Growth in Aviation Industry on the cards: Suresh Prabhu

Freepress Journal got in a conversation with Minister of Civil Aviation, Suresh Prabhu. Excerpts from the questionnaire as he addressed industry concerns are as below:

The aviation industry is one sector that is on-and-off in trouble. What are the challenges when you handle such a troubled industry? How can the health of this industry improve and what measures have been adopted to help the players in the space?

(A) With a view to promoting the growth of the Indian aviation sector in a significant manner, the Government has released the National Civil Aviation Policy (NCAP) 2016. The aim of the Government is to provide an ecosystem for the harmonised growth of various aviation subsectors, i.e Airlines, Airports, Cargo, Maintenance Repairs and Overhaul Services (MRO), General Aviation, Aerospace Manufacturing, Skill Development, etc.

In compliance with NCAP-2016, broad steps taken are as under:

i) Introduction of Regional Connectivity Scheme (RCS) – UDAN (Ude Deshka Aam Nagrik) with an aim to facilitate/stimulate Regional air connectivity by making it affordable.

ii) A revival of un-served or under-served routes under RCS – UDAN.

iii) Introduction of a new category ‘Schedule Commuter Operator’ under Commercial Air Transport Operations.

iv) Rationalization of Category-I routes under Route Dispersal Guidelines (RDGs) on the basis of criteria given in NCAP 2016.

v) Liberalization of domestic codeshare points in India within the framework of Air Service Agreements (ASA). With a view to aid in modernization of the existing airports to establish a high standard and help ease the pressure on the existing airports, 100% Foreign Direct Investment (FDI) under automatic route has now been allowed in Brownfield Airport projects.

For Non-Resident Indians (NRI’s), 100% FDI will continue to be allowed under the automatic route. However, foreign airlines would continue to be allowed to invest in the capital of Indian companies operating scheduled and non-scheduled air transport services up to the limit of 49% of their paid-up capital and subject to the laid down conditions in the existing policy. Increasing the FDI limit for these aviation services shall not only encourage competition by lowering prices but shall also accord choice to consumers.

(B) For addressing the infrastructure issues, Government has granted in principle approval for construction of 21 greenfield airports. The Government is also leasing six airports namely Ahmedabad, Jaipur, Guwahati, Lucknow, Mangalore and Thiruvananthapuram on PPP basis to bring in more investment in the airport sector.

The Government has announced the ‘NABH Nirman’ (Nextgen Airports for Bharat) initiative, which aims to increase the number of Airports and their capacity to handle traffic and preparing our airports for a billion trips a year in next 10-12 years.   Consultants have been engaged to chalk out detailed plans to achieve the target within the timeframe.


Grounding Boeing 737 MAX will impact few players in the industry. How do you see this? How much more impact could it make to the troubled industry?

The matter was taken up with M/s Boeing and FAA regarding the preliminary analysis about the safety aspect of Boeing 737 MAX aircraft and for suggesting any additional measures/advise after the two accidents. Further action shall follow based on inputs/safety measures taken by FAA/Boeing.


How much growth has aircraft manufacturing industry seen in India?

The following could be seen in Aircraft Manufacturing, financing and leasing:

  • CAPA-India had assessed that 1,055 orders for aircraft have been placed by domestic Indian Both Airbus and Boeing have projected that India would require 1,750-2,200 new passenger and cargo aircraft over the next 20 years to meet an exponential rise in both passenger and freight traffic.
  • There are strong impetuses under “Make in India” for the growth and development of civil aviation manufacturing, building up from the strong grooming by Defence PSUs whereby several SMEs are now large suppliers to Global OEMs. Tier-I/II manufacturing partnerships of Indian industry with global OEMs are increasing in diverse fields of design & engineering, advanced technologies, products/ processes, information management, customer services (flight/maintenance training), etc.
  • Broad-based development of Maintenance, Repair & Overhaul (MRO) Sector has been taken up.
  • To unleash the potential, a Committee of Experts has been constituted under the Chairmanship of Secretary, Civil Aviation sector to recommend on the manufacturing of aircraft, helicopters, and associated equipment for the civil aviation sector.
  • With focus on Regional Air Connectivity, a separate Committee has been constituted with representatives of National Aerospace Laboratories (NAL), Hindustan Aeronautics Limited (HAL) and Aeronautical Development Agency (ADA), for the development of Regional Transport Aircraft (RTA).
  • Project Rupee Raftaar: Formulated a road map for developing an Aircraft Financing and Leasing Ecosystem in India. The Working Group set up by the Ministry of Civil Aviation has submitted its Report, which was released at the Global Aviation Summit at Mumbai on 15.01.2019.


UDAN-RCS scheme has worked in some areas and others it still has to take off. Overall, how would you rate this scheme and what further tweaking is expected in the scheme?

