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Hoping for clearer (and brighter!) skies in 2015

Shri Ashok Gajapathi Raju Pusapati, Union Civil Aviation Minister, believes that security should be effective and that VIPs should not avoid being frisked at airports. He is also of the opinion that proposals to set up institutions such as a Civil Aviation Authority or a Civil Aviation Force will just mean cosmetic changes unless rules are simplified. An extremely down to earth and humble man, sharing a cup of tea with him, and hearing him talk about the aviation scenario in India, the present, the future and the hope, was indeed an interesting experience. Here’s more…

A country‘s transportation sector plays an integral role in the growth and development of an economy. According to the Indian Aerospace Industry Analysis report, in terms of passenger traffic, India is currently the ninth largest aviation market in the world. With regards to air cargo tonnage, India leads the South Asian region consisting of Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Currently, India has 128 airports – including 15 international airports.

Over the past 10 years, the Indian civil aviation sector grew by 14.2 per cent in terms of domestic passengers and 7.8 per cent in terms of air cargo (in CAGR – compound annual growth rate). In 2010-11 six major Indian carriers with around 400 aircraft catered to 143 million passengers, including 38 million passengers that originated abroad. In 2010-11, Indian airlines carried approximately 1.6 million tons of air cargo. Further growth of the aviation sector between 2011- 2013 is estimated at 15 per cent.

India’s civil aviation industry faced turbulent weather in 2014 even as two new airlines with foreign collaborators joined the five scheduled operators to trigger a price war that squeezed margins further, with falling fuel costs giving some respite in later months.

The Tata’s-promoted AirAsia, in collaboration with the Malaysian budget carrier and Delhi-based entrepreneur Arun Bhatia’s Telstra TradePlace, took wings in June as a regional carrier, while Vistara, again a Tata’s venture with Singapore Airlines, took to skies earlier this year.

This apart, AirCosta, led by Andhra Pradesh-based industrialist L P Bhaskar Rao, saw its first full-year operation. But these new entrants apart, the aviation industry was saddled with high interest cost in 2014, which stretched the bottom lines further, with high fuel cost adding to its woes for the bulk of the year save from mid-November when the global crude prices started to plummet. As a result, growth did not translate into higher profits for most carriers.

Between January and October, the latest month for which data is available, state-run Air India and private airlines ferried 55 million passengers, which was a healthy growth of 8.61 per cent over the 50 million in the like period of the previous year.
Yet, as per industry estimates, the carriers are expected to log a collective loss of more than $2 bn in the current calendar year. The passenger load factor, which is a key indicator of operational efficiency, varied between a low of 63.3 per cent and a high of 85.9 per cent.

How would you rate the current aviation scenario in India?
It is sad to note that aviation in India has not got the desired growth due to various impediments, most of which, unfortunately, are self created. We plan to get rid of these issues soon. There are a lot of non-performing assets in the Indian aviation scenario, such as world-class airports lying vacant, airstrips lying unused and more.

What needs to be done to revive aviation?
This is a sector which has not seen any growth worth mentioning in the last two years. The fact that we have so many unutilised bilateral entitlements means no thinking had gone into it during allocations. We need to provide regional connectivity as well as allow our carriers to operate international (flights) and utilise unused bilateral entitlements. Apart from the 31 non-operational airports in the country (on maintenance of which, the AAI had spent over `34 crore in three years), there are 45 defence airports, 83 state government airports and five private air strips lying unused. That’s a lot of ‘unused’ inventory, which if put to good use, can lift the aviation scenario of our country. We probably need hubs in the country so that we can harness these things. Currently, we are giving a free hand to outsiders and restricting our players.

You recently released a draft policy on civil aviation. What was the main reason behind this?
It is common knowledge that aviation in India is nowhere near its potential. You can put the blame on the economic infrastructure. But the bigger question is, how do we rise to fulfil our potential? Based on certain discussions, a draft paper was prepared and released recently. The idea was that the quality of decisions depends heavily on the quality of information.
Another perception is that all points have not been covered, and that certain things could have been put in a different way. So, a timeframe should be put on it.

It will ensure that all the information that the stakeholders feel ought to have gone into the process of consultation does appear. This way, any decision that comes in becomes a conscious decision because governments are expected to act consciously, not unconsciously. So, that is the basic shift.

The civil aviation draft policy has been criticised for lacking clarity on issues such as airport privatisation. What do you have to say about it?
Action plan of the aviation policy will follow post the consultations. In terms of airports, we need to have a mixture (private, government and management contract) and generate competition among them. Before these airports were privatised, there were only government airports. The quality of airports might have gone up after privation but the costs have also gone up. So, there is a flip side of it.

The new aviation policy talks of introducing best practices at the Directorate General of Civil Aviation (DGCA).
DGCA’s basic job is to ensure safety, which should not be compromised. As far as other rules are concerned, it’s an evolving process. You can ask me, why are things not being cleared in a reasonable period of time? Is it not stifling our growth? You see, we should understand that we are only capable of restricting Indians through such policies.

The downgrade of the DGCA happened under the earlier government but that has created problems for all our carriers even today. (The US Federal Aviation Administration downgraded India’s aviation safety ranking early this year.)

There were plans of replacing DGCA with the Civil Aviation Authority (CAA). Is that plan on hold?
Well, whatever name it’s called, it remains the same unless the regulations are simplified. Changing the name does not change anything. What we want is a sense of direction. We would like to have meaningful norms that make sense. Wouldn’t you?

Blurb:
India’s civil aviation industry faced turbulent weather in 2014 even as two new airlines with foreign collaborators joined the five scheduled operators to trigger a price war that squeezed margins further, with falling fuel costs giving some respite in later months.