BREAKING: Play ‘dirty’ to get international permit faster, Air Asia chief Tony Fernandes told ex-CEO Chandilya

Play 'dirty' to get international permit faster, Air Asia chief Tony Fernandes told ex-CEO ChandilyaMalaysia-based AirAsia Group CEO Tony Fernandes had instructed his team in India to play ‘dirty’ to get permits for international routes. Business Today is in possession of an audio conversation where former CEO of AirAsia India Mittu Chandliya is giving a presentation to his boss Tony Fernandes in the presence of lobbyist Rajender Dubey.

The discussion revolves around the aviation regulations, international flying permits, the Narendra Modi government, Tata Group chairman emeritus Ratan Tata and competition, especially SpiceJet. The audio is peppered with a lot of loose talk and abuses. It could nail Air Asia and its boss who has been booked by the CBI for allegedly bribing government officials. Air Asia has denied these allegations.

In the conversation, Fernandes says that he is ready to get the international routes for AirAsia India through “dirty ways”. “I am going to lose money. This is going to take a long time if we have done it the clean way. I say we do it the dirty way, but I want to get international routes faster,” Fernandes says in the audio. BT could not independently verify if it is Fernandes’s voice on tape.

When Chandilya confirms this with Fernandes, he replies with a yes. “Just do it. I was not open to do it for the license.” Fernandes says that “we are too slow. I am not going to waste another 20-30 million digging around. 3-4 million – whatever it takes.”

In the audio, Chandilya says that he knows exactly the person who can help with the five year rule. “From the regulatory standpoint, we need an entirely different strategy. We have to go top and all the levels down,” Chandilya says.

Fernandes says that he is not going to get involved. He asks Chandilya and Dubey to negotiate because they are on the ground. “It has to be you ultimately. If you go international, I will give more planes,” Fernandes tells Chandilya.

The 33-minute conversation starts with distress at the rival airline SpiceJet and how pilots are leaving the airline in huge numbers. In the middle of the conversation, Fernandes asks about the tax rates and tells the other two people to “get the tax to zero, and get the international tax to minimum. Let’s have five year deal with airports.”

In the tape, Chadilya talks about his closeness to the then aviation minister A. Gajapathi Raju. Chandilya tells Fernandes that N. Chandrababu Naidu was potentially the prime minister candidate, but he is now the chief minister of Andhra Pradesh.

“His finance minister is now the civil aviation minister. If you play nice with Chandrababu Naidu, we will get everything. The civil aviation minister told me. They want to build Vizag into aviation centre. They are willing to give zero tax on ATF [aviation turbine fuel] as long as we put a hub there. The minister told me that he doesn’t want to be seen physically with me that much, but you tell me what you want. This guy is like [Narendra] Modi. It’s good to have him on our side,” Chandilya tells Fernandes.

The Air Asia chief was booked, earlier this week, by the CBI (Central Bureau of Investigation) for allegedly bribing government officials to amend the once-controversial 5/20 rule that mandated airlines to have five years of experience and a minimum of 20 aircraft to fly on international routes. The CBI has said that the payments of about Rs 12.28 crore were remitted to India to lobby with civil servants during the UPA rule.

On Friday, the CBI summoned Malaysia-based Fernandes on 6 June to probe his involvement in breaking rules while obtaining an airline license. The CBI has also summoned the director of HNR Trading Dubey, who has also been named in the FIR filed by the agency.

CBI raided multiple offices of AirAsia on Tuesday and filed a series of cases against “unknown public servants” of the civil aviation ministry and the then Foreign Investment Promotion Board (FIPB), along with Tata Trusts’ R. Venkataramanan, and T. Kanagalingam, Deputy CEO of AirAsia Group.

Venkataramanan, whose laptop, iPhone and computer hard drives were seized by CBI on Friday, has denied the allegations.”It is commonly known that the present accusations qua Air Asia India find their root in baseless allegations made by Cyrus P Mistry and the Shapoor Pallonji Group against Tata Trusts Trustees (me included) and Tata Sons in his ‘revenge’ legal actions,” he said in a statement.

