Tuesday, November 11, 2014

Draft Civil Aviation Policy - Another policy without substance

The draft Civil Aviation Policy was released by the Honorable Minister of Civil Aviation – Ashok Gajapathi Raju Pusapati yesterday. I had a lot of hopes from the policy since the last decade was plagued with policy paralysis in the Indian government. There is a stiff competition between which sectors suffered the most – Coal, Telecom, Industry or Aviation. The perceived scam in purchase of Air India aircraft, merger of Air India & Indian Airlines, lack of efforts to abolish the 5/20 rule( airlines require minimum 20 aircraft and 5 years of domestic operations to start flying international), non-classification of ATF (Aviation Turbine Fuel) into declared goods category attracting uniform 4% tax across the country, decision to go ahead with redevelopment of Chennai & Kolkata airports by AAI – leading to the disaster that they are today, as compared to world class facilities at Delhi, Mumbai, Hyderabad & Bengaluru, and many more. The list is unending.

However, prima facie the draft policy looks like listing of all problems that need to be resolved and have been in that state for a long time. The policy only highlights the problems without laying down the solutions or ways & means to tackle the problems. It promises to look after taxation issues on ATF, the 5/20 rule and route dispersal guidelines, but gives little on how and when this will be addressed.

There is a common saying – “The more things change, the more they remain the same”. Unfortunately I do not know who this saying is attributed to, but when you see the Strategic 5 year plan of the past government presented by the then MoCA (Minister of Civil Aviation) in 2010 and the Draft Civil aviation policy of this government, one tends to agree with the statement. Both start with quoting ICAO (International Civil Aviation Organization) statistics of generation of 610 indirect jobs for every 100 direct jobs in aviation.

The Strategic Plan 2010-2015 talks about Indian being recognized as a role model by FAA, which today has downgraded the safety rating to Category 2, Inclusion of 500 more aircraft in Indian skies and 300 more helicopters, One helipad every 100kms on highways, and many more, most of which continue to be Aspirational – similar to the section under which it is quoted in the Strategic Plan.

The new Draft policy talks about having airports as integrated multi-modal hubs with Rail / Road / Metro connectivity, access to manufacturing, business & tourism areas, up-gradation of 18 airports which amount to 86% of traffic, developing the 6 metro airports to have a hub & spoke model, Rationalization of ATF costs by having uniform taxes, Development of 6 metro airports as cargo hubs, Listing of AAI & Pawan Hans, changing the regional connectivity policy and reviewing the 5/20 rule, Air Navigation System & up-gradation of DGCA.

While these are welcome moves, the Revised Route Dispersal guidelines, which were formulated by a leading consulting firm are pending implementation for over two years, due to disagreement between carriers on the nature of the requirements. The airport at Bengaluru located about 40kms away from the city center recently got decent road connectivity. The rail connectivity envisioned while construction of airport is still elusive, many of the 35 non metro airports which saw modernization are already facing shortage of space (Eg: Jaipur) or are white elephants and AAI is incurring huge losses at these places (Eg: Aurangabad, Indore).

The Hub & Spoke model has been a success as Delhi – since there is no other airport in the vicinity which can attract so much traffic, but the same does not work well in the south, where Bengaluru, Chennai & Hyderabad compete fiercely with each other. So while SpiceJet based their Q400s in Hyderabad, a lot of the destinations are connected from Bengaluru and Air Asia changed plans and moved to Bengaluru from Chennai, yet there is no perfect Hub & Spoke at either of these places like there is at Delhi.

However, all has not been bad, implementation of GAGAN, changes in Air Navigation System and subsequent trials at Jaipur, up-gradation of ATC infrastructure at Mumbai and increase in runway capacity, are some of the silver linings.

One can only hope that the draft Civil Aviation policy gets into some tangible project plan, which is implemented phase wise with bounded timelines and the next 3-5 years, would see a serious change in the infrastructure & policy in Indian civil aviation. As more airlines take to skies, the pressure on infrastructure would be immense and similar to the boom in 2005-6 which most of us remember well and would hope is not repeated.

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