One Year of UPA Government : Major Decisions and Initiatives - Civil Aviation
The UPA Government completes one year on May 21, 2005. During this period, the Government
has taken several important initiatives. Some of these are being brought out in
the series ‘Major Decisions and
Initiatives’.
Since the dawn of
Independence, Civil Aviation in India has made giant strides and is today a
major contributor to the growth of the national economy. Apart from providing connectivity in a large
and diverse country like India and serving the transportation needs of the
people in a speedy, cost-effective and efficient manner, the aviation sector
has also greatly facilitated the development of domestic and international
tourism, business, commerce and trade.
During the last one year, Indian Civil Aviation Industry witnessed
significant opening up of Indian skies paving the way for increased
international and domestic connectivity. In fact, air travel, for the first
time, has become affordable for the common man.
Boom in
Air Travel
There has been a significant increase in both domestic
and international air traffic as well as cargo in India.
Overall aircraft movements have
increased by 14 per cent, out of which international was 22 per cent and
domestic 11.9 per cent. Overall
passenger traffic has increased by 23.2 per cent, out of which international
was 17.9 per cent and domestic 25.9 per cent.
Overall cargo traffic increased by 21.4 per cent out of which
international was 19.9 per cent and domestic 24.2 per cent.
New Airlines
At present there are
seven scheduled airlines viz. Air India Ltd., Indian Airlines Ltd., Airline
Allied Services Ltd. (Alliance Air), M/s Jet Airways (India) Pvt. Ltd., M/s
Sahara Airlines Ltd., M/s Deccan Aviation Pvt. Ltd. and M/s Blue Dart Aviation
Ltd. operating in the country. The
Government has also granted “No Objection Certificate” to five more airlines
companies viz. M/s Royal Airways Ltd., M/s Inter Globe Aviation Pvt. Ltd., M/s
Indus Airways Pvt. Ltd., M/s Kingfisher Airlines and M/s Go Airlines to operate
scheduled air transport services.
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 was adopted by the Government from November 2004 to March 2005, under
which designated airlines could operate additional services to/from India
subject to the existing terms of commercial agreement with Air India/Indian
Airlines. A number of airlines
responded to the offer and 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.
Signing of a Revised Air
Services Agreement with USA
A revised Air Services Agreement
between India and USA has been signed on April 14, 2005 replacing the earlier
Agreement, which was signed in 1956. The
revised Agreement grants unlimited access to the designated airlines to any
points of call in the territory of the other country, as against four airports
under the earlier Agreement. Besides
the revised Agreement also removes all restrictions on exercise of 5th
freedom traffic rights, code share rights and provides for greater operational
flexibility. These would provide
greater commercial opportunities to Indian carriers and would enable them to
wean away traffic on India-USA route from third country carriers.
Liberalisation of Air Services with UK
Two rounds of negotiations held with UK in September,
2004 and April, 2005 have broken the decade long deadlock in air connectivity
between India and UK. Entitlements on
India-UK sector will go up to 56 services per week on Delhi/Mumbai - London
Heathrow route by Winter season 2006.
From the beginning of Winter 2005 the designated airlines of India may
operate without any capacity limit between India and UK, except Delhi/Heathrow
and Mumbai/Heathrow routes. The
designated airlines of UK may also operate on all other routes to India, except
Heathrow/Delhi and Heathrow/Mumbai subject to a total capacity limit of seven
services per week to/from each airport in India, except that in the cases of
Bangalore and Chennai, the total capacity limit will be increased to 14
services per week each from the beginning of Summer, 2006.
Liberalisation of Air Services on other Important
Routes
During the last few months, entitlements for operations of air services
have been significantly increased on India-USA, India-France, India-UK,
India-Mauritius, India-China, India-Oman, India-Australia, India-Iran routes,
etc. The focus has been to provide
sufficient capacity for direct connectivity rather than travel through third
country carriers.
Progress in the Implementation of ‘7 + 7’ Policy
In pursuance of the new
policy framework to permit the designated airlines of all countries having Air
Services Agreements with India to operate seven flights per week each to any
two international airports in India, the designated airlines of Austria,
Finland, Republic of Korea, Maldives, Armenia, Yemen, USA, France, UK,
Mauritius, China, Oman and Qatar have been offered additional capacity, as
requested by the respective Governments, subject to reciprocal rights to the
Indian carriers.