An email sent to AirAsia executives seeking response on the airline’s involvement in graft allegations has not been answered. The story will be updated once the company responds.

Government urged to bring forward bill giving businesses terror insurance

BRITAIN-ATTACKSThe insurance industry has urged the government to bring forward changes to coverage for businesses affected by terrorism, a year after Borough Market traders were forced to close following the London Bridge terror attack

City minister John Glen announced earlier this year that the government would allow Pool Re, the state-backed terrorism insurance lifeboat, to extend its schemes to include business interruption.

But the Bill which would enact this change has yet to be put to parliament.

Many Borough Market businesses lost money when the area was closed for 11 days after the incident last year.

Many were unable to recoup those losses due to a quirk meaning they were only covered for physical damage as a result of terrorist acts, and not business interruption.

“The changing nature of terrorism and the events at Borough Market highlighted the need for reform in regard to terrorism cover for business interruption insurance,” said Graeme Trudgill, executive director of the British Insurance Brokers’ Association (BIBA).

“We are delighted that Government has agreed to extend Pool Re cover to include non-damage business interruption and we are calling for the Bill that effects this to be brought forward as soon as possible.”

Bermondsey and Old Southwark MP Neil Coyle has also thrown his weight behind the calls to get the changes made, and said he will raise in parliament “this lackadaisical attitude to security” as he pushed for an end to delays

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Latest report links brand value and CX to business growth

BrandZ Top 100 Most Valuable Global Brands 2018 report shows customer experience has never been more vital for the bottom line

The importance of building brands and customer experience has never been more vital for the bottom line and shareholder value.

This is just one of the findings from the WPP BrandZ Top 100 Most Valuable Global Brands 2018 report. It also confirmed the positive effect of building brands over the long term, the importance of delivering consistent customer experience for growth, and customer experience as an even more important driver of differentiation.

The report, released by Kantar Millward Brown, found the top 100 global brands set a record this year, increasing in value 21 per cent to US$4.4 trillion, the highest year-on-year percentage increase in a decade and the greatest addition of value ever of US$748 billion.

Importantly, the report found brands grow value by anticipating and fulfilling the needs and wants of consumers in relevant ways that are innovative, create an emotional connection, and distinguish the brand from its competition. Companies investing in building valuable brands grow their top-line faster, and organic top-line growth is the greatest determinant of total shareholder return.

“Growth – even survival – depends on being innovative and different, and communicating those advantages in innovative and different ways. Brands that depend on the economic tide alone may be caught in the turbulence,” WWP CEO, David Roth, said.

Other findings include brands need to be present online, especially on mobile, and offline in traditional stores and any other pop-up or experiential venue, because the consumer could be in any of these places, or in more than one of these places, simultaneously.

The growth of brands was not all down to an improved economy. The report found brand and brand-building makes the difference, and as the marketplace becomes ever more complex, brands will only become more important.

Across the group, retail led category value growth for the second consecutive year, with a rise of 35 per cent. Two Chinese e-commerce giants drove the retail surge: JD.com increased 94 per cent in value, and Alibaba by 92 per cent. These two Chinese brands also led the Top 20 Risers, the list of brands that increased most in value year-to-year, followed by another Chinese brand, Moutai.

The technology category, meanwhile, led in actual value contribution. Technology added $348 billion in value to the BrandZ Global Top 100, while the retail Top 20 increase by $149 billion.

FirstGroup dumps chief executive as firm reports £326m loss

Aberdeen-based rail and coach group is ‘exploring options’ including sale of Greyhound

TransPennine expressThe chief executive of FirstGroup, which runs buses in numerous UK cities and the Great Western, South Western and TransPennine rail franchises, has been ousted after the company slumped to a £326m loss.

The troubled Aberdeen-based rail and coach operator, which has said it is exploring options including a sale of the US bus group Greyhound, also said it remained committed to the TransPennine contract despite revealing it would lose more than £110m running the franchise.

FirstGroup’s share price fell 11% as investors took fright at the string of bad news and the company’s financial prospects.

The poor performance of the business, which reported a profit of £152m in the previous financial year to the end of March 2017, has cost its embattled chief executive his job.

