India will hit a billion trips, overtake US, says aviation minister Jayant Sinha
Jayant Sinha,minister of state for civil aviation is facing the difficult task of setting India’s national carrier right at a time when airlines are becoming unprofitable because of fuel prices and operating costs. At the same time, however, the aviation industry is booming, and India is among the fast-growing markets in the world.
Jayant Sinha is facing the difficult task of setting India’s national carrier right at a time when airlines are becoming unprofitable because of fuel prices and operating costs. At the same time, however, the aviation industry is booming, and India is among the fast-growing markets in the world. Sinha spoke to Faizan Haider and Saubhadra Chatterji about the future of Indian aviation, safety concerns over flying, and the Opposition coming together ahead of the 2019 general elections, among other key issues.
Why is the revival plan for Air India facing a delay?
The plan includes four important elements. The first is the financial package for supporting Air India for the foreseeable future. The second is a strategy to enable Air India to be competitive and profitable. Number three is essentially a series of organisational reforms so that Air India is professionally managed. And number four is measures to support the very talented workforce that Air India has. Each of those elements is very significant and therefore we are finalising all of the approvals and permissions we need to be able to implement these. Once we do that, we have to get that validated by the board of Air India and approved by all of the different government departments involved.
Is there is a timeline for the implementation of this plan?
Naturally, before Parliament starts in mid-December. We expect a lot of questions in Parliament on Air India, so we also want to prepare a comprehensive set of answers.
There have been some safety concerns recently – an Air India pilot turned up drunk, another skipped the medical test. There are some other incidents as well involving the national carrier.
The aviation system and air transport are the safest means of long-distance transport in the world. Air travel is extremely safe; nonetheless, every system will have a certain number of incidents and events. The volume of flights has gone up dramatically in India - as the volume goes up, statistically, you will end up having a certain number of incidents and events.
We monitor this very, very closely – both in terms of number of incidents and see whether it is within acceptable zone or not, and we also look at all of the safety practices and compliance efforts by the different airlines. Whether we look at it in terms of incident statistics, or in terms of compliance and safety practices, we are very much within the safety zone.
What is your growth projection of the Indian aviation sector? And what are the steps you would take to further push the potentials of India?
The watershed moment for Indian aviation was the national civil aviation policy in 2016, which identified a series of policy measures to ensure that growth would continue at a high rate in a safe and affordable way. As a result, despite some of the highest costs in the world for aviation, we have among the lowest fares and among the highest growth you see anywhere.
As you move forward and look at the long-term growth rate of passenger traffic in India, over the last 15 years or so, it has averaged about 12-13% a year. We are growing between 15-20% in last four years, so we are growing faster than the long-term average. We are seeing that this calendar year we will do roughly 225-230 million passenger trips. But if we continue to grow even at the long-term average, in the next 15-20 years, we are going to reach a billion trips a year.
By way of comparison, China is at about 600 million trips a year and the US is at about 900 million trips a year. China is growing at about 8-9% a year and the US is going at about 3% a year. I think we will surpass the US, of course China will continue to grow strongly and will become the number one market in the world; we are likely to become the number two market in the world, right next to the US.
We have in place the NABH (Next generation airports of Bharat) Nirman programme and we have sufficient airport capacity to be able to handle a billion trips in the next 15-20 years. And in support of that, we see an investment pipeline of about Rs 1 lakh crore over the next five years between Brownfield and Greenfield expansions.
Is this primarily being driven by private investment?
Experts are estimating that to get to the billion-trip capacity, we will need Rs 3-4 lakh crore. Of that, as I said, Rs 1 lakh crore is already in the pipeline. Of that Rs 1 lakh crore, about 20-25% is likely to come from Airports Authority of India (AAI) over the next five years and the remainder is going to come from private sector.
The airline industry is also in crisis for some time and airlines are posting losses owing to fuel costs. Is the ministry planning to interfere or provide relief?
The airline industry, of course, is cyclical. Right now, we are in the down part of the cycle where oil prices have gone up, interest rates have gone up and so airlines are actually being quite unprofitable right now. But we have to look across the cycle, and the airline industry in India continues to be attractive. Obviously our job as the government is to be able to provide a supportive policy environment for all the players in the aviation sector, including airlines. So we have tried to put in place a supportive policy environment for the airline industry. We are looking at all the different ways to support them.
Coming to political economy, we have seen what looks like a tussle between the government and the Reserve Bank of India (RBI). Isn’t it an unhealthy sign for the economy?
It is very natural for there to be policy differences between the elected government and RBI. And this is built into the system.
The good news is that there is a very proactive and very thoughtful approach to resolve this tension which our government has done in the past, and we will continue to do in the future. Policy differences always exist in every government in India and around the world. The important question is how those differences are being resolved. To the best of my knowledge, those differences are being resolved.
The Rafale deal is the Opposition’s main weapon against the Centre now. Is it damaging the government’s image?
Absolutely not. The honourable finance minister, the honourable defence minister, all of our party spokespeople, have thoroughly explained and clarified the Rafale situation. You saw that the CEO of Dassault has clarified the decisions that were taken, they were for Dassault to take. So I think the while the Opposition would like to make this a larger issue, the reality is that it has no purchase with the people of this country because they are fully satisfied with how we have presented the facts and explained the situation. And they have complete confidence in our government – that whatever decision we take is purely and solely in national interest.
Some experts say the economic situation may hurt the poll prospects of your party.
Absolutely not. The economy is really one of our strong points. Leaving aside the political rhetoric, if you go into facts, the economy is in a sweet spot. You just saw the inflation number that was just 3-point-something per cent, IIP is strong, economic growth has been very strong at over 8%. If you look at virtually every other high-frequency indicator, those are quite positive right now.
Of course, external conditions change all the time because they are cyclical – when oil prices are high, obviously our external balances are not as attractive as they are when oil prices are low. But if you strip oil out of the equation and you look at the macroeconomic picture, every objective observer, every rating agency, every careful analyst of the Indian economy tells us that the Indian economy is in an unprecedented once-in-a-generation sweet spot.
And what I mean by that is high growth, low inflation, robust macroeconomic parameters, whether you look at foreign exchange reserves, current account deficit largely under control and significant policy reforms in the pipeline.
Other governments have undertaken policy reforms but then they have suffered in terms of growth; other governments have had growth but neither undertaken policy reforms nor been able to manage macroeconomics. The reason we are in this extraordinary sweet spot is because we are delivering on reforms, we are delivering on macroeconomy and we are delivering as far as the people are concerned.
The Congress has been able to forge alliances with local partners in some states. Will that impact elections?
When we go for election campaigning, we say this is not ‘Mahagathbandhan’ but ‘Maha-thug-bandhan’. We are not in any way concerned about this alliance because this is entirely opportunistic alliance. The kind of popularity the honourable Prime Minister enjoys, the kind of appreciation that we are getting from the people for delivering the results — whether it is giving them Ayushman Bharat, ration card, toilets, gas cylinders, roads, power or water — is clear.
I travel constantly talking to people, interacting with people. I am engaged in the Chalo Panchayat Chalo programme. I sit down at Panchayat Bhawan, we talk about local issues. That’s the kind of grassroots results we are delivering. I am in the civil aviation ministry but I am not a ‘Hawayi neta’ (high-flying leader).
Your father (Yashwant Sinha) has been very critical about the BJP. Does this put you in an uncomfortable situation?
In my family, we have a lot of very accomplished people. So, we have always kept our personal lives separate from our public lives. We don’t discuss politics, we have a lot to discuss when we meet, in our personal lives - what are the children doing, how people’s health is, how are we celebrating festivals.