Aviation policy will help industry regain lost altitude
The biggest setback due to a lack of an aviation policy has been in the global standing of India in the industry because the only reason why India receives attention from foreign carriers is for exploitation of its burgeoning market and not for any significant contributionanalysis Updated: Jun 17, 2016 12:42 IST
Eighty-four years after JRD Tata heralded the birth of civil aviation in India by operating the maiden flight to Mumbai from Karachi via Ahmedabad; 63 years after government assumed ownership of Air India and Indian Airlines; and 25 years after private airlines were allowed to operate in Indian skies, the country finally has a national civil aviation policy (NCAP) — approved by the Narendra Modi government on June 15.
Intriguingly, in a country that operated its first international flight on June 8, 1948, when most airlines now dominating the Indian skies did not even exist, the delay is inexplicable. It is difficult to surmise as to why the country functioned all these years without a defined national aviation policy. Was it lack of vision? Or, was it driven by the socialist philosophy that aviation, deemed as an elitist industry till not long ago, deserved no attention?
The political masters overlooked the fact that by not creating an environment conducive for the aviation industry’s growth through clear-cut policies they had put India to a great disadvantage even though global experiences had shown that the aviation industry acted as a catalyst for economic development. The early-starter advantage that JRD Tata had provided India had been frittered away by our political masters.
Whatever be the cause, in retrospect, one can only assess and rue the humongous harm the procrastination has caused because even after the need for a national policy was realised in the early 1990s, the policy had remained in the works for 25 long years. The biggest setback has been in the global standing of India in the industry because the only reason why India receives attention from foreign carriers is for exploitation of its burgeoning market and not for any significant contribution. It wouldn’t also be incorrect to say that our market has to a large extent been responsible for fuelling the growth of several carriers in the Gulf and South East Asia.
In a marked reversal of mindset, the NCAP now seeks to make air travel affordable by aiming to have 300 million domestic passengers by 2022 from the present 80 million to become the third-largest civil aviation market in the world.
The NCAP, as an indirect bonanza, will also achieve a larger objective of ending the ad hocism that has existed in the sector. The contentious 5/20 rule (five years of domestic operations and a fleet of 20 aircraft to become eligible for international operations) which delayed the NCAP announcement has been one example of ad hoc policy-making to benefit a particular airline. As a compromise, the NCAP has replaced it with 0/20, doing away with the need for the five-year stipulation to be eligible because all older private airlines were aggressively campaigning against its total abolition.
Even if some aviation analysts may fault the NCAP by identifying areas left unaddressed, it is a praiseworthy effort because it encompasses all major operational facets, particularly the concept of regional connectivity and development of Maintenance Repair & Overhaul (MRO). Both these areas have enormous potential waiting to be exploited.
Considering India’s geographical spread and fast-growing economy the huge potential for business and leisure travel in tier two and three cities has remained unharnessed because most airlines have largely concentrated on main cities because of high traffic density and higher fares. With concessions like no airport charges, reduced excise duty on aviation turbine fuel and state governments desirous of flights in tier two and three cities required to bear the cost of security, fire services and other amenities, the operational cost for airlines will reduce. This innovative thinking has enabled the government to cap the fare on a one-hour regional connectivity flight to ₹2,500. The concept of Viability Gap Funding for airlines, if operational costs exceed the capped fare, should ignite interest in airlines to lease smaller aircraft and enhance air connectivity. Achhe din are thus in the offing for people of small cities. Likewise, for the policy on MRO. Hitherto, Indian carriers with the exception of Air India were sending aircraft to Singapore, Sri Lanka, Dubai, etc, for major maintenance. With incentives granted under the NCAP, MROs established in India will not only enable execution of maintenance work at relatively low costs but also generate employment. It will only be a question of time before Indian MROs establish themselves and are able to undertake maintenance of aircraft of foreign airlines too — effectively reversing the current trend.
Absence of policy had also enabled the political leadership to recklessly dole out seats to foreign airlines under bilateral agreements, far in excess of requirement, thus not only giving them a head start but also facilitating a stranglehold of foreign carriers on the Indian market — hindering the growth of Indian carriers on several routes as they get ready to mount services.
One only hopes that with the NCAP in place, the Indian aviation industry will gain strength, the government’s desire of making air travel affordable will be achieved in quick time, and the nation will soon realise what the delay of almost three decades in evolving the NCAP has cost the country.
Jitender Bhargava is former executive director, Air India
The views expressed are personal