Govt goes all out to see UDAN take off
Govt hopes to boost air travel among smaller cities by capping fares to regional airports
From convincing companies to lease smaller jets in India to reducing airport charges at key metro airports for regional flights, the government is going all out to make the regional connectivity scheme called UDAN a success.
Launched last week, UDAN, which stands for Ude Desh Ka Aam Naagrik (may the common man fly), hopes to boost air travel between smaller cities by capping fares to regional airports at ₹2,500 for a one-hour flight. Government is hoping that the first flight under the scheme takes off by January 2017.
“The government has put in a lot of effort to ensure that the scheme is successful. The selected airline operators will be granted exclusivity of operations for three years as against one year that was proposed in the draft. During these three years, no other airline would be allowed to operate flights on that route,” said an official.
The aviation ministry is also talking to private airport operators to reduce the charges for regional flights. Foreign registered planes have been allowed to fly in India. This move will help leasing companies take back their planes in case of a default. At present, all civilian aircraft flying in the country is registered with the Directorate General of Civil Aviation. “A delay in deregistering planes, as witnessed recently in the Air Pegasus case and during the Kingfisher crisis has made international aircraft firms wary of leasing planes in India. This also caused a hike in lease rentals,” said an official.
The government has also held talks with aircraft leasing firms to ensure that small jets are available to operators in India.
“UDAN will result in air traffic doubling in the coming years,” said aviation expert Rajji Rai.
Government has said it will provide a viability gap funding (VGF) or financial support of up to ₹5,610 per seat to airlines to ensure that the operational cost is met. To fund the scheme, a regional connectivity fund would be created by imposing a levy per departure on domestic flights on key routes. The levy would help raise ₹500 crore annually.
Government will conduct a reverse bidding whereby the operator seeking the lowest VGF would be granted the right to operate services on a route.
Centre and state government would offer support by reducing excise duty, lower the VAT to 1% on ATF, provide land, security and fire services free of cost. The government hopes the incentives will help airline earn a return of 16%.
Wipro chief executive officer Abidali Neemuchwala, who is based out of Dallas, US, could not fly down to Bengaluru when the company declared its second-quarter earnings last week because of a prior engagement.
However, in a telephone interview with Mint, Neemuchwala said that Wipro is well-positioned and on its way to make itself a future-ready firm.
The former Tata Consultancy Services Ltd veteran, who joined the company in April 2015 as the chief operating officer and took over as the CEO in February this year, has taken steps to improve Wipro’s delivery and sales capabilities. I would not agree with the death of Indian IT. Indian IT has always had the resilience or ability to transform itself. It has the flexibility, the nimble-footedness. One of our industry’s core competencies has been our ability to train a large number of people. Now is the market changing? The answer is definitely yes. So what has made us successful in the past—is that going to make us successful in the future? The answer is certainly no. Will change be required? The answer is yes. Will Wipro be able to undergo that change? Absolutely yes. This is because I have always believed Wipro as a company is entrepreneurial. We are also very technology-centric. We have made investments in digital technologies, like Internet of Things and cloud. We are making the organisation simple and nimblefooted. We started hyper automation and now we are ahead of our plan. Two most heartening things which I have seen in the eight months are that our strategy and ambition resonates and percolates to employees and customers. This is very important for any CEO. Simply, because no single CEO can do magic in a company unless the CEO has the power of the organisation. I am very glad that we have been able to do this and that is a very heartening thing for me. We had a very stable CEO transition (on 1 February Neemuchwala was appointed as CEO and his predecessor T.K. Kurien was appointed executive vice-chairman). We have a very stable top management team. The kind of changes we wanted to do at the top, we have been able to do without losing the senior leadership talent pool. The second thing is that as we started articulating our strategy, our customers are lapping up to this strategy. The newly-acquired and newly-built capabilities like Wipro Digital or Wipro Consulting or our hyper automation I’m always careful of putting a timeline and so I believe it is not unreasonable to expect this (by coming to industry-matching growth number by March 2018). I feel very confident and I see green shoots coming in a more sustainable manner. I’m very hopeful that four-five quarters is a good time for a very visible outcome or metric for an industry-leading growth or margin. I think there are two parts. First is having a bold and risk taking ability to buy. And second is staying the course and making these acquisitions successful.