NEW CIVIL AVIATION POLICY SHOULD LOOK BEYOND 2020: PHD CHAMBER

The civil aviation traffic in the country is increasing at an unprecedented growth rate primarily on account of booming Indian economy and acceleration in economic activity, a growing tourism industry, the entry of low cost carriers in the private sector, and the liberalization of international bi-lateral agreements. A study conducted by PHD Chamber has pointed out that airport development has not kept pace with the growth of Indian economy, passenger and cargo air traffic. Whereas airport infrastructure was developed expecting a growth of 16% in air transport traffic per annum, the actual growth during the last three years has been in the range of 24-28 percent. As a result, several major airports are congested and offer inefficient services. Airlines are facing infrastructure constraints due to limited landing slots, inadequate parking bays, and congestion during peak hours. As the civil aviation sector is expected to see 25% compounded growth in the next 10 years, civil aviation infrastructure needs faster development through public private participation mode, to be supplemented by foreign direct investment, according to Shri Sanjay Bhatia, President, PHD Chamber.

Development of quality airport infrastructure would have an important impact on our international competitiveness and economic growth. The liberalization of civil aviation policy and the entry of low cost carriers from 2002 onwards has brought about a paradigm shift in the growth of air passenger traffic. The new civil aviation policy should further facilitate the entry of the new private carriers and promote healthy competition to benefit the national economy and the air passengers.

According to Government of India civil aviation policy vision for 2020, the number of aircrafts on scheduled operations would increase to 1000 from the current number of 321 aircrafts and the air passengers would increase to 280 million by 2020 from the current level of 95 million air passengers. This expected increase in the number of aircrafts and air passengers would require a matching strengthening of airport infrastructure, improving management systems for providing better services, developing a large pool of skilled and technical manpower; attracting more professionals to manage the civil aviation industry in India. Liberalization of rules and regulations governing civil aviation, without compromising the safety and security; and reduction in ATF prices and taxation of ATF and lease rentals is also important.

Improving regional air connectivity in the country deserves special attention as unprecedented urban infrastructure and real estate activities in Tier II and Tier III cities is taking place in India, particularly due to exceptionally high growth of IT and related industries. These emerging cities are developing fast as new centers of economic and commercial activity and there is a growing demand for air connectivity to smaller towns which has not been met so far. The new civil aviation policy should especially focus on improving regional connectivity and development of regional hubs. Development and modernization of the identified non-metro airports by Airports Authority of India in 35 cities of commercial and tourism significance should be completed in a time bound manner, according to PHD Chamber.

Addressing a meeting of the PHD Chamber, Shri R K Singh, Joint Secretary, Ministry of Civil Aviation has informed that to promote foreign direct investment in civil aviation industry, it is proposed to further liberalize the FDI policy, particularly in areas such as: charters, cargo, maintenance and repair operations, flying training and ground handling. The Joint Secretary has informed that the civil aviation sector is expected to attract an investment of the order of US$ 110 billion by 2020. Out of this, US$ 80 billion would be required for the purchase of new aircrafts and US$ 30 billion would be required for building up airports infrastructure. As there would be steady induction of new aircrafts, India has the potential to become a regional maintenance hub. Companies such as Boeing and Airbus have already committed an investment of US$ 100 million each for this purpose. The Indian private sector should also explore this promising area for investment.

If India’s current economic growth rates were sustained, India would become a trillion dollar economy by 2009 and also emerge as the world’s third largest economy by 2025. According to PHD Chamber, the new civil aviation policy that is expected to be announced some time in 2007, should provide a longer term vision, beyond 2020, for development of civil aviation infrastructure. It is not feasible to plan greenfield airports or to modernize existing airports efficiently on a piece meal basis as proper development requires complicated planning and vital issues such as land acquisition become more difficult to handle with time because of growing urbanization and development in various parts of the country.