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Ajit Singh enumerates measures to boost the Growth of Civil Aviation Sector in India

Enumerates Measures to boost the Growth of Civil Aviation Sector in India

   Wednesday 10-Oct-2012  | New Delhi
Union Minister of Civil Aviation ShriAjit Singh addressed the Economic Editors’ Conference in New Delhi today. In his opening statement he touched upon various issues concerning the growth of aviation industry in the country.

He said that the Government’s decision to allow 49% FDI by foreign airlines in Indian carriers will help in rapid growth of airline sector in India. The Minister highlighted major decisions taken in the recent past to help the growth of aviation industry which included adoption of a liberal policy to allocate traffic rights to private Indian airlines to various international destinations in addition to Air India, allowing Indian carriers to import ATF, approval of Turn Around Plan (TAP) for Air India, upgradation and development of airports, development of navigation system GAGAN and steps taken to create separate Air Accident Bureau.

Mr. Singh said that the future plans of the Ministry include rationalization of price of ATF by getting it declared as a notified product, improving connectivity to smaller and remote parts of the country, enhancement of helicopter connectivity, developing India as an international hub, developing low cost airports, creation of CivilAviation Authority, creation of Civil Aviation Security Force and skill augmentation in Civil Aviation sector.

The following is the text of Minister’s address:

 1.“Aviation has been identified as one of the most important growth engines essential for the fast economic growth of the country, besides providing air transport for passengers and goods. Civil Aviation facilitates overall economic growth of the country including trade & commerce, domestic & foreign investments, transfer of technology, creation of infrastructure, domestic & international tourism and generation of employment etc.

2. Air transport in India has witnessed unprecedented growth in the recent past. During the last 10 years, compounded annual growth rate of passenger traffic has been approximately 15%. A key trend in the business model of the Indian Carriers in the domestic operations is that domestic traffic is rapidly shifting to Low Cost Carrier model. From a level of about 1% in 2003-2004, the market share of LCC including the LCC arm of full service carriers is today exceeding 70% of the total domestic traffic.

3.The high growth rate of aviation sector in passenger segment is not getting reflected in the financial health of airline carriers in India. The approximate losses of airlines in the last financial year 2011-12 have been over Rs. 10,000 crores.  One of the major challenges of the air traffic industry in India is the high and growing debt burden of the carriers.  Nearly half of the debt is aircraft related and the rest is accounted for by working capital loans, dues to airport operators and fuel companies. While there are number of structural factors that are responsible for this phenomenon, the operating cost environment is adversely impacting the financial performance of the airline sector.

4.Though there is a slow-down of global economy, the international passenger traffic in India has witnessed a growth of 5.4% during the period from January–August 2012 compared to corresponding period in the year 2011:

January – August 2011

22.1 million

January – August 2012

23.3 million

 However, the number of domestic passengers during the period for January-August 2012 remains almost the same as in the year 2011:

January – August 2011

39.63 million

January – August 2012

39.82 million

 5. Allowing 49% FDI by foreign airlines in Indian carriers

 

(Detailed note is enclosed as Annexure-1).

 

6.Allocation of International Traffic Rights

Government has adopted a liberal policy to allocate traffic rights to private Indian airlines to various international destinations in addition to Air India. However, Air India has always been given priority in allocation of the traffic rights. In Summer-2012, 200 services per week were allocated to private Indian airlines as per the brief given below :-

 

SpiceJet

70 services per week

Jet Airways

67 services per week

IndiGo

63 services per week

 Air India was allocated 471 services per week during the same period i.e. Summer-2012. The utilisation of these allocated rights during Summer-2012 so far has been as follows :

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