Tim O’Toole, who has seen FirstGroup’s share price slump 66% since his appointment in 2010, has resigned with immediate effect.

“The time is right for me to step aside,” O’Toole said. “Today’s results clear the way for the new approach sought by our chairman and the board.”

He will be replaced by the executive chair, Wolfhart Hauser – who said the board was “disappointed” with the company’s financial performance – while a successor is sought.

“This year’s results fell short of our ambitions – we are disappointed that we did not make the further progress we intended based on the trends we saw at the end of the previous financial year,” Hauser said.

Hauser, 68, said that after eight years it was not such a surprise that O’Toole had left so abruptly.

“I think if you look at his age (62) it is not totally all of a sudden,” he said. “The board thought at this time it is very important to have a fresh view in relation to strategy.”

Matthew Gregory, FirstGroup’s finance chief, said external consultants had been appointed to review all options for the Greyhound business, including a sale.

“We are not giving up the fight for this business,” he said. “There is a root-and-branch review and all options are on the table. Our obligation is to maximise value for shareholders.”

Profits at Greyhound slumped 39% to £25.5m as the bus group’s long-haul business took a battering amid increased competition from low-cost airlines in the US.

FirstGroup made a £277m non-cash write-down on Greyhound to take into account the change in value of the business resulting from the shift in how people are choosing to travel.The company also made a £106m non-cash charge relating to the losses it believes it will rack up for the remainder of the life of the TransPennine rail contract, which runs until 2023.

Gregory said FirstGroup was not seeking to hand back the contract for the heavily loss-making franchise, which it has run since 2016. It lost £6.5m in the year to the end of March.

“As of today we are committed to meeting the obligations of that franchise and are not walking away from it in any way, shape or form,” he said. “We can’t rule out the losses will get to a higher level – or possibly get to a lower level – this is our best estimate at the moment.”

In April the group rejected a takeover approach from the US private equity group Apollo. Earlier this month, the shareholder West Face Capital urged FirstGroup to sell the £1.4bn company, break it apart or spin off its North American operations.

Net debt fell from £1.3bn to £1bn year on year.

O’Toole, who was paid £1.26m in the previous financial year, will receive a payoff which will be revealed in FirstGroup’s annual report next month. The company would not comment on the level of the payout. However, O’Toole’s contract stipulates a 12-month notice period, so he will be negotiating a portion of the £1m he receives annually in pay and pension because of his sudden departure.

The Jet Business’s New Showroom in London Adds Intimacy to Jet Shopping

The company’s new location makes buying a jet a comfortable, relaxed experience—it even takes walk-ins.

The Jet Business showroomIf you’re looking for, say, a new watch, there are plenty of walk-in shops in most major cities that will allow you to compare pieces from different brands and get a feel for the product on your wrist before you buy. The same is not true when it comes to private jets, or at least it wasn’t until industry veteran Steve Varsano—who had previously worked at XOJET and Virgin Galactic—opened his street-level business jet showroom in London in 2011.

Seven years later, his firm the Jet Business—which focuses mostly on the buying and selling of large and long-range jets—has moved to a much larger new space in London’s upscale Mayfair district, just a few blocks away from its original location in Belgravia. Inside, customers receive the same face-to-face service you would find at a car showroom or boutique clothing store, building a rapport that helps ease the buying or selling process. And the approach seems to be working: according to the company, the showroom has attracted more than 2,400 guests, has serviced 157 billionaires and 326 corporate jet owners/principals, and has been visited by heads of state, royalty, and other dignitaries.

But to understand what really makes the Jet Business’s new showroom so special, you need to see it. So let us take you on a short tour of one of private aviation’s most fascinating sales spaces

5 Most Important Things in Business Today

President Trump said he will help China telecom company ZTE, which is suffering because of trade friction between the United States and the People’s Republic. According to Reuters:

U.S. President Donald Trump pledged on Sunday to help ZTE Corp “get back into business, fast” after a U.S. ban crippled the Chinese technology company, offering a job-saving concession to Beijing ahead of high-stakes trade talks this week.

