The Hindu : Opinion / Leader Page Articles : Ready for takeoff

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Saturday, Dec 25, 2004

Opinion

Opinion - Leader Page Articles

Ready for takeoff

By V. Jayanth

The civil aviation sector in the country could see strong growth in the new year.

THE STAGE is set for a major expansion in the civil aviation sector. The decks have been cleared for rapid expansion and modernisation of the major international and domestic airports. And the airlines too are planning to spread their wings. A partial open skies policy, being extended from time to time, to let in international airlines for the peak tourist season. The decision to let domestic private airlines operate to neighbouring countries. The go-ahead for the construction of two greenfield airports in Hyderabad and Bangalore, in addition to the modernisation and expansion of the Delhi and Mumbai airports. All these developments have readied the aviation sector for a takeoff in 2005.

No wonder then that Airbus Industrie, one of the major aircraft manufacturers, considers India a major market for the next decade — with an estimated sale of 400 aircraft by 2019. This could increase if the low-cost airlines establish themselves in the years to come.

For all that, a new Civil Aviation Policy is still in the making. The Union Minister of State, Praful Patel, has promised to finalise it by January. It is likely to be based on the recommendation of the Naresh Chandra Committee and will be discussed in Parliament before being implemented.

Aside from the open skies policy, which has more or less come to be accepted, the Centre needs to firm up its plans in two important areas. These are the future of the national carriers, Air India and Indian Airlines, and a policy framework to develop and modernise the smaller airports in the country. The question of permitting foreign direct investment (FDI) and if so to what extent and a time-frame for upgrading some of the second-tier airports to receive bigger aircraft and provide night landing facilities will have to be examined.

Air India and Indian Airlines have finalised plans for aircraft acquisition and it is for the Government to clear them in due course. Unless it is done early, the fleet replacement and augmentation plan may be further delayed. AI has also expressed its intention to set up a low-cost subsidiary airline — Air India Express — sometime in 2005. It remains to be seen if it will compete more with IA or the other private carriers who are planning to operate overseas flights in early 2005. The aircraft for this airline are going to be on lease.

Though the current thinking is that there may be no privatisation of these two national carriers, they have to be made commercially independent and viable so that they can take on competition.

Otherwise, they cannot survive in the new environment, where even some of the Ministers seem to prefer private airlines and Members of Parliament only oppose the privatisation move, without ensuring a level-playing field for AI and IA.

While AI has planned to acquire 50 wide-bodied aircraft, IA has secured the Public Investment Board's ratification for a Rs.10,089-crore plan to buy 43 aircraft. These plans have to be cleared by the Cabinet Committee on Economic Affairs and then by the whole Cabinet, along with the terms and guarantees. The aircraft manufacturers are vying with one another to offer the best possible terms for these expansion plans.

Meanwhile, the private airlines are also going ahead with their expansion plans. The low-cost, no-frills Air Deccan is making waves with its tempting fare offers. It has signed a deal to acquire 30 Airbus aircraft to operate more services and on more routes — but basically the commercially viable sectors.

Jet Airways and Air Sahara have also firmed up plans to connect more domestic destinations and also fly out to regional centres. Colombo is already on their circuit, while Kathmandu, Singapore and Kuala Lumpur are expected to be served in another three or four months.

The Centre is thinking of clamping some conditions for allowing foreign operations, but these regulations must be fair and transparent and not be seen to favour one or the other of the airlines in the race.

What is more important and urgent is the need to modernise and equip the second-tier airports in the country. A massive Rs.40,000-crore plan to develop and expand 55 such airports through a public-private sector partnership over the next five years has been drawn up and a high power committee appointed to submit its recommendations by February. Developing these airports becomes as important as building new terminals or modernising the existing national and international airports in the metropolitan centres and key State capitals.

Unless the feeder-routes are also strengthened, the aviation sector cannot flourish. After all, despite the petroleum price increase, the airlines are waging a vicious fare war that has ultimately benefited the passengers. Some of the fares on offer make them cheaper than air-conditioned class train fares. If they are enabled to operate to more centres and strengthen their services from the metros, it may make them more viable. The airlines have also been pleading with the State Governments to lower the sales tax on aviation turbine fuel, to marginally reduce the cost of fuel.

Alongside these major strides in the aviation sector, it is up to the State Governments and the private sector to develop the tourist and hospitality sectors so that they can harvest the projected growth in international and domestic tourism, around the year.

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