Addressing the Economic Editors’ Conference in New Delhi recently, Civil Aviation Minister Ajit Singh opined that the decision to allow 49 per cent FDI by foreign airlines in Indian carriers will help in rapid growth of airline sector in India. “Aviation has been identified as one of the most important growth engines for the country, besides providing air transport for passengers and goods,” he said.
He further stated that the future plans of his ministry include rationalisation of the price of ATF by getting it declared as a notified product, improving connectivity to smaller and more remote parts of the country, developing India as an international hub, developing low cost airports, creation of a Civil Aviation Authority, creation of a Civil Aviation Security Force and skill augmentation in the civil aviation sector.
He also expressed concerns over the decline in air passenger traffic numbers in the last three months, but hoped that the buoyancy in the sector would lead to a spike in the long run. “In the past three months, the traffic numbers have fallen. Following the global economic downturn, there were worries about a downturn in the Indian economy. There were estimations about a fall in GDP growth and there were issues relating to high costs, and airlines and the hospitality industry are the first to suffer from this,” Singh said, hoping that in the long-run the traffic will increase.
According to him, air transport in India has witnessed unprecedented growth in the recent past. However, the high growth rate of the aviation sector 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,” he informed.
In order to promote regional air connectivity, he said the government had approved creation of 15 greenfield airports and work on three of them – at Mopa (Goa), Navi Mumbai and Kannur – is likely to begin by the end of this fiscal. He informed that a total of Rs 24,132 crores would be made available for airport development in the 12th Plan period, including a Rs 17,500 crores investment in the central sector.
To promote connectivity to tier-II & III cities, he said changes were being made in the Route Dispersal Guidelines, which make it mandatory for all Indian airlines to operate to socially-important but financially unviable routes in the Northeast, Jammu and Kashmir and A&N Islands.
Replying to a question over Air India’s possibility to join Star Alliance, he said that his ministry would soon initiate talks with German carrier Lufthansa for the entry of Air India in the alliance. “We are going to talk to Lufthansa to adhere to the plan we had to join the alliance. The government gave a lot of facilities to the (German) airline that was mentoring us for the same. Meanwhile, Air India also had some problems. But now they are over,” he concluded.
