Year End Review 2004

There has been number of developments in the last few months in the Civil Aviation sector. Some of the major achievements of the Ministry are listed below:-

There has been a significant increase in both domestic and international air traffic as well as cargo in India during the period May-November, 2004, the data in respect of  which is given hereunder :

-     Overall aircraft movements have increased by 15.3%

International (19.7%) and domestic (14.1%).

    -  Overall passenger traffic has increased by 24.3%

International (17.9%) & domestic (25.9%)

               -     Overall cargo traffic increased by 21.9%

International (20.4%) and domestic (24.8%)

2.         Liberalisation of Air Services with UK and Australia:-

            The long pending deadlock in civil aviation issues between India and UK was resolved as a result of the successful negotiations with UK held on 16 – 17 September, 2004 in London.  Consequently, entitlements for operation of air services between India and UK – which is the biggest market for Air India - will be more than doubled within the next one year easing the existing capacity constraints. Airlines of either country will be entitled to operate 40 services/week each by winter 2005.  UK carriers have also been granted access to Bangalore, Hyderabad and Cochin besides the four metro destinations and Indian carriers to Glasgow, Edinburgh and Bristol in addition to London, Manchester and Birmingham.

            Entitlements for operations on India–Australia sector will also be enhanced for both sides significantly from the existing 2100 seats/week to 6500 seats/week over the next two years. Australian carriers will also get access to Chennai, Bangalore and Hyderabad as additional points over this period. 

            India-US talks are now scheduled from January 13-15, 2005 to liberalise services between the two countries. 

3.         Open sky policy during peak season:-

                        Non-availability of seats to and from India during the peak winter season has been one of the major constraints faced by passengers. In order to ensure sufficient availability of seats, a limited open sky policy has been adopted by Government and notified well in advance from November 2004 to March 2005, under which designated airlines can operate additional services to/from India subject to the existing terms of commercial agreement with Air India/Indian Airlines. A number of airlines have responded to the offer and have requested for operation of over 2400 additional flights (equivalent to over 5 lakh seats) to different airports in the country during this five-month period. This will assist greater connectivity to/from India and also ensure that off loading of confirmed passengers does not occur and passengers are assured of seats.

4.         Progress in the implementation of ‘7 + 7’ policy:-

            In pursuance of the policy framework to permit the designated airlines of all countries having Air Services Agreement with India to operate 7 flights/week each to any two international airports in India, the designated airlines of Austria, Finland, Republic of Korea, Maldives, Armenia and Yemen have been offered additional capacity, as requested by the respective Governments, subject to reciprocal rights to the Indian carriers.

5.         Removal of Restrictions on Photography:-

            India was among the few countries in the world which had restrictions on photography by passengers at terminal buildings of airports and from inside the aircraft. These restrictions had outlived their utility and often presented a rather negative image of the country to foreign travellers, particularly tourists who were accustomed to take photographs at airports and while in flight.  These outdated restrictions have now been removed through amendments in the Aircraft Rules to permit photography by passengers of scheduled flights at terminal buildings of civil aerodromes and civil enclaves at Defence aerodromes. In addition passengers are also now permitted to take photographs from inside an aircraft while in flight or landing/take off at civil aerodromes.

6.         Other Amendments in Aircraft Rules:-

            Two other major amendments in Aircraft Rules, one relating to ‘Aerodromes’ and the other relating to ‘Air Fares’ have been notified as part of the continuous process to update the Aircraft Act/Rules in accordance with the changing civil aviation scenario and the Standards and Recommended Practices of the International Civil Aviation Organization (ICAO). 

7.         Low Cost Operations by Air India:-

             In what will be a boon for expatriate Indians working in the Gulf region and S.E. Asia, Air India has decided to operationalise "Air India Express", a new budget carrier under the banner of Air India Charters Limited (AICL), a wholly owned subsidiary of Air India, by inducting 14 B-737-800  aircraft  on  dry lease over a period of one year from March, 2005 to April, 2006.  Flights to South East Asia and Gulf (excluding Saudi Arabia) would be operated by this carrier at substantially reduced fares effective from summer of 2005.  Air India has also dry leased 3 B737-800 aircraft to serve the price-sensitive Kerala/Gulf routes under the banner of Air India Express.

