16 Oct, 2012

Indian Aviation Minister Outlines Full National Plan, Projects and Strategy

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New Delhi, 12 Oct 2012 (Ministry of Civil Aviation) – Union Minister of Civil Aviation Mr Ajit Singh, addressing the Economic Editors’ Conference in New Delhi today, said that the Government’s decision to allow 49% FDI by foreign airlines in Indian carriers will help in rapid growth of airline sector in India.

The Minister highlighted major decisions taken in the recent past to help the growth of aviation industry which included adoption of a liberal policy to allocate traffic rights to private Indian airlines to various international destinations in addition to Air India, allowing Indian carriers to import ATF, approval of Turn Around Plan (TAP) for Air India, upgradation and development of airports, development of navigation system GAGAN and steps taken to create separate Air Accident Bureau.

Mr Singh said that the future plans of the Ministry include rationalization of price of ATF by getting it declared as a notified product, improving connectivity to smaller and remote parts of the country, enhancement of helicopter connectivity, developing India as an international hub, developing low cost airports, creation of CivilAviation Authority, creation of Civil Aviation Security Force and skill augmentation in Civil Aviation sector.

The following is the text of Minister’s address:

1.         Aviation has been identified as one of the most important growth engines essential for the fast economic growth of the country, besides providing air transport for passengers and goods. Civil Aviation facilitates overall economic growth of the country including trade & commerce, domestic & foreign investments, transfer of technology, creation of infrastructure, domestic & international tourism and generation of employment etc.

2.         Air transport in India has witnessed unprecedented growth in the recent past. During the last 10 years, compounded annual growth rate of passenger traffic has been approximately 15%. A key trend in the business model of the Indian Carriers in the domestic operations is that domestic traffic is rapidly shifting to Low Cost Carrier model. From a level of about 1% in 2003-2004, the market share of LCC including the LCC arm of full service carriers is today exceeding 70% of the total domestic traffic.

3.         The high growth rate of aviation sector in passenger segment is not getting reflected in the financial health of airline carriers in India. The approximate losses of airlines in the last financial year 2011-12 have been over Rs. 10,000 crores.  One of the major challenges of the air traffic industry in India is the high and growing debt burden of the carriers.  Nearly half of the debt is aircraft related and the rest is accounted for by working capital loans, dues to airport operators and fuel companies. While there are number of structural factors that are responsible for this phenomenon, the operating cost environment is adversely impacting the financial performance of the airline sector.

4.         Though there is a slow-down of global economy, the international passenger traffic in India has witnessed a growth of 5.4% during the period from January – August 2012 compared to corresponding period in the year 2011:

 

However, the number of domestic passengers during the period for January-August 2012 remains almost the same as in the year 2011:

 

5.         Allowing 49% FDI by foreign airlines in Indian carriers

(Detailed note is enclosed as Annexure-1 see below).

6.         Allocation of International Traffic Rights

Government has adopted a liberal policy to allocate traffic rights to private Indian airlines to various international destinations in addition to Air India. However, Air India has always been given priority in allocation of the traffic rights. In Summer-2012, 200 services per week were allocated to private Indian airlines as per the brief given below :-

 

Air India was allocated 471 services per week during the same period i.e. Summer-2012. The utilisation of these allocated rights during Summer-2012 so far has been as follows :

 

The Ministry has already asked the demand for next 3-seasons w.e.f. Winter-2012 from various Indian carriers including private carriers and very soon more traffic rights under bilateral agreements will be allocated liberally to these carriers as per their demand and the process will be completed within this month.

7.         Approval of TAP & FRP of Air India

(Detailed note is enclosed at Annexure-2 see below).

8.         Allowing Indian carriers to import ATF

Indian carriers have now been allowed to import ATF directly. However, availability of on-site and off-site pipeline/infrastructure for use by the carriers for the import of ATF has to be ensured.

9.         GAGAN

India’s GPS aided GEO augmented Navigation system known as GAGAN developed by AAI with the support of ISRO with an estimated cost of Rs. 774 crores is likely to be rolled out by July 2013. This would bring India on threshold of redefining navigation in the region from land based to satellite based system. India is the only fourth country in the world after USA, Japan and Europe to have such navigation system. This will be helpful for landing aircraft in tough weather & terrain like Mangalore and Leh airports. This will also help in reducing flying time and fuel consumption by providing straight navigation.

The GAGAN is designed to provide the improved accuracy, availability and integrity necessary to enable users to rely on GPS for all phases of flight, from en-route through approach for all qualified airports within the GAGAN service volume. GAGAN will also provide the capability for increased accuracy in position reporting thereby permitting more uniform and high quality Air Traffic management (ATM).

In addition, GAGAN will provide benefits beyond aviation to all modes of transportation including maritime, highways, railroads and public services such as defense services, security agencies, telecom industry and personal users of position location applications. Flight inspection of GAGAN signals are being carried out at Kozhikode, Hyderabad, Nagpur & Bangalore airports and the results have been satisfactory so far.

10.      Simplification of procedure for sanction of buildings around Airports

Government has decided to do away with the system of taking NOC from AAI every time and has now prescribed the height at difference distances from the airports upto which the local municipal authority will be empowered to sanction the map as per their bye-laws. These heights will be transposed on the colour map of the area around airports and the maps will be available with the local authority. The builder/applicant will have to come to AAI only if they want to consider building higher than the prescribed heights as per these colour maps. The new procedure involves even change in the orientation/location of instruments relating to air navigation to allow maximum height for the buildings around airport by keeping in mind the commercial importance of the area.

