Feature

Flight plan for the future

Indian aviation is set to stay in top gear with consistent reforms like additional frequencies and more countries on the radar. But despite these progressions, the ministry is beleaguered by the laboured pace of airport infrastructure development. Bhisham Mansukhani examines

The purple patch that appeared on India's aviation landscape back in the days of NDA's aviation minister Rudy Pratap Sharma, looks set to deepen and spread throughout UPA's stint under the aegis of current incumbent, Praful Patel and secretary of civil aviation, Ajay Prasad.

Praful Patel Civil Aviation Minister

Ajay Prasad Secretary of Civil Aviation

A recent document released by the Ministry of Civil Aviation and the Directorate General of Civil Aviation (DGCA) traces its successful flight so far. It also highlights a further slew of reforms, including capacity addition and, significantly, the allowance of more flights by international airlines over and above the stipulated bilateral agreements, thereby laying the foundation for a more flexible, demand-driven regime.

The document itself keenly highlights the successful year that was. The recent growth in the civil aviation sector has been encouraging; in the first three years of its tenth plan, the air transport grew at an average rate of seven per cent per annum as against the plan estimate of five per cent. In fact, during the year 2004-05, air transport witnessed a high growth of above 24 per cent. The government is, therefore, convinced that an average growth rate of 16 per cent per annum is achievable by 2010.

The recent growth has reassured entrepreneurs about healthy prospects for civil aviation in India. Therefore, it is not surprising that a number of new airlines are proposing to enter the market while existing airlines are going for significant fleet expansion or renewal. Two more new airlines, namely Inter Globe and Indus Airways, have been granted NOCs.

Bilaterals never mind

The government will not henceforth mandate any commercial agreement as part of bilateral agreements. All new operations by foreign carriers, both on new destinations as well as on existing routes, would be free from the obligations of mandated commercial agreements. All existing government-mandated commercial agreements would be reviewed and phased out over the next five years. However, the airlines will be free to enter into such co-operative marketing arrangements as are mutually agreed upon between them.

According to the policy framework that permits designated airlines of countries having Air Services Agreements with India to operate daily flights to any two international airports in India, the airlines of Austria, Finland, Republic of Korea, Maldives, Armenia and Yemen have been offered additional capacity, as reque-sted by their respective governments. This is subject to reciprocal rights to the Indian carriers.

Winter opens for business

In order to ensure sufficient availability of seats, a limited open sky policy that was adopted by the government last year, has been adopted again beginning December 1, 2005 to January 31, 2006. Also, foreign airlines have been permitted to upgrade their equipment at their existing frequencies during the period November 1, 2005 to March 31, 2006.

Freeing Atlantic skies

Following a a revised Air Services Agreement between India and the USA in April 2005 which grants unlimited access to the designated airlines to any point in the other country, a major step was taken in respect of air services between India and the UK. Consequently, entitlements for operation of air services between the two countries, which is the biggest market for Air India, has eased existing capacity constraints. The designated airlines of both sides may operate up to a combined total of 42 services per week with effect from winter this year, 49 services a week from summer of 2006 and 56 services from winter of 2006 on the Delhi/ Mumbai-London route.

Traffic rights were enhanced for the following countries since assumption of the present government in order to enable greater connectivity to and from India: Brazil, Australia, UK., Saudi Arabia, Austria, Yemen, Israel, UAE, Iran, Germany, USA, China, France, Mauritius, Iran, Oman, Taiwan, Qatar, Netherlands, Belgium, Germany, Canada, Bhutan, Philippines, South Africa, Singapore, Maldives, Taiwan, Poland and Azerbaijan.

Slow landing

The government is also looking at upgrading and modernising airports of Airports Authority of India (AAI) at Delhi and Mumbai through restructuring by adopting the joint venture route. However, the progress is laggard and the process of evaluation itself has already taken about a year and a half. A quick look at the process reveals this: The government invited Expression of Interest (EOI) by May 2004 for acquiring 74 per cent equity stake in the joint venture. Ten entities lodged their EOIs and nine consortia were shortlisted for participation in the Request For Proposal stage.

The Pre-Qualified Bidders (PQBs) were issued the Transaction documents and Request for Proposal document in April 2005. Finally, eight consortia were issued the Transaction documents in August 2005. Out of eight, five and six consortia submitted their bids for Delhi and Mumbai airports, respectively, by September 2005. The bids are currently at an evaluation stage and the process is likely to be completed by the end of this year.

The joint venture companies will be mandated to undertake capital expenditure of Rs 28 billion in Delhi and Rs 26 billion in Mumbai in the first five years. The expenditure on development of the Mumbai airport is expected to touch Rs 59 billion for the period 2005-2019 whereas it is likely to reach Rs 79 billion for the Delhi airport over the period 2005-2024.