Opening up of International Routes to Private Carriers
With a view to
optimally utilise the traffic rights available to India under various
bilaterals, it has been decided to permit Indian scheduled carriers with five
years of domestic operations and with a minimum fleet size of 20 aircraft, to
operate on all international routes except Gulf countries, which have been kept
reserved for Air India and Indian Airlines for a period of three years. Jet Airways and Air Sahara have so far been
permitted to operate to Sri Lanka, Nepal, Bangladesh, UK, Malaysia and
Singapore.
Government has also
decided to formulate appropriate measures for establishing improved operational
synergy between Air India and Indian Airlines for their mutual benefit.
Policy regarding Commercial Agreements
It has been decided
that the Government will not henceforth mandate any commercial agreement during
bilateral Air Services consultations.
Foreign airlines starting new air services, therefore, will not have to
pay compensation to the airlines of the country by way of mandated commercial
agreements. This will help to bring
down tariffs and increase connectivity, thereby providing direct benefits to
passengers.
Foreign Direct Investment in Civil Aviation Sector
The Government has increased the
Foreign Direct Investment limits in “Air Transport Services (Domestic
Airlines)”. The revised limits are 49 per cent through automatic route and 100
per cent by Non-Resident Indians through automatic route. No direct or indirect
equity participation by foreign airlines is allowed.
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.
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 three B 737-800 aircraft to serve the price sensitive
Kerala/Gulf routes under the banner of Air India Express which is commencing
its operations to the Gulf effective from April 29, 2005. On-line passenger
booking and ticket sales for flights of Air India Express were launched on
March 18, 2005.
New international connection by Indian Airlines
In compliance of the announcement made
by the Prime Minister at Guwahati, Indian Airlines has introduced a biweekly
Guwahati – Bangkok flight from January 1, 2005.
Leasing of Aircraft by IA to Increase Capacity
Indian
Airlines has an on-going programme of leasing 23 aircraft to increase its
capacity. Out of these, five Airbus A-319 aircraft will replace ageing B 737
aircraft. Currently, 17 Airbus A-320 and four ATR-42 aircraft are on lease with
the Airline.
Acquisition of 43 Aircraft by Indian Airlines
The Project Report of Indian Airlines for acquisition
of 43 aircraft, viz. 19 Airbus A 319, four 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. 9,474.95 crore (@ US$ = Rs.46) was considered
in a PIB meeting held on November 10, 2004 and it has since been approved. Induction of wide bodied aircraft by Indian
Airlines is also on the anvil, while at the same time Indian Airlines is also
planning to induct smaller aircraft for feeder routes.
Compensation to Indian Airlines
Consequent upon the
decision to merge Vayudoot 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 instalments. The Government has now decided to grant Rs.
138.33 crore to IA to discharge the liabilities of Vayudoot.
Cargo operations of Indian Airlines and Air India
Indian
Airlines is into the final stages of examining conversion of five 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 two years. For this it plans
to dry lease one 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.4,000 crore to Rs.6,000 crore in
2005-06.
Initial Public Offerings of Air
India and Indian Airlines
The Board of Air India in its 106th meeting held on April 26,
2005 has in principle approved the Initial Public Offering (IPOs) in order to
strengthen Air India’s equity base subject to the approval of the Government.
The proposal of AI is yet to be received by the Government.
Indian Airlines proposes to acquire
43 Airbus aircraft during 2006-07 to
2010-2011 at an estimated cost of Rs.10,237 crore. The Government has approved infusion of Rs.325 crore as equity in
the Indian Airlines to be used as margin money for the acquisition. Further, in order to partially support the
financing of this acquisition, Indian Airlines Board has, in principle, approved
raising of resources by IPO.
Sales Tax on ATF
Sales
Tax on ATF supplies for international operations of Air India and Indian
Airlines has been totally waived in the Finance Bill, 2005. This would create a level playing field for
Air India and Indian Airlines as foreign airlines are already availing this
benefit.
Removal of Restriction on Photography
India was among the few
countries in the world, which had restrictions on photography by passengers at
the terminal buildings of the airports and from inside the aircraft. These outdated restrictions have now been
removed through amendments in Aircraft Rules to permit photography by
passengers of scheduled flights at the 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.
