Tuesday, December 21 2004 11:14 Hrs (IST) - World Time -

New Delhi: Reforms in the civil aviation sector aimed at making flying more affordable has gathered momentum as 2004 comes to a close.

The process of opening up the sky, launch of several new private carriers, the much-awaited fleet acquisition programme of public sector airlines and modernisation of airports also went ahead with full-steam during the year.

Emergence of fare war

As the UPA (United Progressive Alliance) Government spent over seven months in office, a major change witnessed in this sector was the emergence of a fare war caused by the entry of low-cost carriers, a new feature unseen in the Indian aviation scene so far.

The aviation sector saw a massive hike in domestic load factors, with many passengers shifting from air-conditioned super-fast trains and the inflow of foreign travellers also saw a major increase.

Keeping in mind the entry of more private players in the domestic sector and their operations in the international arena, the Government was planning to finalise a new Civil Aviation Policy and present it to Parliament in the Budget Session to create a roadmap for the next decade.

The only dampener was the high cost of Aviation Turbine Fuel (ATF) caused by high level of taxes and unprecedented hike in world crude prices.

Surge in passenger traffic

As a massive jump in the passenger traffic in India was projected in the coming years, estimates showed the country would require over 200 aircraft, in addition to the existing 100-plus planes, in the next five years.

The high passenger traffic and the growing number of airlines and aircraft have already posed a grave scenario on the aviation infrastructure front. The airlines have been complaining of traffic congestion in the air, while landing and take off, besides lack of adequate parking and ground handling space at major airports.

Indian Airlines (IA) and Air India (AI), the two public sector carriers affected by lesser number of aircraft than they should have had to meet the high demands, are now in the process of getting a go ahead from the Government to buy planes.

Fleet acquisition plan

While IA's fleet acquisition plan to acquire 43 aircraft at a cost of Rs 10,089 crore has been ratified by the Public Investment Board, AI has finalised plans to acquire 50 wide-bodied aircraft to boost its fleet strength from 34 to 74 by March 2013.

During the year, AI floated a low-cost subsidiary, Air India Express, to primarily operate from Kerala to the Gulf and West Asian destinations with an 18 aircraft fleet. It is likely to launch operations early next year.

Government has also decided to infuse additional equity of Rs 325 crore in the IA, linked with its aircraft acquisition programme. Government is also likely to provide fresh equity to allow AI work out its future growth strategies and the fleet plans.

Operation in SAARC nations

After having allowed private airlines to fly to SAARC (South Asian Association for Regional Co-operation) nations, the Government was also planning to allow them operate to other international destinations and the Civil Aviation Ministry's proposal was likely to come up before the Union Cabinet in the next few weeks.

Jet Airways and Air Sahara have already been designated for operations to Sri Lanka, Nepal and Bangladesh against the unutilised entitlements of the Indian side.

Officials feel that there would be "no adverse impact" on Air India and Indian Airlines if private carriers were allowed to operate to foreign destinations as the public sector carriers were together operating only 28 per cent of capacity on foreign routes.

Following the footsteps of low-cost carrier Air Deccan, three new operators have been allowed to launch flights in the coming months. These are Vijay Mallya's Kingfisher Air, Go Air and Royal Airlines (erstwhile Modiluft).

The entry of these private carriers in the domestic aviation market from early next year is likely to give a major boost to the UPA Government's promise of making flying more affordable.

Airport modernisation plan

With a major plan to restructure and modernise airports across the country on the anvil, Government plans to create a Regulator for the civil aviation sector by January 2005.

The work on modernising and restructuring Delhi and Mumbai airports is likely to begin by the middle of 2005 after the process of inviting technical bids and further short-listing the bidders is over by March 2005. The two projects would cost over Rs 20,000 crore.

An ambitious Rs 40,000 crore modernisation plan for 25 airports through public-private partnership was also announced recently and 55 other airports have been identified for modernisation in the next five years.

An empowered committee of secretaries, headed by Cabinet secretary B K Chaturvedi, would be set up to monitor the progress of airport modernisation. It would submit its recommendations by February 2005.

The proposed regulator would be concerned with all economic activities in the sector including landing, tariff, freight and user charges, but would not touch the activities of the air traffic control, customs and safety.

New Civil Aviation Policy

The Civil Aviation Ministry has ruled out corporatisation of Airports Authority of India (AAI), but said that it would only have independent directors on the Board who will give it a corporate face and bring professionalism without changing its ownership structure.

However, most of these changes would be put in place after the new Civil Aviation Policy is finalised, which is likely by January. The policy, based on the recommendations of the high-powered Naresh Chandra Committee, would also be debated in Parliament during the Budget Session and given a final shape.