“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter in the first of two tweets about U.S. trade relations with China. It said he and Chinese President Xi Jinping were working together on a solution for ZTE.

A Xerox Corp. (NYSE: XRX) plan to merge with a Japanese company has died. According to Reuters:

Xerox Corp has scrapped a planned $6.1 billion deal with Fujifilm Holdings Corp in a settlement with activist investors Carl Icahn and Darwin Deason that also hands control of the U.S. photocopier giant to new management.

The victory for the billionaire investors puts the Japanese company further on the back foot in any new negotiations with Xerox, although it is by no means out of contention as Xerox is now expected to go up for sale in an auction at a higher price.

Tesla Inc. (NASDAQ: TSLA) is having problems with engineering executives. According to The Wall Street Journal:

Tesla Inc. will be without two important executives just as the electric-car maker struggles to boost production of its first mass-market vehicle and faces doubts about its ability to raise cash.

Matthew Schwall, who was the company’s main technical contact with U.S. safety investigators as the Silicon Valley auto maker races to develop driverless-car technology, left the company for rival self-driving car company Waymo LLC. His departure comes as the National Transportation Safety Board has been investigating multiple crashes involving Tesla vehicles.

Nintendo is re-releasing one of its old products. According to CNBC:

Nintendo is bringing back its retro NES Classic Edition console in June, the company announced Monday.

The NES was first released in the mid-1980s. At the end of 2016, Nintendo re-released the console which was pre-loaded with 30 retro games such as “Super Mario Bros” and “Donkey Kong.”

It was in very short supply and many found it difficult to get their hands on due to the popularity of the console. But the Japanese gaming giant announced via Twitter that the NES Classic will return to stores in the U.S. on June 29. It costs $59.99.

“Avengers: Infinity War” has topped $1 billion in ticket sales. According to Box Office Mojo:

Disney and Marvel’s Avengers: Infinity War had a wonderful Mother’s Day weekend. The superhero feature topped the domestic box office for the third weekend in a row, delivered the second largest opening in China ever*, became the eighth largest domestic release of all-time, fifth largest global release and became the first superhero film to ever top $1 billion internationally.

Old East business district seeks to triple its reach

An Old East Village business agency worked with the private sector to leverage more than $300 million in investment for the neighbourhood.

An Old East Village business agency worked with the private sector to leverage more than $300 million in investment for the neighbourhood.

Jennifer Pastorius wants more.

The Old East Village Business Improvement Area made a pitch to the city’s planning and environment committee to grow its size, a move supported by a city staff report.

Now, the BIA is small, one block east of Adelaide, on Dundas Street to Lyle. The plan before the city will see it reach about five blocks east to Woodman Avenue, and it will include Western Fair.

There are transformative projects coming up, the Adelaide Street underpass, rapid transit, the Old East secondary plan, and that will all require more attention from our office.

Jennifer Pastorius

“We want to be able to provide greater support, to build upon the successful revitalization we have had. We are smaller than most and we want to expand,” said Pastorius, the BIA general manager.

The BIA wants its size to conform to the Community Improvement Plan boundaries for Old East, she added. That plan offers several programs and services from the city to better the area.

“Our office has worked with businesses to advocate for more than $300 million in public and private investment here,” she said, including the Medallion apartment tower developments, work on Western Fair, and a revitalization of the area that has seen it add restaurants and retailers along Dundas Street, east of Adelaide.

The larger the BIA, the more business will pay a levy and that money can support the BIA’s work, she added.

“There are transformative projects coming up, the Adelaide Street underpass, rapid transit, the Old East secondary plan, and that will all require more attention from our office,” she said.

“We have always been an office that has worked in the confines of some fiscal limitations that do not reflect the amount of advocacy and investment dollars we bring in,” said Pastorius.

Now, the BIA takes in about 42 properties within its boundary, and that will grow to 158 under the new plan, said Kerri Killen, a planner with the city.

The levy BIA members pay is based on the assessed value of their property. Under the current boundary, BIA members’ property is assessed at about $7.5 million. With the expansion, it will top $20.1 million, said Jim Logan, manager of taxation and revenue.

