India’s beleaguered civil aviation sector will now be monitored directly by the Prime Minister’s Office (PMO). Sources said in a recent communication to the aviation ministry, the PMO has listed 12 important agenda points for Vayalar Ravi’s ministry. Each comes with a timeline and a progress update plan, which must be filed by the fifth of every month. The monitoring is unusual as the PMO usually intervenes only on inter-ministerial issues and where the problem is too complex for the ministry concerned.
The agenda gives top billing to measures with a macro impact on the sector. These include framing a policy for fixing airport tariffs, putting in place regulations on airline tariffs, examining the aviation turbine fuel tax regime and finalising the turnaround plan for Air India.
The development comes within a week of the country’s airline bosses meeting Prime Minister Manmohan Singh to present their grievances. The airline chiefs had urged the PM to consider concessions in jet fuel ? which accounts for 40% of input costs ? and lower airport charges.
Singh has reason to be concerned since the civil aviation sector, despite growing 18.6% between January and August this year after years of impressive performance, is mired in losses with Air India and Kingfisher tied down by heavy debt as well.
Regarding Air India, Singh’ office has directed the ministry to quickly finalise its turnaround and financial restructuring plan, constitute a team of experts and put in place a professional management. The ministry has already received the debt restructuring plan from lead banker SBI and a resolution from Air India board.
PMO also wants the ministry to complete work on the Civil Aviation Authority of India Bill, 2011 by the budget session of 2012. The Bill seeks to establish an independent regulator for the airline sector in addition to the current airport regulator.
The country’s three listed private carriers ? Jet Airways, Kingfisher Airlines and SpiceJet ? together posted losses of around Rs 1,500 crore in July-September. This comes at a time when state-owned Air India bleeds with Rs 21,000 crore cumulative losses and Rs 42,000 crore debt. The industry’s total debt is over Rs 60,000 crore. ?Industry health is precarious,? said PwC executive director Dhiraj Mathur.
Last month, Kingfisher had unexpectedly cancelled a large number of its flights stating it wanted to reconfigure aircraft as it was exiting the low-cost business. Besides causing inconvenience to passengers, the move triggered a surge in spot fares of other carriers. Even the aviation ministry was caught by by surprise, which seems to have prompted the PMO to step in.
The domestic airline industry is headed for a record combined annual loss of up to Rs 15,000 crore in the financial year ending March 2012, according to projections by aviation consultancy firm Centre for Asia Pacific Aviation (CAPA) India.