India doesn't need 'open skies': Ashok Gajapathi Raju

June 07, 2016 08:32 pm | Updated September 16, 2016 11:36 am IST

After seven months of intense consultation, the civil aviation policy has been finally sent for Union Cabinet's approval. Civil Aviation Minister Ashok Gajapathi Raju talks to Somesh Jha in an interview about how the previous governments had lacked a clear vision for the aviation sector and how the government will work towards protecting the domestic airlines in the new aviation policy. Edited excerpts:

What is the present position of the much-awaited civil aviation policy?

First of all, I will tell you why we need a (civil aviation) policy. Policy is not a religion and it has to be amended from time to time but with some definite period so that economic activities can be planned. Till now, certain decisions were taken based on the situations coming in. There was never an attempt to look at the sector in a totality and bring out a policy. We did that exercise and put it in the public domain. From then on, a lot of suggestions started coming in. I think it’s the most discussed draft policy and it has come to an advanced stage. There is no stakeholder left out for consultation. We have the benefit of everybody’s idea coming in and also, the advantage of informal consultation by group of senior ministers. We have just about moved the Cabinet note and in the next few days, everything will settle.

When do you expect the entire benefits to translate into the Indian sky?

After the policy is released, its implementation has to be worked out. The thrust is on the regional connectivity because India is a vast country. As it is AAI (Airports Authority of India) has over 30 airports which are inactive. Plus, people are interested in a few new airports due to the terrain of the country. Right now, we have the route dispersal guidelines that have served the country well. Besides, there are inactive airports too. We expect once the viability gap funding proposal gets cleared, some of the inactive airports will become active. We are looking for more destinations. As it is, we had a very good year. World over, we had the highest growth in aviation.

Don’t you think the civil aviation ministry missed a big target by not being able to release the civil aviation policy within two years of the government formation?

It’s not an easy thing to understand. For a person like me, with an average intelligence, you are connected to aviation in the sense that you go to an airport, board the aircraft, get out of it and get to work. You are not looking at what will promote it and how this transport works. So when you come here, it’s a new thing. It takes a while to understand it. Once you understand it, you have to start taking it forward. Whatever you take forward, you try to see that your direction is good and straight – it should encourage the airlines. For some odd reasons in India, aircraft are passenger-centric running like a bus. But the largest airline in the world is a cargo airline. Here, we only have two cargo airlines with one aircraft each. India itself has a good market (for cargo) with e-commerce going up and you have all types of climates. Ultimately, transport should not become a bottleneck for economic activity. This is what we are trying to achieve.

Was it a bottleneck?

I won’t call it a bottleneck. Everybody had lost sight of it. It was lying there in everybody’s view but still not visible.

Do we have a vision now?

We want to. Now, cargo has a tremendous potential. Right now, there is very little cargo going in the belly of aircraft and being exported out of the country. The problem is that India’s dwell time is not very good. So, (our) strategy is to bring down this dwell time. So, we have to work together in the government and try to see that this dwell time goes down.

Is there any plan to capture the cargo market?

It’s time to sensitize that this opportunity is available and we need to harness it. We hope that trade and industry will have a look at it. The integrated cargo terminals have been planned but world over, it is at the airport. The proximity from airports can also be looked at from where goods can be quickly transported.

You talked about how the route dispersal guidelines (RDGs) served the country well. How long do you think the RDGs should stay in India?

I think it should stay because it serves the country well.

How long?

In fact, nobody asked us to remove RDGs. Not even a single suggestion we received was against the RDG, not even from the airlines.

Coming back to the policy, since we know the draft policy came out in October and the ministry had a wide table consultation already before releasing it. What took it so long to shape the final policy?

When you want the impact to reflect and also aim sustainability, you can’t be hurried. If you take it hurriedly and miss out on a few aspects then it becomes slipshod. So you need to see that doesn’t happen.

Did you ever think that releasing the policy in piecemeal would have served the purpose better?

Piecemeal was a thing of the past which was reactionary. That’s not what we looked at.

You pointed out India is the fastest growing aviation market. A lot of help came from the lower aviation turbine fuel last year. Don’t fuel prices going up again worry you?

Prices of anything growing up generates problem in an economic activity. If economic activity keeps pace, there is no problem. Aviation contributes and gains from the economy.

Is there any cushion that government may provide to the airlines in such times?

I have requested the states to lower down their VAT (value added tax) on ATF. Some states have responded and some states haven’t. Some states took it differently. For instance, West Bengal has zero VAT only in Bagdogra. In Maharashtra, different airports levy different tax. So, states follow their own model and I have left it to the states. If they see an opportunity, they will do it.

Proposing an auction for bilateral traffic rights was a first globally…

Some suggestions favoured the proposal, some didn’t. The air services agreement is between countries on a level of equality. For some odd reason, India is not able to utilise its allotment both in the public and the private sector. Foreign airlines have been demanding more flights. The foreign carriers utilise 60 per cent of the allotment and we have been able to utilise only around 30 per cent. So until you don’t use your own allotment, it doesn’t make sense to re-negotiate and increase the bilateral traffic rights.

Is there a rethink on the proposal to auction bilateral traffic rights?

Decisions have come to an advance stage. I don’t want to speculate if this proposal or that goes through.

A news report recently said that the civil aviation policy was held up due to difference of opinion between Junior Minister Mahesh Sharma and you specifically on bilateral auctioning…

You see first of all, it’s an agreement between countries. It’s done on level equality. That’s it. If there is anyone who has to have any difference here it should be (us and) the External Affairs Ministry. India should gain. Anyway…

Don’t you think the new formula being talked about to replace the 5/20 rule is restrictive?

To my mind, 5/20 is antiquity and nobody has been able to explain me why this rule has come. Also, talking of flying abroad, we have not been able to utilise our own bilaterals. So, we need players to utilise our bilaterals.

