In­dian Civil Avi­a­tion 2017 in ret­ro­spect

Vayu Aerospace and Defence - - Commentary -

In­dia’s civil avi­a­tion sec­tor soared in 2017 as pas­sen­ger traf­fic con­tin­ued to rise on the back of more re­gional flights and higher dis­pos­able in­come lev­els. Prime Min­is­ter Naren­dra Modi said his gov­ern­ment’s pol­icy re­forms had re­sulted in an eq­ui­table and in­clu­sive growth for the sec­tor.

“In the avi­a­tion sec­tor, we have brought in pol­icy changes that have en­abled even a ‘hawai chap­pal’ (slip­per)-wear­ing per­son to avail the ben­e­fits of air travel. We have brought this type of change,” Modi said. Be­sides aug­ment­ing pas­sen­ger traf­fic growth, the Rs 2,500-an-hour flight ser­vices launched un­der the re­gional air con­nec­tiv­ity -- UDAN -- scheme also ex­panded the coun­try’s avi­a­tion in­fra­struc­ture.

In the first phase, con­tracts to five com­pa­nies were awarded to op­er­ate flight ser­vices on 128 routes to 70 air­ports. Till re­cently, RCS-Udan op­er­a­tions to 13 air­ports had com­menced, with an ad­di­tional 12 ready to re­ceive flights. Apart from en­hanced ser­vices to non-metro cities, the sec­tor has also ben­e­fited from the rise in do­mes­tic dis­pos­able in­come lev­els and lower jet fuel prices, all of which ac­cel­er­ated pas­sen­ger traf­fic growth in 2017. Ac­cord­ing to the lat­est data from the Directorate Gen­eral of Civil Avi­a­tion ( DGCA), pas­sen­ger traf­fic dur­ing Jan­uaryNovem­ber 2017 zoomed 17.27 per cent to 105.9 mil­lion. The rise in pas­sen­ger traf­fic aided air­lines to post healthy quar­terly fig­ures and also place new air­craft or­ders in an­tic­i­pa­tion of fu­ture growth.

The gov­ern­ment, how­ever, did not see the same logic work­ing in favour of debt-rid­den Air In­dia.

The Union Cab­i­net, in a mo­men­tous de­ci­sion, man­dated the for­ma­tion of an ‘Air In­dia -- Spe­cific Al­ter­na­tive Mech­a­nism’ headed by Fi­nance Min­is­ter Arun Jait­ley to look into the strate­gic divest­ment of the air­line. Among the po­ten­tial bid­ders, bud­get pas­sen­ger car­rier In­diGo evinced in­ter­est in buy­ing the air­line’s in­ter­na­tional op­er­a­tions and its sub­sidiary Air In­dia Ex­press.

In ad­di­tion, avi­a­tion in­dus­try ma­jors SATS, Bird Group and Celebi have shown in­ter­est in buy­ing Air In­dia’s ground han­dling unit. Cur­rently, the air­line is un­der a mas­sive debt bur­den of Rs 50,000 crore, and had posted an op­er­at­ing profit of Rs 105 crore in 2015-16. The year also saw some very low points, es­pe­cially with fre­quent clashes erupt­ing be­tween pas­sen­gers and crew.

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