‘Need to amend AAI Act as it’s very restrictive’

INTERVIEW WITH JAYANT SINHA

`55,689 CRORE

total mobilisation in equity schemes during the April-january period of the current financial year

`4.97-LAKH CRORE

assets under management of equity MFS at the end of January, from Rs 3.86 lakh crore in March-end

35.65 LAKH

10th straight month of inflows into equity schemes

additional investor accounts in equity MFS in the current financial year so far THE GOVERNMENT is looking a a number of options to soften the blow of a levy that has been imposed on flights on major routes to fund subsidised flights on regional routes. Leading airlines have gone to courts protesting the levy. “We are considering a variety of different proposals and let’s see what pays off,” Minister of State for Civil Aviation JAYANT SINHA said when asked if the government plans to lower the levy per flight. In an interview with SUNNY VERMA, Sinha said the government would amend the Airports Authority of India (AAI) Act to monetise its land bank of around 55,000 acres. Edited excerpts:

Why is there a need to amend the AAI Act to monetise its land bank?

There is a need to amend the Act because the Act is very restrictive in terms of what is possible to do with that land. For instance, Chapter 3, Section 12 of the Act lays down what is possible for the Airports Authority to do with its land. It says establish and maintain hotels, restaurants and restrooms at or near the airports. Establish warehouses and cargo complexes at the airports for the storage or processing of goods. So, it’s very specific on what can be done with the land. It doesn’t say, for example, shopping centres, conference centres; it doesn’t say, for example, offices, commercial or multi-use complexes, training facilities. Therefore, we want to amend the AAI Act so that we can expand the amount of functions which can use AAI land. This will enable us to monetise this land better and plough those into actually building a lot more airports more quickly. If we can monetise this land and use this land well, the whole process of building these airports can become selffunding and self-sufficient.

What is the status of strategic divestment in Pawan Hans Helicopters?

The Niti Aayog went through a process where it examined many different public sector enterprises to see which of these could be divested strategically. These recommendations were sent to the Cabinet and then the Cabinet approved. One of the recommendations was Pawan Hans. Now there is a process underway by which legal and transaction advisors are being appointed to undertake the process. That’s where we are with the Pawan Hans right now. We will see how the process unfolds and what kind of bidders emerge and then we will see what the right decision is.

Economic Survey has spoken of privatising Air India...

I am very glad that Dr. (Arvind) Subramanian has turned his attention to aviation. I have assured him that we are doing our utmost to ensure the transformation of three public sector enterprises — Air India, Pawan Hans and AAI — and we have to ensure that we are able to take full advantage of the discipline and accountability that market place provides along with ensuring that important national interests are maintained. So, we are working hard to achieve a good balance there.

Are you completely ruling out privatisation or listing on exchanges of Air India?

Air India is going through a transformation process and the transformation process has multiple dimensions. Obviously, governance, performance, operating efficiency as well as balance sheet restructuring is on the agenda.

Are there any plans of listing AAI?

Our efforts as policy makers are always to ensure that we can balance the accountability and discipline of the market place with important national interests, and you know that is, of course, continuously evaluated. We have come to conclusion on Pawan Hans, we are working through that process for Air India and as far as AAI is concerned, we are taking important steps as well in the transformation of AAI.

Even though there is no decision on AAI and Air India right now on listing, you are saying that the discussions are being held...

As I told you earlier, we are the custodians of people’s trust and, therefore, it is very important for us to continuously evaluate what is the right way to achieve the transformation of these institutions. So, that is a continuous process. Have you reached a solution with airlines that are protesting the levy to fund regional subsidised flights?

Discussions are underway as far as that is concerned and we are hopeful that we will be able to resolve that matter. I understand the position of the airlines; what they are saying is due to the rise in oil prices and very competitive nature of our markets. Their profits are coming down substantially. If you look at the most recent numbers that have been reported, you will find that their profitability has come down. It’s important that certain level of profitabiliy be maintained for our airlines because we want them to be able to expand their fleet, we want them to be able to maintain safety and security standards. So, a certain level of profitability is required. Otherwise, no investment will come in those markets, and that will then be unfortunate for all concerned.

Certain amount of profitability, return on invested capital is required for the industry to prosper and thrive, and for customers to get both convenience and high-qualityservice.so,iamsensitive to their concerns. India has some of the lowest ticket prices in terms of revenue per kilometre and at the same time, it has among the highest costs when you look at the taxes and so on. So, costs are quite high, most of the inputs to airline industry are global inputs such as aircraft, oil prices, pilots. Pilots can go fly anywhere in the world, aircraft can go anywhere in the world, oil prices are set globally. Our taxes are high... But at the same time, our pricing is far below that of global levels and the net result of it is that our airlines, therefore, have very contrained profitability and that not good for industry in the long run. So we have to balance all of these aspects to ensure that the industry continues to thrive and prosper.

In light of this, will you lower the levy per flight?

We are considering a variety of different proposals and let’s see what pays off.

Maybe, the government can fund partially?

Let’s see what we come out with as a solution.

Have the counter-bids been closed for RCS routes?

As part of UDAN, we are expecting that we will be able to open up 43 unserved airports and 12 underserved airports. So, those are the numbers. The counter-bids have been now closed and we will start evaluating them from today onwards (last Monday) and once we have gone through all of the counter bids and the original bids, within a few days, we will be able to actually issue out the routes that are being awarded. So, the awards will be done in the next few days and actually when the flights will start, will depend on each individual routes because in certain routes, the airports still need a little bit work to be ready.

On certain routes, the NSOPS have to establish their own readiness and be able to make sure that they have the planes, the flights crew and all of the approvals that they need etc. Each route will be different in terms of when it actually gets started but our hope is particularly for the underserved airports, which already have flight service but less than seven flights a week, we will get these routes started very soon.

And, we have considerable confidence in that also because of the 11 bidders, 3 are actually major airlines and 8 are NSOPS. Three major airlines already have extensive operations, in some cases they are already flying to the underserved airports. So, those are the ones that we think will get started almost immediately. The other ones will take longer depending on the the state of airports and the ability of the operator to be able to mount the flight. So, we will have to just see but of course as far as the government is concerned, we are doing everything within our powers to accelerate and expedite the provision of these flight services. There is great anticipation and excitement in many cities about the fact that airports are going to become operational. I was just in Jamshedpur where the notion that Jamshedpur is going to get connected to Kolkata through regular flights was welcome by all sections of society and there is tremendous enthusiasm.

“Certain amount of profitability, return on invested capital is required for the (aviation) industry to prosper and thrive, and for customers to get both convenience and high-quality service”