In his bid to put forward a reform-oriented agenda, civil aviation minister Ashok Gajapathi Raju on Monday unveiled a draft aviation policy that aims at listing the state-owned Airports Authority of India (AAI) and Pawan Hans Helicopters. However, the minister stopped short of initiating bold measures such as privatisation of the state-owned, loss-making carrier Air India or even stating categorically that the archaic norm that allows airlines to fly to overseas destinations only after five year of operations (5/20) would be scrapped.
All the minister said was that an expert committee has been set up which will suggest the blueprint for Air India’s revival and that the 5/20 norm would be reviewed.
The draft policy, which would be finalised by January after soliciting stakeholder comments, also includes enhancing regional air connectivity; developing six major metro airports as international hubs’ creating more airports in public-private partnership mode; rationalising jet fuel cost; promoting air cargo, MRO and helicopter operations; and improving passenger facilitation.
“The AAI will be corporatised, followed by listing on the stock exchanges. We have a similar objective for Pawan Hans,” Raju said.
Amber Dubey, partner and India head of aerospace and defence at consultancy firm KPMG, said, “The draft civil aviation policy reads like a feel-good document, bereft of specifics on burning issues like ATF taxes, MRO taxes, airport charges, general aviation, etc. Most of the points are ‘statements of intent’ and are ‘work in progress’ anyway. There will be no ‘open skies’ in India and hence bilateral traffic will continue to be constrained by the ability of Indian carriers to deploy equal capacity. Air India will not be privatised and will be guided by yet another ‘expert committee’ for its revival. The infamous 5/20 rule will continue for now. So will the Route Dispersal Guidelines (RDG).”
AAI, which saw its profit increase 8% to R800 crore in FY14, currently runs 61 of the 132 airports in the country and also has a stake in the Delhi, Mumbai, Bengaluru and Hyderabad airports which are operated by private players. In 2009, KPMG had valued AAI at $4.5 billion.
Pawan Hans, the largest helicopter operator in Asia with 47 aircraft in which ONGC has a 49% stake, currently offers services for offshore oil platforms, remote/hilly regions and tourism/pilgrimage services.
On revitalising flag carrier Air India, Raju said it was essential to ensure that it achieves its full potential but privatisation may not be a viable alternative. To develop a turnaround roadmap for the airline, the ministry is setting up a new expert committee. Air India, which operates the largest domestic fleet of 108 aircraft but has only has a 16.6% market share, may also get a professional management in order to bring about more efficient operations.
“If Air India could get listed, I would be the happiest. We will have to take a conscious decision as it is a delicate matter,” Raju said.
In terms of airport modernisation, the government will also rope in the private sector for modernisation of four airports, at Chennai, Kolkata, Ahmedabad and Jaipur. While Chennai and Kolkata will only be offered for management contracts on a fee basis, the latter two will be offered under PPP through a bidding process.
The draft policy has also underlined the “considerable potential” of developing infrastructure for helicopters in the country as a separate category together with incentives at airports in order to reduce congestion in big cities, and aid medical evacuation, relief operations and law and order activities.
The Business Aircraft Operators Association, an association of all business jet and helicopter operators, welcomed the move. “This will promote greater use by industries to enable business. While we see a major thrust on remote connectivity in the draft, the role of small aircraft operators needs to be given due consideration,” it said.
Separately, the ministry has also said that airports will be developed with the objective of setting up integrated multi-model hubs where rail, metro and bus services can all meet. Meanwhile, the policy also says that steps will be taken with state governments and finance ministry to rationalise taxes on aviation turbine fuel — Indian prices are currently 45% higher than overseas.
For developing the air cargo industry, the policy says that six metro airports will be designated regional air cargo hubs, while air freight stations will be set up across country for faster customs clearance.