, introduced in 2021, has now concluded marking a milestone in the development of India's aviation and drone industries.

Source: Economic Times

(i) HaveUs AeroTech India launches 70,000 Sq. Ft. engineering mega warehouse

November 12, 2024- HaveUs AeroTech India has announced the launch of its Engineering Mega Warehouse. The 70,000 square feet facility is set to support maintenance, repair, and overhaul operations ("MRO"), improving turnaround times for airlines operating in the region. The warehouse will store a wide variety of engineering spares, aircraft components, and engines with specialized storage for complex avionics, hydraulic, and mechanical parts. The facility will operate 24/7, supported by air suspension trucks for seamless transport of heavy parts between the airport and the warehouse.

In addition to streamlining MRO services, the warehouse will contribute to India's vision of operational self-reliance. The strategic location leverages Bengaluru's growing role as a key aerospace and MRO hub. With future expansions planned in Delhi and Mumbai, the company is addressing rising global supply chain demands.

Source: Business Standard

(j) Singapore Airlines invests Rs 3,194.5 crore in Air India following Vistara Merger

November 12, 2024 - Singapore Airlines has committed an investment of Rs 3,194.5 crore in Air India following the completion of the operational integration and legal merger between Air India and Vistara. The merger officially completed on November 12, 2024, consolidates the operations of Air India, Air India Express, and Vistara into one full-service carrier, marking a significant milestone in the Air India Group's post-privatization transformation.

The merger follows the earlier integration of Air India Express and AIX Connect (formerly AirAsia India) on October 1, 2024. The unified Air India Group now operates over 8,300 weekly flights on 312 routes, connecting more than 100 domestic and international destinations with a fleet of 300 aircraft. As part of the deal, Singapore Airlines, which previously held a 49% stake in Vistara, now holds a 25.1% stake in the newly formed Air India Group and have expanded their codeshare agreement, adding 11 new Indian cities and 40 international destinations to their joint network.

Source: Air India, Press Release

(k) Kerala Authority for Advance Ruling ("AAR") has ruled against Adani Thiruvananthapuram International Airport Ltd

November 12, 2024 - The Kerala bench of the Goods and Services Tax ("GST") Authority for Advance Ruling has ruled that the concessionaire agreement between the Airports Authority of India ("AAI") and Adani Thiruvananthapuram International Airport Ltd is a supply of services and, therefore, liable to GST. This decision contradicts previous rulings by the Rajasthan, Gujarat, and Uttar Pradesh AARs which had exempted similar airport transfers from GST, classifying them as "going concerns."

The Kerala AAR concluded that the agreement which involves the operation, management, and development of the Thiruvananthapuram airport, does not qualify as "transfer of business" and cannot be treated as a "going concern" exempt from GST. According to the ruling, the transaction constitutes a supply of services under Section 7 of the GST Act.

The AAR further clarified that GST would be applicable to the leasing and supply of assets between AAI and Adani Thiruvananthapuram International Airport Ltd, including the annual concession fees charged by AAI and any invoices raised for salary/staff cost reimbursements.

Source: Business Standard

(l) SpiceJet settles dispute with Export Development Canada ("EDC")

November 14, 2024- SpiceJet has resolved its USD 90.8 million dispute with EDC for just USD 22.5 million, resulting in a savings of USD 68.3 million. As part of the settlement, SpiceJet gained full ownership of 13 EDC-financed Q400 aircraft which will help reduce operational costs by eliminating monthly rental payments.

This resolution strengthens SpiceJet's financial position and operational capabilities, as the airline can now manage these aircraft without incurring additional rental expenses. In other financial moves, SpiceJet raised Rs 3,000 crore through a successful Qualified Institutional Placement in September 2024 and has cleared over Rs 600 crore in pending dues since late September.

Source: The Economic Times

B. Key International Updates

(a) Boeing workers vote to end seven-week strike

November 5, 2024- Boeing workers in the U.S. have voted to end a seven-week strike after approving the company's latest contract offer with a 59% majority. The deal includes a 38% pay increase over four years, USD 12,000 signing bonus, and increased employer contributions to retirement plans. However, it does not reinstate the defined-benefit pension that was frozen in 2014. The strike, which disrupted production of the 737 Max and 777, had cost Boeing an estimated USD 100 million per day in lost revenue. This resolution comes as a relief to the company, which has faced financial losses exceeding USD 8 billion in 2024. Approximately 33,000 workers in the Seattle area are set to return to work soon.