8.         Acquisition of Aircraft by Air India:

            After a gap of nearly a decade, Air India is set to acquire new aircraft for its fleet. The national carrier has been facing severe capacity constraints due to the shrinking of its fleet over the years. Air India Board has approved a revised fleet plan through which the fleet size of Air India would be enhanced from the present level of 34 aircraft to 74 aircraft by the year 2012-13.  In the interim, Air India will go in for dry leasing of aircraft to operationalise its plans for a number of destinations. The Board of AICL, a subsidiary company of Air India has, in the meantime, approved a project proposal for acquisition of 18 B-737-800 aircraft. A project report in this regard has been received by the Government and will be processed in accordance with the extant procedures for investment in PSUs.  At the same time Air India has already initiated the process of tenders which have been received on 24^th December 2004 and Air India Board will finalise its recommendations by 31^st January 2005.  Air India will continue  to aggressively expand its  network  and  target  an  annual  growth of  20-25%  by leasing  passenger  aircraft until  delivery  of  its  new  aircraft  fleet  commences  in  the year 2007/08.  During the current FY, Air India leased 2 B747-400 aircraft to operate 5 weekly flights from India to Los Angeles and concluded lease agreements for 3 B777-200 aircraft that will be deployed on the India-UK/Los Angeles/Toronto routes. 

9.         New stations connected/operated by Air India:

Air India has started flights to Shanghai and Los Angeles and also introduced terminator flights from Ahmedabad to London. Air India has identified need for non-stop operations to USA and is tailoring its fleet acquisition accordingly. Services to the following 12 new destinations have been planned in a phased manner:San Francisco, Washington, Houston, Toronto, Manchester, Beijing, Seoul, Taipei, Sydney, Lagos, Mauritius and South Africa.

            With a view to enhance passenger appeal, Air India has undertaken major cabin interior refurbishment on its 6 owned B747-400 and 8 owned A310-300 aircraft.

            On the B747-400 used on India/Europe/USA prime routes, refurbishment will include replacement of seats, toilet modules and provision of state-of-the-art inflight entertainment system besides mood lighting and change of interiors and exteriors.

            On the A310-300 fleet, which has a limited residual life, seats, wall panels, galley and toilet exteriors will be refurbished and the cabin provided a more contemporary look with leather upholstery and provision for DVDs in Executive Class for inflight entertainment.

11.       New international connection by Indian Airlines:-

In compliance of the announcement made by the Hon’ble Prime Minister at Guwahati, Indian Airlines is introducing a biweekly Guwahati – Bangkok flight from January 1, 2005. 

12.       Foreign Direct Investment(FDI) in Civil Aviation Sector:-

            The Central Government has increased the Foreign Direct Investment limits in "Air Transport Services (Domestic Airlines)" and revised limits are as under :

(a)    49% through automatic route; and

(b)   100% by Non-Resident Indians through automatic route;

(No direct or indirect equity participation by foreign airlines is allowed).

13.       Acquisition of 43 Aircraft by Indian Airlines.

            The Project Report of Indian Airlines for acquisition of 43 aircraft viz. 19 Airbus A 319, 4 Airbus A-320 and 20 Airbus A 321, all with CFM 56-5B engines and related spares, spare engines, equipment etc. at a total estimated cost of Rs. 9474.95 crore (@ US$ = Rs.46) was considered in a PIB meeting held on 10.11.2004 and it has since been approved.   Induction of wide-bodied aircraft by Indian Airlines is on the anvil while at the same time Indian Airlines is also planning to induct smaller aircraft for feeder routes.

14.       Cargo Operations of Indian Airlines and Air India :

            Indian Airlines is into the final stages of  conversion of 5 B737s into freighter aircraft  and use it as a hub and spoke concept with Nagpur as a hub and also offer retail courier services.

            Air India is also planning to significantly expand its cargo operations in a phased manner over the next 2 years.  For this it plans to dry lease 1 A310 dedicated freighter and one  B747 dedicated freighter and convert two A310 aircraft into aircraft for freighter services.  Through these measures Air India’s revenues for cargo services will increase from Rs.4000 crores to Rs.6000 crores in 2005-06.

