The civil aviation sector is evolving from being a restrictive regulator to becoming a constructive collaborator, thereby focusing on becoming a more customer-centric industry. At the recent Confederation of Indian Industry Partnership Summit, Jyotiraditya Scindia, minister of civil aviation, talked about the international travel scenario, Air India’s disinvestment, the policy for drones and the future potential for the maintenance, repair and overhaul (MRO) segment…
Normalising international operations
The government is evaluating the process for normalising international operations and has asserted that it wants to return to normalcy while keeping an eye on the Covid-19 situation in certain parts of the world. In the pre-Covid era, the highest capacity was close to 0.42 million passengers per day. Airlines are now flying with 0.37 million to 0.39 million passengers per day at a seat load factor of 75-80 per cent, which is a very healthy load factor. The domestic capacity was increased through a very gradual and monitored process. On October 18, 2021 the government allowed 100 per cent capacity for domestic airlines. Every country has different rules with regard to international travel right now, and understandably so. It depends on each country’s risk appetite, and one cannot disagree with their determination of their own risk appetite; thus, the decision is best left to individual countries. In sum, plans to resume international flights will depend on Omicron and its behaviour.
Disinvestment of Air India
The government has gone through an iterative process for the disinvestment of Air India. The airline had been driven to the ground due to several unfounded decisions that were taken earlier. The Navratna company has received close to Rs 520 billion in debt infusion and another Rs 540 billion in government guarantees, adding up to total liabilities of about Rs 1 trillion. Given the situation, from every stakeholder’s point of view, this has been a win-win transaction, as the taxpayers’ money is more justifiably used for many more socially productive purposes than filling the deep losses of a state-run airline, while from a company standpoint this is an opportunity for Air India to rise again like a phoenix. The shareholders’ agreement was signed in November 2021. Air India will be transferred to its new owner early next year.
A supportive drone policy is in place, based on trust, self-certification and non-intrusive monitoring. India has the opportunity to become a global leader in this area. The number of forms required for drone registration has been reduced from 25 to 5, and the types of fees required have been reduced from 72 to 4. Drones can be significant creators of employment and economic growth. A production-linked incentive (PLI) scheme for drones and drone components worth Rs 1.2 billion, spread over three financial years, has been notified. This amount is nearly double the combined turnover of all domestic drone manufacturers in 2020-21. The government has agreed to keep the PLI rate constant at 20 per cent for all three years, an exceptional treatment given to only the drone industry (in PLI schemes for other sectors, the PLI rate decreases every year).
The market size of the civil aviation industry is currently pegged at Rs 900 billion. Of this, the MRO segment accounts for about 15 per cent or Rs 135 billion. However, as things stand today, 85 per cent of MRO-related work gets offshored, with only 15 per cent being done in India. Indian airlines should persuade their original equipment manufacturer (OEM) vendors to develop MRO facilities in the country. When they secure orders for fleet expansion, they must also give an impetus to OEM suppliers to be able to bring their MRO capacities into India. The policy construct is in place, the market is there, and the demand for aircraft is increasing. Both the industry and OEMs need to work with us to make this possible, because it is going to help them in the longer term.
The central government is planning to develop helipads along major highways across the country, so that accident victims can be evacuated using helicopters from the spot. The Ministry of Civil Aviation is working with the Ministry of Road Transport and Highways to gauge whether the government will be able to develop these helipads, especially in major cities such as Mumbai and Delhi. Currently, there are around 250 helicopters in India, and non-scheduled operators manage 181 of them, with less than one helipad per district. Recently, the ministry came out with a new helicopter policy, which has made all the processes simple. Besides, helicopter corridors are being developed and three such corridors – Mumbai to Pune, Begumpet to Shamsabad, and Ahmedabad to Gandhinagar – are in place.
Further, the government is planning to develop 36 heliports under the regional air connectivity scheme, and six of them are already functional. The foundations are in place to launch the helicopter industry in the country.