Source: The Economic Times

C. Significant developments

(a) Sirius India Airlines plans to raise USD 100 million for fleet expansion

November 17, 2024- Sirius India Airlines, an air charter services operator, plans to raise USD 100 million through debt and other instruments to expand its fleet and services. The company aims to have 50 private jets by FY 2027 and expand to markets in the Far East, Southeast Asia, and East Africa.

Founder Arun Kashyap confirmed that the funds are expected to be secured by March 2025, with the expansion plan set to begin in FY 2026. The company has already started discussions with lenders and strategic investors. Sirius India in collaboration with Dubai-based Transworld Group currently operates three luxury jets. The airline plans to add 10 aircraft in the next fiscal year, with the goal of reaching 50 jets by March 2028. The fleet expansion will include small and medium jets, as well as aircraft for group charters.

Source: The Economic Times

(b) Seaplane lands for first time in Assam

November 14, 2024 - Union Minister Shri Kinjarapu Rammohan Naidu attended the seaplane demo launch at Umiam Lake in Meghalaya, highlighting the role of seaplanes in boosting tourism and local economies. The Minister outlined new initiatives under the UDAN scheme to enhance seaplane operations and announced collaborations with Indian manufacturers like HAL and Mahindra Aerospace for domestic seaplane production. He also reaffirmed the government's commitment to improving air connectivity in Meghalaya, including ongoing developments at Shillong and Tura airports.

Source: Press Information Bureau

(c) India liberalizes air treaties executed with Vietnam and Uzbekistan

November 12, 2024- India has liberalized air transport agreements with Uzbekistan and Vietnam. This step will ensure better connectivity and will foster strong bilateral relations. The significant move is expected to boost the travel as well as trade opportunities by providing more flexible rules to both the countries. This relaxation in the air treaties will allow airlines to access more routes which will eventually boost the air traffic between the countries.

Source: The Economic Times

D. Key Judicial Precedents

(a) Spirit Airlines files for Bankruptcy Protection amid Financial Woes

November 18, 2024- Spirit Airlines has filed for bankruptcy protection after struggling with heavy losses and debt. The Florida-based low-cost carrier is the first major U.S. airline to file for Chapter 11 since 2011. The airline has reached a deal with bondholders to restructure its debts and expects to exit bankruptcy by Q1 2025. Spirit will continue normal operations throughout the process, with no disruption to flights or bookings.

Spirit's financial difficulties were worsened by intense competition and an oversupply of seats. The airline's average fare per passenger dropped 19% in the first half of 2024. It also faced challenges with Pratt & Whitney engines, leading to aircraft groundings. As part of the restructuring, Spirit will reduce its debt by USD 795 million and receive a USD 350 million investment from bondholders. It also secured USD 300 million in debtor-in-possession financing.

Source: Reuters

(b) Supreme Court orders liquidation of Jet Airways on failure of resolution plan

November 7, 2024- The Supreme Court of India has invoked its extraordinary powers under Article 142 of the Constitution to order the liquidation of Jet Airways due to the failure of the resolution plan. The airline's resolution process had been stalled for five years, and despite the infusion of Rs 200 crores by the Jalan KalRock Consortium ("JKC"), the first tranche of the agreed payment of Rs 350 crores was not made.

The Court set aside a decision by the National Company Law Appellate Tribunal ("NCLAT") which had allowed the transfer of ownership without fulfilling the terms of the resolution plan. The Court directed the National Company Law Tribunal to appoint a liquidator and commence liquidation proceedings, with the Performance Bank Guarantee of Rs 150 crores provided by the consortium being forfeited.

The Court expressed concerns over the disregard of legal principles by the NCLAT and highlighted the failure of the resolution applicant to comply with the approved plan, particularly regarding payment of dues. With this decision, the Court emphasized the need for speedy and substantial justice in insolvency proceedings.

Source: Live Law

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