15.       Compensation to IAL to dispose off the outstanding dues of Vayudoot Limited.

            Consequent upon the decision to merge Vaydoot with Indian Airlines in 1993, it was decided to freeze all outstanding dues of Vayudoot for a period of five years and thereafter payment by Indian Airlines in 10 annual installments.  This period of moratorium was further extended for two years i.e. upto 24.05.2000.  In view of its severe financial position, IA had requested this Ministry to provide funds for disposing off the liabilities of Vayudoot.  The matter was under consideration of the Govt. for quite a long period and it has now been decided to grant Rs. 138.33 crore to IA to discharge the liabilities of Vayudoot.

16.       Notification of AAI (Amendment) Act, 2003:-       

The Govt. has notified the AAI (Amendment) Act, 2003 on 01.07.2004 to enforce the provisions of the said Act, which, inter alia, provides for restructuring of airports through leasing route, exclusion of private airports from the ambit of AAI Act excepting security and

 ATC functions which will continue to be discharged by AAI and also empowers Government for levy of Advance Development Fee (ADF) for the development of existing airports and also for the setting up of new airports.

17.       Restructuring of Delhi and Mumbai Airports :-

The empowered Group of Ministers (EGOM) constituted by the earlier government was reconstituted by the Cabinet in its meeting held on 15^th June, 2004 with the Hon’ble Minister of Defence as Chairman and other members being Hon’ble Minister of Finance, Hon’ble Minister of Law, Justice and Company Affairs and Hon’ble Minister of Civil Aviation.  The reconstituted EGOM in its first meeting held on 28^th June, 2004 had taken the following decisions:-

      1.   Appointment of a Global Technical Advisor and Legal Consultant;

2.   Reduction of Foreign Direct Investment from 74% to 49% and the reduced 25% equity will be held by the Indian entities (Indian Companies).  The balance 26% will be held by Airports Authority of India and Government PSUs in the Joint Venture Companies;

3.     Employees of AAI at Delhi and Mumbai airports will be on a mandatory deputation with the Joint Venture Company for a period of 3 years.  The Joint Venture Company will be required to absorb a minimum of net 40% of the existing employees working at these airports.  Those employees who are not absorbed by the Joint Venture Company would revert to AAI;

4.      Increasing the maximum permissible equity participation in the Joint Venture Company for Delhi and Mumbai airports by Indian Scheduled Airlines and their group entities from 5% to 10%. 

                The Invitation to register Expression of Interest (ITREOI) issued on 17^th February 2004 was modified accordingly.  The last date for receipt of Expression of Interest was 20^th July, 2004. 

Ten entities have lodged their EOIs by 20^th July 2004 (i.e. last date of the receipt of EOIs). The Expressions  of  Interest received  from  10  parties  have  been  evaluated by the Financial Consultant and  nine  parties have been shortlisted as Pre-Qualified Bidders. Letters to these nine bidders have been issued by AAI intimating their pre-qualification and also requesting them to execute a Confidentiality Undertaking. Action for finalising the Request For Proposal and other project agreements like Operation, Management, Development Services Agreement (OMDA), Lease Deed, Shareholders Agreement, State Support Agreement is on hand.  Technical and financial bids are being released in January 2005. Subsequent to the approval of the Board of AAI, M/s Thakur, Vaidyanath Aiyar & Co. has been appointed as Accounting and Tax Advisor for the Transaction and they have since started their assignment.Meanwhile the upgradation of Mumbai Airport 1B has already started in full swing.As far as addressing the issues of parking bays is concerned, both at Mumbai and at Delhi airports, 16 and 9 parking bays respectively are under construction.

18.       Bangalore International Airport Limited:-

Draft Concession Agreement of Bangalore International Airport Limited (BIAL)   approved by the Cabinet in its meeting held on 15^th June 2004.  The approved CA was signed by the Govt. of India with BIAL on 5^th July, 2004. 

The CNS/ATM agreement has been discussed with the officials of BIAL and a final draft is being submitted to the Board of AAI shortly for consideration and approval.

The Concession Agreement (CA) of HIAL as approved by the Cabinet in its meeting held on 15.12.2004 has been signed between Government of India and HIAL on 20.12.2004. 