Restructuring of Delhi and Mumbai Airports
The reconstituted Empowered Group of
Ministers (EGOM) in its meeting on June 28, 2004 decided on the reduction of
Foreign Direct Investment from 74 per cent to 49 per cent. The reduced 25 per
cent equity will be held by the Indian entities (Indian Companies). The balance
26 per cent will be held by Airports Authority of India and Government PSUs in
the Joint Venture Companies. Employees of AAI at Delhi and Mumbai airports will
be on a mandatory deputation with the Joint Venture Company for a period of
three years. The Joint Venture Company will be required to absorb a minimum of
net 40 per cent of the existing employees working at these airports. Those
employees who are not absorbed by the Joint Venture Company would revert to
AAI. It was also decided to increase 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 per cent to 10 per
cent.
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.
Bangalore International Airport Limited
Draft Concession Agreement (CA) of
Bangalore International Airport Limited (BIAL) was approved by the Cabinet on
June 15, 2004. The approved CA was
signed by the Govt. of India with BIAL on July 5, 2004 and work has
commenced.
Hyderabad International Airport Limited
The Concession Agreement (CA) of the
Greenfield Hyderabad International Airport Ltd. (HIAL) as approved by the Cabinet
on December 15, 2004 has been signed between Government of India and HIAL.
Modernisation of Airports
Apart from
restructuring of Delhi and Mumbai airports and Greenfield airport approved to
be set up at Bangalore and Hyderabad, the Airports Authority of India (AAI) has
decided to modernise 30 non-metro airports to world class standards in phases
with focus on airside and city side development and enhancement of
non-aeronautical revenues. Remaining 50
airports will also be taken up for improvement. According to broad estimate, the likely investment in the total
airports sector would be of the order or Rs.40,000 crore. 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. Design by global
competition for Ahmedabad International terminal, Udaipur, Dibrugarh, Jaipur
and Trichy have been finalised.
New Greenfield airports are proposed at Navi Mumbai,
Mopa (Goa), Chakan (Pune) and Ludhiana by the respective State Governments.
While approval has been granted for the one at Mopa, the others are being
processed.
Dedicated Satellite Communication Network
Orders have also been placed for supply, installation
and commission of a Dedicated Satellite Communication Network (DSCN) for
meeting all operational 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 the critical operational communication requirements for air
traffic services. It is also proposed to set up new ATM for Mumbai and Delhi to
ease congestion of air traffic.
International Air Cargo facilities at Domestic
Airports
AAI has established international
cargo facilities at four domestic airports namely Nagpur, Guwahati, Lucknow and
Coimbatore. Cargo revenue of Indian Airlines from April-December, 2004 has
shown an increase of over 19.25 per cent compared to the same period in the
preceding year and Indian Airlines had 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.
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 has expressed
willingness to transfer the Nagpur airport to Government of Maharashtra subject
to finalisation of modalities. The Union Cabinet has also approved
international status to Nagpur Airport and has also approved re-naming it as
Dr. Ambedkar International Airport.
Haj Operations
2005
The Government has decided 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 the Government to the
Airlines for the Haj 2005. It has also been decided to add Guwahati and
Aurangabad as new embarkation points for Haj 2005 and Patna will be an
embarkation point in place of Gaya. In
the current year, all persons who applied for Haj travel – about 82,000 had
been provided the facility.
Augmentation of fleet by Pawan Hans Helicopters
Pawan Hans Helicopters Ltd has signed an Memorandum of Agreement
with M/s Eurocopter, France on 31.3.2005 for purchase of Two Dauphin AS365N3
helicopters, with an option to purchase two more helicopters.
Development in 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 9,472
seats and connecting 11 stations in the North Eastern States. New flights have been introduced at Shillong
– Silchar route from July 2004. Further strengthening of air connectivity in
North-East is being taken up in 2005.
New Civil Aviation Policy
The Draft Civil Aviation is currently under
circulation to various Ministries for their comments.
Economic Regulator
An Economic Regulator for the civil aviation sector is
also on the anvil and the Draft Bill is under consultation process.
RK:LV
PIB SF-52 (17.5.2005)
(Release ID :9333)