A telecom like revolution in Indian aviation can enable everyone to fly and it can happen with pragmatic approach by the government and all stakeholders feel experts.
“The root cause behind India’s struggling aviation sector is its wrong perception as an elitist service rather than a time-saving tool. It is over-taxed, over-regulated, over-protected and suffers from high structural costs. It is quite similar to where Indian telecom was, two decades back,” said Amber Dubey, Partner and India Head of Aerospace and Defence, at global consultancy KPMG.
“The best part — most of the problems are actually man-made and hence addressable. We need to repeat the telecom revolution in aviation, drastically bringing down the cost of flying and taking flying to the interiors of the country,” Mr. Dubey said at an interactive meeting organised by the Indian Merchants’ Chamber (IMC) on “Doing a telecom like revolution in aviation — Possibilities and Pitfalls.”
This will require sacrifices by all stakeholders and to bring airfares down to the level of Rs.2,000 to Rs.2,500 for a one hour flight in a regional sector.
The government needs to grant infrastructure status to aviation as well as a ten-year tax holiday to the sector.
The other measures suggested by Mr. Dubey include bringing jet fuel prices down to international levels, abolishing the route dispersal guidelines (RDG), the 5/20 Rule. “An Essential Air Services Fund (EASF) needs to be set up to provide direct subsidies for loss making routes and taxes for aircraft maintenance need to be zero-rated. Dwell time for cargo handling has to be reduced from three days to three hours and helicopters and small aircraft have to be promoted for last mile regional connectivity,” he said.
For a vibrant aviation sector, DGCA needs to undergo significant reforms, Airports Authority of India needs to be listed and Air India must go out of Government control.
As per estimates, the tax-breaks may cost the government less than Rs. 6,000 crore, but the growth in aviation and tourism could create a huge multiplier effect. That is why Dubai and Singapore support their aviation industry so passionately. Why not India with so much tourism potential and market with 125 crore people?
According to experts, India needs to go for a bold turnaround strategy for its aviation sector. The Ministry of Civil Aviation is currently drafting a comprehensive National Civil Aviation Policy (NCAP 2015) which, provided framed properly, could be a game changer. The industry is hopeful to see long pending reforms that may bring growth, transparency, predictability and simplicity. Case-by-case decision-making may go.
“If NCAP 2015 lives up to expectations, we could see a breakout similar to the period 2004-08. An explosive growth of 20-25 per cent per annum along with due focus on safety and security will help us leapfrog from number 10 currently to number 3 by 2020. We could then fight it out with China and the U.S. for the No.1 spot by 2030,” Mr. Dubey said.
Earlier, VIP Industries Chairman Dilip Piramal who is the President of IMC, bemoaned the fact that Indian aviation had failed to make the strides expected of it though the country offered enormous potential.
Expressing confidence he said that now that the government was engaged in formulating a National Aviation Policy, the sector should see improvement. “IMC has an aviation committee, headed by an experienced Jitender Bhargava, which can provide inputs for the policy,” he said.
Mr. Bhargava, Chairman, Aviation and Airports Committee, IMC and former Executive Director, Air India, said the industry had suffered in the past due to absence of a National Aviation Policy.
“Ad-hoc decisions taken either for the interest of a particular airline or a country has proved detrimental to industry’s growth. Though the performance in first year of NDA government in aviation sector has been lacklustre, the current year should hopefully see some major policy actions that can infuse life,” Mr. Bhargava said.
“In a price sensitive market, the operational costs for airlines have to be controlled through effective policies,” he added.
He also stressed that the potential offered by the country should be harnessed by Indian aviation companies, rather than be offered on a platter to foreign airlines which are on the prowl to benefit at the cost of India.
Corrections and Clarifications:
This article has been edited for a factual error