The signing of the CA will now facilitate construction of the Greenfield International airport at Shamshabad near Hyderabad. 

            Setting up of Greenfield airports at Navi Mumbai, Chakan (Pune), Mopa (Goa) are also being actively perused.  Government of India has given in principle approval for Mopa (Goa) and study has been assigned to ICAO. 

Apart from restructuring of Delhi and Mumbai airports and greenfield airports approved to be set up at Bangalore and Hyderabad, Airports Authority of India (AAI) has decided to modernize twenty five non-metro airports to world class standards in phases with focus on airside and city side development and enhancement of non-aeronautical revenues.  Remaining 55 airports will also be taken up for improvement.  According to broad estimates, the likely investment into the total airports sector would be of the order of Rs.40,000 crores.  In the first phase, approximately ten airports would be taken up in hand and the remaining in the second phase.  The selection of airports will be made keeping in view their commercial and traffic growth potential.  AAI is in the process of appointing Indian Financial consultant (IFC) and Global Technical Advisor (GTA) who will assist AAI in conducting techno-economic feasibility study of identified airport to evolve an appropriate model based on viability of the project.  Among these the work of upgradation and modernisation of Srinagar airport has already started.   

Design by global competition for Ahmedabad International terminal, Udaipur, Dibrugarh, Jaipur and Trichy have been finalized.

21.       GPS and GEO Augmented Navigation(GAGAN):

            Orders have already been placed for supply, installation and testing of the ground network of GPS and GEO Augmented Navigation (GAGAN).  This would include the hardware for 8 reference stations, master control centre and a part of the uplink station which will be supplied, installed, tested and handed over by the contractor.  This will be integrated to the RF section of the uplink station which is being implemented by ISRO and the navigation payload of the GSAT-4 Satellite, which ISRO will be putting in orbit for operationalisation of "GAGAN".

22.       Dedicated Satellite Communication Network(DSCN):

    (i)     Orders have also been placed for supply, installation and commission of a Dedicated   Satellite   Communication   Network   (DSCN)    for   meeting   all perational communication requirements of air traffic services.  The system will have VSAT Terminals at 80 airports with full redundancy including in the space segment for highly reliable communication and would replace the terrestrial communication links leased from the DoT which have been found to be deficient in meeting some of thecritical operational communication requirements for air traffic services.

 (ii)   New ATM for Mumbai and Delhi to ease congestion of air traffic.

23.       Haj Operations  2005:-         

The following decisions have been taken by the Government with respect to Haj 2005:

• To retain the amount of Rs.12,000 to be paid by each pilgrim for the round trip to Jeddah / Madinah and the remaining cost as subsidy to  be paid by Government to airlines.
• To add Guwahati and Aurangabad as new embarkation points for Haj 2005 while Patna will be an embarkation point in place of Gaya.  
• In the current year, all persons who applied for Haj travel – about 82,000 - will be provided the facility, which is an increase of nearly 10,000 over the past year; and

• Policy prevailing prior to September 2003 will be followed.  However, non- income tax payees will get higher priority for availing such facilities.
• The outgoing phase viz. Phase I of the Haj operations 2005 have already commenced from 13^th December 2004 and will end on 13^th January 2005.  Return phase viz. Phase II will start from 26^th January 2005 and will conclude on 24^th February. 2005. There will be 15 embarkation points from where the Haj Committee pilgrims will be airlifted to Jeddah.

Two Dauphin AS365N3 helicopters have been added to PHHL fleet one in month of August, 2004 and second in October 2004 and now Pawan Hans has deployed one additional Dauphin N3 helicopter with ONGC for their offshore task at Mumbai.  The company has acquired one additional light helicopter i.e. Bell 407 from M/s. Bell Helicopter Asia in December, 2004.  To go further, a more dynamic role for Pawan Hans Helicopters Ltd. is being envisaged.

25.       Development in the North-Eastern Region:-

Indian Airlines and its subsidiary Alliance Air have been taking special measures to ensure connectivity in the North Eastern States. Indian Airlines presently operates 139 flights per week offering 9472 seats and connecting 11 stations in the North Eastern States.  New flights have been introduced at Shillong – Silchar route from July, 2004. One ATR has been based at Guwahati w.e.f. July, 2004.   Further strengthening of air connectivity in North-East is being taken up in 2005.

