Alliance Air sale on govt agenda: Scindia

NEW DELHI: The sale of Alliance Air is “definitely” on the agenda of the government, even as the airline continues to do its job in terms of connectivity, Union civil aviation minister Jyotiraditya Scindia told HT in an interview on Tuesday, as he discussed growth in the aviation sector, and new opportunities, among other issues.

“Alliance Air is definitely slated for disinvestment. In the interim, it’s doing its job in terms of connectivity,” Scindia said.

On growth in the Indian aviation sector, he said that while domestic traffic has picked up, international traffic is still taking time. “We’re almost at pre-Covid level of 12 million per month as far as domestic air traffic is concerned. International passenger traffic, however, is taking time. It is shocking that the demand conturned straint has now into a supply constraint internajust tionally. They are not enough planes. But having said that, we’ve finally achieved 1,000 flights a day in the international sector on November 20. So we are seeing very strong green shoots...”

NEW DELHI: Union civil aviation minister Jyotiraditya Scindia spoke to Neha LM Tripathi about the growth in the aviation sector, the potential disinvestment of Alliance Air, new opportunities, and broadening and deepening the Indian aviation space, among other issues. Edited excerpts:

How do you see calendar year 2024 panning out for Indian aviation in terms of growth?

In 2019-20, we had an overall passenger traffic of roughly 200 million passengers. We’re almost at pre-Covid level of 12 million per month as far as domestic air traffic is concerned. International passenger traffic, however, is taking time. It is shocking that the demand constraint has now turned into a supply constraint internationally. There just are not enough planes. But having said that, we’ve finally achieved 1,000 flights a day in the international sector on November 20. So we are seeing very strong green shoots in the international sector as well.

My forecast is that this sector is going to grow by leaps and bounds in India, mainly because of Prime Minister Narendra Modi’s impetus on increasing connectivity; both broadening it as well as deepening it. We have moved full focus from tier 1 cities to also increasing focus on tier 2 and tier 3 cities. For the last 10 months, we have been increasing our focus on the lastmile connectivity as well.

Today, we have capacities of roughly 70 million at Delhi airport which will go to 100 million by the end of this year or early January. We will come up with Jewar airport by 2024, which will initially add 12 million capacity, eventually going up to 60 million. If you look at Mumbai, the airport is capped out at roughly 60 million today but they are building a new airport in Navi Mumbai at roughly 50 million capacity. Bengaluru airport has gone from 25 million to almost 60 million capacity. Chennai has gone from 25 million to about 44 million, and similarly Kolkata too has increased its capacity.

If you look at these five metros, you’re going to go from 190-200 million to almost 420 million passenger traffic over the next five to six years. Similar growth rate is being seen in tier 2 and tier 3 cities where the growth rate between 2010 and 2015 was roughly at 11.5% CAGR, that growth rate is now 33.6% CAGR.

So, there is a very strong underpinning of growth from tier two, tier three cities also and the fact that through UDAN (Udey Desh ka Aam Naagarik), we’re building this galaxy of airports in tier 2 and 3 cities will also lead to a huge follow-on demand into the sector. The best example is the recently established connectivity in the northeast, from nine airports in 2014 to 16 airports today.

There is a whole gamut going, from wide-bodied aircraft internationally to narrow body aircraft domestically to ATR-72 and Q400 family to ATR-42 down to Dornier 228. So, that is the breadth of civil aviation that you’re seeing today; and then, finally, helicopters too.

Do you think that the growth in domestic aviation has been impacted due to the supply chain issues being faced by the industry?

Supply chain is certainly an issue for civil aviation but it’s a global and not local issue. A sector that was actually cutting back on employees, human resources because orders were not coming in, is today flooded with orders and just didn’t have enough resources to pump out those planes.

The same thing is happening with the OEM (original equipment manufacturer) suppliers, engines, and so on. Having said that, there is a preponderance and a greater focus that we have within India for aircraft manufacturing and for engine MRO (Maintenance, repair and overhaul).

