Civil aviation in India: Flying high despite glitches
Recent news reports might paint a sad picture of the civil aviation sector, but if one digs deeper, potential of the sector shows, writes Srinath Rangarajan
The civil aviation sector in India, in 2017, came on primetime news for all the wrong reasons. There were two main issues that were highlighted in the print and electronic media. One was the strategic disinvestment of Air India while the other was on the incidents of clashes between the passengers (some high profile ones) and the airlines crew.
But the good news which is yet to capture the public eye is the rapidly increasing size and growth of the sector. According to the Director General of Civil Aviation (DGCA), the first 11 months of 2017, recorded 10.6 crore people who flew within the country compared to 9.9 crore during the whole of 2016, improving further when the December 2017 value gets added. In fact, there could be a better rise, in view of the fact that the November 2017 passenger count of domestic travelers recorded a phenomenal growth of 17 per cent over its corresponding figure for November 2016.
While these statistics can be considered healthy, there are skeptics who suspect base effect as the reason for such a growth in November 2017 because of November 2016 being the famous ‘demonetisation month’. But such skepticism is unwarranted as the Government of India’s official figures, released at the end of December 2016 did specify that demonetisation had very little, if at all any, effect on air travel.
One thing that is clear is that passengers travelling by air, in India, are definitely on the rise and the year-on-year growth for individual months is also showing a visible increase, notwithstanding the small fluctuations here and there. The civil aviation industry in India has thus emerged as one of the fastest growing industries since 2013 and India is currently considered the third largest domestic civil aviation market in the world. The International Air Transport Association (IATA) is predicting a rapid growth for this sector in India in the coming years too.
Rise in personal disposable incomes is definitely one of the reasons for this growth in this sector. Apart from this, there is an interesting scheme called UDAN-Ude Desh ki Aam Nagrik (let the common citizen of the country fly) which can have a potential impact on future ridership. This is a Regional Connectivity Scheme (RCS) of Government of India aimed at making air travel affordable. The scheme also seeks to boost air transport infrastructure development of all regions and states of India. Under this initiative, the airlines will have to sell a required number of seats by capping the price at Rs 2,500 per hour of flight journey to regionally underserved airports. The Government will compensate them for this.
As a part of this scheme, several underserved regional airports are developed and their operational readiness is enhanced. The Government compensation to the airline operators is through a Viability Gap Funding (VGF) model with contributions from the Union Government, State Governments and Airport Operators. Five airlines were awarded 128 fixed wing flight routes to 70 airports in the UDAN-RCS Round-I bidding held in April 2017. Recent data tells us that around 13 regional airports have commenced RCS UDAN operations.
While the effect of implementing the UDAN scheme on domestic air travel, as of now, is yet to be studied in detail, it definitely holds a lot of promise. This has the potential to keep the aviation sector upbeat in the coming decade.
Apart from making air travel regionally and financially more inclusive, it can boost tourism and economic activity in promising regional towns like Jamshedpur, Durgapur, Pantnagar, Ludhiana, Rourkela, Tirupati among others. Though this scheme is branded as a passenger friendly initiative, it provides an additional business opportunity for moving high value export cargo. All these can help in developing additional economic value and jobs.
But this scheme comes with its own share of problems. The shortage of infrastructural facilities and manpower in the tier-II cities is likely to curtail private jet flights. As the runways are shorter, the aircraft will have to cut down in size and running these aircraft require specially trained pilots. If the number of new pilots that our aviation industry is producing in an year is any indicator, the possibility of meeting the demand to serve the future requirement, considering the objectives of UDAN scheme, does not show a rosy picture.
There are many other lingering issues in civil aviation which need to be resolved. Small size of aircraft fleets and the safety infrastructure wherein 422 air safety violations were detected in 2016 when compared to 275 in 2015 are some of the concerns which need attention. But the contentious matters remain the issue of Air India's future and the rising trend of jet fuel prices which can have possible detrimental effects on the growth of the sector.
Even while these lingering issues persist, there is a lot to feel positive about the trends in the civil aviation sector — the scrapping of 5/20 rule (under which national carriers are required to have five years of operational experience and a fleet of minimum 20 aircraft to fly overseas) which was supposed to be thwarting the growth of aviation sector in India, elimination of hand baggage tags in 29 airports, envisioning an automated tray retrieval system, heading towards an Aadhaar enabled entry and biometric boarding system and improved aviation security.
Many years ago, the Chairman of the GMR Group, GM Rao, in an interview to a news television channel, predicted that airports would drive the future of transportation economy and that was the reason for his group investing in airports. If the growth of the sector till now is any indication, one has to accept that he has hit the nail on its head.
The author is an aspiring Civil Servant and the views expressed here are personal
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