That sounds like a lot of money, but for the BIA it means its revenue from the levy will only increase from $14,500 a year to about $42,000.

That additional cash may go to hiring staff, and some street beautification projects.

Some businesses were caught off guard by news they may be included in the BIA. The owner of the Hungary Butcher, on Dundas Street across from Western Fair, will be swallowed up, but no one has told owner Miki Hambalek, he said.

“It would be nice if the businesses are informed of this. I would like to be in the loop,” said Hambalek.

“Business owners already have so much red tape and costs. This is the first I am hearing of this.”

The BIA is working to inform all businesses of the move, but has not yet told everyone, said Pastorius.

Brexit: Euroclear confirms holding company move from London to Brussels

The tax residence and domicile of the clearing house will move to the Belgian capital later this year

Brexit has put the future ability of UK-based financial firms to operate across the European Union and eurozone in doubtEuroclear, the financial clearing house, has confirmed it is shifting the residence of its holding company from the UK to Brussels due to Brexit.

The tax residence and domicile of the holding company of the Brussels-headquartered group, which underwrites trades between large financial firms, will also transfer to the Belgian capital later this year.

Brexit has put the future ability of UK-based financial firms to operate across the EU and eurozone in doubt and some firms are taking pre-emptive action in case access ends up being withdrawn.

“We want to redomicile the topco to the eurozone. It will be in Belgium as it’s where most of our business operations are. We are preparing to launch a transfer of arrangement sometime after the summer,” Lieve Mostrey, Euroclear’s chief executive told the Financial Times.

“For the type of company we are, we feel more comfortable in the eurozone,” she added.

Last month Euroclear outlined plans to establish operations in Dublin, to enable the firm to continue to support the settlement of Irish corporate securities after Brexit.

Euroclear was founded in 1968 to settle trades in the nascent eurobond market (designed to tap large firms’ offshore foreign currency bank balances) and today holds around €29 trillion of clients’ assets.

Clearing houses are positioned between the two parties involved in a financial transaction and effectively safeguard completion of a deal even if one side goes bust.

Another London-based clearing house, LCH, part of the London Stock Exchange, is the EU’s biggest clearing house for euro-denominated transactions.

Research from EY in 2016 suggested that forcing euro clearing out of the City could result in up to 83,000 job losses in London over the next seven years.

Number of UK restaurants going bust up by a fifth in 2017

Chains under pressure from rising costs and competition amid consumer spending squeeze

Jamie Oliver restaurantThe number of UK restaurants going bust jumped by a fifth last year as major chains came under pressure from rising costs and competition amid a squeeze on consumer spending.

There were nearly 1,000 insolvencies across the restaurant industry in 2017 compared with 825 the year before, according to law firm Moore Stephens. Casualties included the Handmade Burger Co chain and Liverpool-based Viva Brazil Steakhouse which was later bought out in a rescue deal.The pain has continued into 2018 with Jamie’s Italian planning to close 12 of its 37 UK branches as part of a rescue package, while burger chain Byron is to close up to 20 restaurants – nearly a third of its outlets – in a similar deal. Earlier this month, specialist chain Square Pie closed off all five of its remaining sites after going into administration.

“Pressure on the restaurant sector is now hitting even the biggest names on the high street,” said Jeremy Willmont, head of restructuring at Moore Stephens.

“The jump in insolvencies over the last year demonstrates just how tough the current economic conditions are for the restaurant trade.”

The rise in the legal minimum wage and low availability of staff prompted by fewer Europeans coming to the UK in the wake of the Brexit vote have increased the challenges. The fall in the value of the pound has made potential take-home pay less attractive for European workers and increased the price of food and other essentials for restaurateurs.

“Running a restaurant business is becoming increasingly challenging. Employment costs are rising and the market in areas such as London is becoming ever more saturated,” Willmont said.

Fears are growing that Jamie Oliver’s Barbecoa chain of steak restaurants could soon fall into administration. Oliver recently put both branches of the upmarket barbecue chain up for sale, but has yet to find a buyer.