Evidence of that is with the C295 facility put in place by the Prime Minister. Airbus, for the first time ever, is putting such a huge footprint in India. We’re going to manufacture 40 out of the 56 C295s at Vadodara airport, which is going to pull in tremendous amounts of technology with almost 30,000 parts and 4,000 sub-assemblies being produced locally.

Companies like Bharat Dynamics and Bharat Electronics will give all the strategic facilities online in terms of radar avoidance and things like that for the C295. So, there’s major integration happening, and at the same time, we’ve got fuselages of the Apache helicopters being built in Hyderabad.

Tata Boeing is putting in place empennages for the C 130Js and 737 complex structures are being built in their facility.

Safran has now come in and is putting in a big footprint of $150 million to set up an MRO facility in India for the CFM engines. Civil aviation is not about planes and airports alone, it’s about the whole ecosystem and now we have the scale.

The government has initiated the disinvestment process of AI Engineering Services Ltd. (AIESL) and Air India Air Transport Services Ltd (AIATSL). When is the EOI expected and how hopeful are you of completing the process?

We are starting roadshows for both AIESL and AIATSL, we’re starting to evince investor interest on that, and this process is going to take time. Both DIPAM (Department of Investment and Public Asset Management) and the aviation ministry are working together. However, the process is very much on because that decision is full and final. In many ways, there’s tremendous embedded value in those companies. So I think there should be a great degree of investor interest. To be candid, this is something that is being led by DIPAM. I would say that both these companies are very much on the anvil, and we are pursuing it tremendously. But I can’t give you a fixed date.

Alliance Air is facing a number of challenges after the privatisation of Air India. Are you looking at putting the airline also on the block?

Alliance Air is definitely slated for disinvestment. In the interim, it’s doing its job in terms of connectivity.

It’s doing its job of flying routes, for example, a lot of northeast routes are operated by Alliance Air. So, in the hinterland whether it’s northeast or hilly states, Alliance Air does some of the routes with regard to the ATR-42 aircraft, as well. But it certainly is slated for divestment.

Government had sounded quite buoyant about Jet Airways’ revival after Jalan-Kalrock won the bid. But more than a year after, the airline remains on ground and there seems to be a standoff between the lenders and consortium.

I think they’re putting their consortium and their process together. Hopefully, by mid next year they will be able to commence operations. I certainly hope that it takes to the air sooner rather than later.

Akasa Air, as we know, after a long time we’ve actually seen the birth of an airline in India, as opposed to the shutting down of airlines, which we’ve been used to for the last two decades. Certainly, fundamentals are changing. But having said that, there are tremendous cost pressures on airlines, especially with regard to air turbine fuel (ATF), which still has to flatten out its curve from a pre-Covid basis. But as long as the trend is declining, it’s important.

Recently the US transport department has imposed a penalty on Air India for not refunding passengers on time for flight delays. Are you going to revisit the flight ticket cancellation and refund policies?

We have a grievance redressal mechanism, Air Sewa, that was put in place by me when I came in. On a daily basis, I monitor the complaints that have come in and the redressal by airline companies.

So, within our ministry, we have a system in place where if one has a backlog of tremendous amounts of grievances that one has not addressed, then we approach the airline and ask them to process the refund quickly. That system is 24x7. A lot of these refund issues also come up on this, which is what we process very rigorously.

Are you concerned over recent air incidents?

From our point of view, DGCA, as a safety regulator, is very hands-on in terms of the number of tests and the surveillance that it does in its ASP (annual surveillance plan).

Under my watch, over the last one year, we have increased the surveillance, and the number of random checks, tests, engineering evaluations from around 2,002 on an annual basis, to around 3,194 this year, which is almost a 50% increase. With regard to the number of instances that you’ve talked about, whenever those have happened, there have been very clear tests on both the engine and the airframe side of those aircraft, and action has been taken wherever it was warranted.

On the human resource side as well, there was an earlier requirement of a certain level of engineering staff at every station, which about four or five years ago had been slightly relaxed.

Since I’ve taken over, I’ve brought back the earlier norm of having a much higher level of engineering staff at every airport for every airline company in terms of the checks prior to the next take-off. I believe in ensuring, as much as possible, a six-sigma approach with regard to both safety and security, and there will not be any compromise.