11.      Development of Airports

At present 5 major airports are being operationalized under PPP mode which include:-

(1)   Cochin International Airport, Cochin

(2)   Hyderabad International Airport, Shamshabad

(3)   Bangalore International Airport, Bangalore

(4)   IGI Airport, New Delhi, and

(5)   Chhatrapati Shivaji International Airport, Mumbai.

Government of India has so far granted in-principle approval for setting up of 15 new greenfield airports.  The work on 3 new greenfield airports i.e. Mopa in Goa, Navi Mumbai and Kannur in Kerala is expected to begin by the end of this financial year.

A total of Rs. 24,132 crores is proposed to be made available for the development of airports in the 12^th Five-year Plan (year 2012-2013 to year 2016-17) which includes Rs. 17,500 crores investment in the central sector.

12.      Declaration of Tiruchirapalli, Coimbatore, Mangalore, Varanasi and Lucknow airports as International airports

So far there were 17 international airports and these 5 have been added to the list now. Presently these airports are custom airports where all facilities as per extended norms of an international airport in terms of customs, immigration, health, animal & plant quarantine etc. are available on temporary basis. These airports are having minimum international operations. After these airports are declared as international airports, these facilities will be available on permanent basis which would open the door to have more international flights to different destinations.

13.      Creation of separate Air Accident Bureau

Government has already taken steps to establish a separate Air Accident Bureau to efficiently investigate the accidents and to recommend effective corrective measures.

14.      Disciplinary action against officials

Disciplinary action has been initiated against 29 officers out of which 23 belong to DGCA and 6 from AAI. 9 officers have been placed under suspension and orders have been issued to lodge FIR in 3 matters.

Proposed actions in future

1.       Issues related to ATF

Rationalisation of price of ATF by getting it declared as a notified product to bring it under the ambit of Petroleum & Natural Gas Regulatory Board (PNGRB).

ATF constitutes approximately 40% to 50% of operating expenses of Indian Airlines. The major contributor to the high prices of ATF is the VAT levied by various State Governments ranging from 4% to 30%. Efforts are on to persuade the State Governments to reduce the VAT on ATF so as to bring down the prices of ATF and discussions with a number of States have already taken place in this regard.

2.       Connectivity to smaller and remote parts of India

The top most priority of the Government is to provide air connectivity to remote and interior areas of the country, North Eastern Region, Tier-II & Tier-III cities of India and remote/difficult areas of the country. Connectivity which is proposed to be provided would be customer oriented in terms of affordability and cost of travel. Two main instruments to facilitate air connectivity to these areas include Route Dispersal Guidelines and plane acquisition policy. For this purpose a Consultant has been appointed and the report of the Consultant is expected to be finalized within a period of 2-months.

3.       Enhancement of Helicopter connectivity

The Government is also working to develop Heliports in different parts of the country to make Helicopter operations to inaccessible areas for the purpose of air connectivity, religious, other tourism and for medical purposes.

Pawan Hans Helicopters Limited has grown into one of Asia’s largest helicopter company that maintains and operates by offering wide range of services to its clients through its fleet of 45 helicopters.

Apart from providing existing helicopter services, Pawan Hans is going to commence new services to Government of Himachal Pradesh, Government of Goa, GAIL, British Gas, NTPC, CRPF, Mathura-Vrindavan sector, Varanasi-Sarnath Buddhist sector etc. Pawan Hans is also likely to commence helicopter services for tourism purpose in association with Government of Tamil Nadu for connecting Coimbatore, Ooty, Kodaikanal, Rameshwaram, Madurai etc. Pawan Hans is also in talks with Government of West Bengal & Government of Kerala to start sea-plane services to various destinations.

4.       India to be developed as an international hub

There is a need to develop India as an international hub for the passengers.  Action in this regard has been initiated, which includes revisiting the policy regarding bilateral air service agreements with different countries and also rationalization of all bilaterals and traffic entitlements on international routes to Indian carriers and rationalization of traffic on domestic routes. This would also require development of more airports for domestic & international operations.

5.       Development of Low Cost Airports

In an endeavour to provide air connectivity to different parts of India, development of low cost airports is the most important component. Instructions have been issued to AAI to identify the most suitable low cost model for development of smaller airports and to develop airports in the smaller cities based on this model.

6.       Creation of Civil Aviation Authority

Creation of Civil Aviation Authority to manage the phenomenal growth of air traffic with safety, an effective, autonomous and professional regulatory body is required and a bill in this regard will soon be brought before the Parliament.

7.       Creation of Civil Aviation Security Force

Creation of a separate Civil Aviation Security Force which is professionally trained and exclusively meant for the work of civil aviation (details available at Annexure-3 see below). Efforts would also be made to negotiate with the State Governments to provide security at smaller airports so that the central security forces may be effectively utilised at the bigger and more important airports. This will also bring down the cost to provide security which would reduce the burden on passengers from the security expenses.

8.       Skill augmentation in civil aviation sector through a vibrant, world class aviation education and training

Work to establish a Civil Aviation University is in progress.

In my above mentioned endeavours, I would urge all and each one of you to come forward with your innovative & implementable ideas (howsoever small they may be) for the development of civil aviation sector in India.”

Please Click here for Annexure 1

Please Click here for Annexure 2

Please Click here for Annexure 3