Des Gunewardena, co-owner of D&D, the group behind about 30 high-end London restaurants including Le Pont de la Tour, Coq D’Argent and Quaglino’s, said trading was tough across the industry amid rising wage bills and other costs.

He said D&D’s sales were rising by a few percent in London but increasing costs were impacting business.

While the upper end of the market in London is facing less pressure than the chain-led casual dining sector where private equity fuelled a wave of expansion in recent years, Gunewardena said D&D was now “rebalancing” investment outside the capital.

“We are hedging our bets. We have a lot of projects we’ve been offered in London but we are also opening three of our biggest ventures elsewhere.

“It could be that regional cities prosper more than London over the next 20 years. There is no evidence that London is not going to continue growing but we are in uncertain economic times when governments could change things fundamentally.”

The group, which launches its first Manchester outlet, 20 Stories, later this month, opened its first regional British outlets in 2013 – Angelica and Crafthouse in Leeds’ Trinity shopping centre.

The two openings will be the group’s first in the US since founder Terence Conran opened Guastavino’s in 2000, and the current owners’ first new overseas venture for more than a decade.

Foreign jurisdictions try to lure legal business from London

They face an uphill battle

LOFTILY as they may disdain the profit motive, Britain’s judges are, on a national level, money-spinners. English law is often specified as the one under which commercial contracts are to be interpreted and enforced. And disputes often end up being heard in British courts. But, like any business, the law is competitive, and other jurisdictions want to snatch a share of this market. London is mounting its defences.

It has several hard-to-beat advantages: the use of English; a reputation for fairness; the centuries of precedent that lend predictability. Richard Caird, a partner at Dentons, a global law firm, notes that a foreign company can expect an impartial decision in an English court, even if it is pitted against a British firm. Over 70% of cases in the English commercial courts involve a foreign party. In 2015, Britain had a £3.4bn ($5.2bn) positive balance of payments on legal services.

One way for other financial centres, such as Dubai and Singapore, to compete is by becoming hubs for arbitration—by agreeing to abide by the decision of a tribunal, disputants can bypass courts entirely. But as Philip Rubens of Teacher Stern, a law firm in London, points out, such tribunals create no binding precedent. Financial firms often want their day in court.

So Singapore and Dubai, in the UAE, have also set up special commercial courts. The Netherlands, France and Kazakhstan have similar plans. Mostly, these courts will conduct cases in English and apply internationally accepted laws. Singapore and Dubai have even hired judges retired from London and other jurisdictions.

So far, however, they have attracted little international business. Since its establishment in 2015, no case has been heard in the Singapore International Commercial Court based on a contractual agreement between the parties to hear a case there, though proceedings have been transferred from other Singapore courts. Most cases heard in the Dubai International Financial Centre Courts after they opened to foreign litigants in 2011 have had UAE links.

Nor is London complacent. Judges conducted a survey of big users of the commercial courts, such as lawyers and bosses at financial institutions. One consequence was the creation in 2015 of the “Financial List”. Litigants in financial disputes, generally with over £50m ($65m) at issue, can apply to have their cases heard on the list, by judges with expertise in financial law.

Some new procedures have been introduced for Financial List cases. In ordinary commercial courts, for example, different parts of a trial are heard by different judges. On the Financial List, one judge hears the entire case. The jury is out on whether the new system improves justice. Litigants had hoped Financial List cases would be faster. But Vaninna Ettori, an adviser to the Chancellor of the High Court, notes that the sort of cases that appear on the Financial List would typically be expedited anyway. Ultimately, as Mr Rubens points out, its success will depend on how many Financial List cases are overturned on appeal.

Dubai and Singapore are unlikely to make much of a dent in London’s dominance. Its courts’ reputation has been built over many years, and the forces of inertia stop people from changing contract terms. Mr Caird notes that the true threat to Britain’s courts will be its departure from the EU. He questions whether financial institutions that move operations to the continent as a result of Brexit will still use British courts. Brexiteers worry about the influence of European judges on British affairs after Brexit. Maybe they should worry about continental European judges snapping up the valuable cases.