Any plan of action on utilising the bilateral traffic rights?

I have been telling them that it’s an agreement between countries so if you don’t perform we can pull it out from you and give it to the one who is performing. Why make India lose? But it’s a different matter that today none of the player is performing.

Are you in favour of open skies?

There are only a few countries which have offered so many destinations as India. I think, Indian players should have that advantage in India.

Does India need open skies?

I don’t think so. I think Indians should get advantage in India. How many destinations do the countries with which we have an air service agreement give us? Just look at how many destinations India is offering them.

Is this one of the reasons that Qatar’s demand for additional traffic rights were not met?

They will naturally ask for more because for them, there’s a market. How many destinations does Qatar give? One. India has certain advantages and they (Qatar) want to contribute to their GDP with Indian advantage and we would like to contribute to Indian GDP to our advantage.

Are you trying to say while we are opening our markets, they are being restrictive?

I won’t say that they are being restrictive. India has certain advantages which not many countries have. So let Indian advantages go to the Indian players. Say, a country gives you one destination and you give that country five-six destinations. One is to six is fine but why do you have to give eighteen destinations in return of one destination? Let Indian players fly from anywhere. Most countries, world over, work in the interest of their own players and I think it's time India should also start working in the interest of their own players

Is the policy in that direction?

I think so. At least that’s what I think.

Coming to Air India, it has made an operational profit of Rs 8 crore this year…

Well, it has not made an operational loss this year (laughs).

Are these the final numbers?

It will likely make an operational profit between Rs. 6 crore and Rs. 8 crore.

Do you think Air India will still require the equity infusion from the Union government till 2020-21?

If you want Air India to turnaround, you have to go according to the turnaround plan and the original financial reconstruction plan. Both of them were agreed by some government at some point of time. It has to be carried forward.

So, the government will infuse a total of Rs. 30,000 crore by 2020-21 as per the turnaround plan?

The problem is that Air India has to also pull up its socks and work in a more disciplined way. Because whenever they have worked as a team, they have delivered. So we wish they work as a team and deliver. It’s a beautiful airline so in that sense you will like it to survive but you can’t commit the taxpayers’ money for eternity. It won’t work that way.

Would Air India require more equity infusion from the government beyond 2021?

Their performance is being measured and monitored constantly. If the government of the day continue to pour money what have I to say? But I think it’s an economic activity which needs to have some type of return and economic objective fulfilled

The Junior Minister had also said in an interview that government may cut stakes in Air India below 51 per cent by asking banks to convert debt into equity. Is that happening?

All that is there in black and white in the turnaround plan. They (Air India) just need to pull up their socks and work. They are fully capable.

Parliamentarians recently raised concerns related to higher airfares. What is the government doing to address it?

We did a one-year analysis of the airfares and found that only 1.7 per cent of the overall tickets were on the higher side. So, almost 98 per cent of the ticketing is going in a reasonable economic level. So, what are the strategies that you can put in to deal with this 1.7 per cent? Of course, there will be a seasonal spurt in demand and there is a capacity constraint which leads to higher fares but to make fares universally high doesn’t make sense. We need to find out the capacity we need to deploy during the peak season.

And during crises situations?

During the Chennai floods, we requested the airlines to charge fares at Rs 2,000 to evacuate passengers and they did that for two-three days. So, they are responding. It’s not as if they are inhuman.

Is this what you are looking at — capping fares temporarily during crises?

The airlines have been responsive. They are also businessmen and they need the goodwill of everyone.

How do you plan to decongest Delhi and Mumbai airports?

Talking of airport congestion, on the air traffic side, Mumbai appears to be the biggest problem because of old style runway. Delhi has three parallel runways. That’s one big problem. Chennai also has old cross style runway but in terms of air space congestion, Mumbai is reaching saturation. State government has talked about the Navi Mumbai. Though we have been hearing it for sometime, work has to start on it. They have just published their RFP. We have to see how fast they can come out because Mumbai is a premium town in our country and we can’t allow our premium cities to become problem because of aviation. DIAL has finalised a master plan.

How many airports would cities like Delhi and Mumbai need?

I don’t think another airport is required in Delhi. There is a plan under which they can build a fourth runway, too. I don’t foresee any problem in Delhi. But if Mumbai-level traffic builds at any other airport, except Hyderabad, it will have problems because all (of them) have old runways.

How many new airports would India need?

You would need at least two on the east coast and two on the west coast, if you are talking of Make in India and boosting export-import.

One-third of AAI’s revenues come from private airports at Delhi and Mumbai. Will more airports be privatised?

The question is how to improve the efficiency. Right now, the passenger services of AAI are getting evaluated — something that has never happened before. At these private airports, the cargo traffic is better. You can improve on that elsewhere. But I feel there should always be a mix. So, one concept that came up was that the assets remain with AAI and give service contracts to private players to improve upon them. We have not closed our eyes on anything and are open to all suggestions.

So, are such contracts going to be given?

There was some thinking in that regard, a little bit in Jaipur and Ahmedabad.

But talks with Singapore’s Changi Airports International on Jaipur and Ahmedabad didn’t materialise.

It didn’t materialise in one way, but talks are still on, so let us see where it takes us. In some aspects, private players are better placed and in some others, the public sector is. For instance, private players know how to exploit the commercial capability of an airport and how to make it more presentable.

Many industry players have threatened to move court if the policy doesn’t come out in their favour. Do you fear a policy paralysis?

In our country, even a murderer is entitled to go to court. Government is mandated to do things legally. You are not here to do anything illegal and you have no control over anybody going to the court. Ultimately, the courts will have the last word which will be binding on everyone. If we are going against the law, please tell us.

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