26.       13^th Meeting of DGCAs of SAARC Countries: 

The 13^th Meeting of Directors General of Civil Aviation of the SAARC countries was held at New Delhi during November 29 to December 1, 2004 under the Chairmanship of the Director General of Civil Aviation, India.  Members of ICAO HQ, Montreal and its Regional office at Bangkok and representatives of DONOR agencies like European Commission, Federal Aviation administration of USA and representatives from aircraft manufacturers like Airbus and Boeing participated in the deliberations.  Overall 60 delegates from various domestic and international organisation participated in the meeting.

27.       International Air Cargo facilities at the airports:-

AAI has established international cargo facilities at four domestic airports namely Nagpur, Guwahati, Lucknow and Coimbatore.  

  As far as Indian Airlines is concerned, cargo revenue from April-September 2004 has shown an increase of over 18%, compared to the same period in the preceding year and Indian Airlines has introduced a new facility called Shipment Notification System to promote export cargo through which shipper will be informed about the status of his shipment ex-inland cargo stations, via e-mail and SMS. 

 As far as Air India is concerned, it has decided to operate dedicated freighters on key cargo routes i.e. India/Europe/USA, India/Japan, India/Singapore and India/China.  It has proposed to retrofit its older A310 aircraft and sought to dry lease upto 3 AB310 freighters and 1 B747-400 freighter for providing bridge capacity in the interim.

28.       Fog Management:- 

Secretary(CA) reviewed the preparedness of airlines, airports and other concerned agencies for smooth operation of air services in the advent of fog in the coming winters at metro and other major airports of the country,  AAI is making elaborate arrangements to ensure maximum convenience of all air travelers.   IGI Airport, Delhi is being upgraded to CAT III-B, for which work is already in progress.  To compliment this, the training of Indian Airlines’ Pilots has also been started in full swing. 

To facilitate the movement of travelers, Indian Airlines is now providing full Call Centre services at Delhi, Chennai, Bangalore and out-bound services at Hyderabad.  Call Centres would be available to the entire domestic network by 1^st July 2005.  Especially during the fog conditions, Indian Airlines is providing pro-active information to passengers about flight disruptions by sending SMS messages.  This SMS service would soon be extended to also provide facility to passengers to get arrival/departure information on request.

29.       Cargo Hub at Nagpur:-

            There is a proposal from Government of Maharashtra  (GOM) to construct International Multi Model  Passenger and Cargo Hub (MIHAN) at Nagpur.  Ministry of Civil Aviation/Airports Authority of India is willing to transfer the Nagpur airport to Government of Maharashtra subject to finalization of modalities.  On the advice of the MCA, GOM conducted a due diligence study of Airport infrastructure at Nagpur and submitted a report on October 26, 2004.  The report is under examination.

The Indian Air Force (IAF) is also implementing its GAJRAJ Project adjacent to the MIHAN Project.  High level meetings are taking place between MOC, MCA, GOM and AAI to exchange equivalent land between GOM and MOD to facilitate implementation of the MIHAN Project. 

            Government of Maharashtra has already formed a Special Purpose Vehicle (SPV) in the name of Maharashtra Airport Development Company (MADC) for development of MIHAN.

30.       Opening up International Routes :

             Government has decided to optimally utilize the traffic rights available with the country on international routes by strengthening the public sector airlines on the one hand and on the other hand allowing private Indian Scheduled Carriers to operate to all parts of the world excepting Gulf and Saudi Arabia.  Gulf/Saudi Arabia routes would be kept reserved for the public sector airlines for the next three years.

              Government has also decided to review the mandated commercial agreements entered into by Air India/Indian Airlines with different airlines and phase them out over the next five years.

              Government has also decided to formulate appropriate measures for establishing improved operational synergy between Air India and Indian Airlines for their mutual benefit.

  Consequently, there will not only be more balanced use of rights between Indian and foreign carriers, but the competition will bring down tariffs, which will benefit passengers directly.  At the same time, there will be an increase in capacity and connectivity that will benefit passengers by giving them more seats and more choices.