  • MoCA launched RCS-UDAN on 21st October 2016. Simultaneously, Airports Authority of India invited proposals from the applicant/ airlines. 27 RCS networks were awarded to five selected airline operators on 30th March 2017. RCS flights between Shimla & Delhi was inaugurated by Prime Minister Narendra Modi and Hyderabad & Kadapa and Hyderabad & Nanded through video conferencing on 27th April 2017.
  • After the successful start of UDAN-1, Ministry felt the need of connecting Hilly Region and North East areas of the country which has not seen true representation in UDAN-1. The scheme was tweaked to allow the flying of smaller aircraft with less than 9 seats and frequency of operation up to 14 per week in the identified areas. These special attention areas were termed as priority areas. The Helicopter operation was also brought under the ambit of UDAN. Including these two vital concepts of Regional connectivity, Schemes was modified and proposals were invited from prospective bidders. Award letters were issued to 15 Airline operators for 90 RCS Networks comprising of 305 routes. In this round of bidding 31 helicopter destination have emerged to be made operational after compliance of regulatory and safety requirements. It saw the participation of bigger airlines such as IndiGo and Jet Airways as participants in the bidding process.
  • After the successful launch of the two rounds of UDAN, the state felt the need of marketing their Aviation infrastructure to the airline operators and accordingly many states such as Uttar Pradesh, MP Rajasthan, Karnataka etc. offered various incentives over and above RCS. Tourism Ministry also found it interesting to incentivise virgin tourist routes to be explored and operated by the prospective bidders. The interest from Seaplane operators also fuelled the subsequent launch of UDAN 3.0. The identification of water bodies to be potentially converted into waterdromes resulted in 10 waterdromes to be bid for connectivity across states. UDAN 3.0 completed with the award of 95 networks covering 46 virgin tourist routes across the country and 10 waterdromes.
  • Till April 2019 we have awarded more than 700 routes to 15 Airline operators and out of these 160 routes are in operation.


How many airports are operational under it and how many more do you expect?

38 RCS Airports have been revived and operationalized after launching of Regional Connectivity Scheme. 10 more RCS airports are likely to be ready for operations in next 6 months.


If security is beefed up further in these airports, the cost is expected to accelerate. There were some talk around security of the airports under UDAN-RCS scheme. What is your view around it?

  • The security at all airports is being provided by Airport Operators/Airlines/other agencies as per the provisions mandated in AVSEC Orders and Circulars issued from time to time by Indian civil Aviation Security Regulator i.e. BCAS in line to ICAO Annex 17 and NCASP.
  • As per the MoU signed between MoCA, State Govt. & AAI, the security services at RCS airports are to be provided by State Police free of cost by the respective State Govts. The State Police personnel are being inducted on completion of Induction Training by BCAS (Security Regulator).


At present, how many airports and airline services are operational under UDAN-RCS scheme?

As on April 12th 2019, 160 RCS flights are operating from different airports connecting either un-served or underserved airport.


How much new employment opportunities can be seen under the aviation industry in the next 5 Years?

  • Based upon the anticipated induction of the new aircraft in the fleet of the private scheduled airlines other than Air India, DGCA has come to a point that new employment opportunity in respect of pilots in the aviation industry is approximately 12000 in next 5 to 8 years. These figures are based on present growth and aircraft induction plan of Airlines, which may vary due to various factors affecting the growth of aviation sectors.
  • In this regard, the Airports Authority of India has intimated that projection for employment opportunities through direct recruitment in for the next 5 years has been worked out to 2557.
  • However, over l0 lakh high-quality direct and indirect jobs have already been created in the Aviation sector and on-going growth will require skilled personnel in all areas: cabin crew, engineering, air traffic control, pilots, agents, design, and so on.
  • The Airports Authority of India has allied with several skill training organisations. The agencies which have come together with AAI include NSDC, NSDF (National Skill Development Fund), CIDC among others. As part of the agreement with CIDC, training and assessment fees of the candidates are completely paid by the Airports Authority of India. The program is aimed at providing job oriented skill development and training to the marginalized and economically weaker sections of the society across India.


What is your view on ATF under GST and impact on the aviation industry?

  • A few steps taken in this regard include reduction of Central Excise Duty applicable on Aviation Turbine Fuel (ATF) from 14% to 11% w.e.f. 11th October 2018 and rationalization of GST provisions, with a view to revive the airline industry.
  • Ministry of Civil Aviation has requested Ministry of Finance to include Aviation Turbine Fuel (ATF) within the ambit of Goods and Service Tax (GST) at the earliest. The matter is under consideration of that Ministry.
  • Ministry of Civil Aviation has also requested various State Governments to provide full support for bringing ATF within the GST’s ambit at the earliest during the deliberations on the matter in the GST Council.


The disinvestment of Pawan Hans and Air India has not been very smooth. The disinvestment of Air India has been a long battle for many governments. What are your views about such government disinvestments?

Air India Disinvestment: The strategic disinvestment of Air India has been deferred for some time due to adverse market conditions and no bidders had shown interest in the proposal. However, the Government has prepared a revival plan for Air India which focuses on building a competitive and profitable airline group, which includes a comprehensive financial package, transferring non-core debt and assets to an SPV, a higher level of operational efficiency by strengthening management and implementing best practice business processes and robust organizational and governance reforms.

The Government remains committed to the disinvestment of Air India (AI). In this regard, AISAM has directed to separately decide the contours of the mode of disposal of the subsidiaries viz. Air India Engineering Services Limited (AIESL), Air India Air Transport Services Limited (AIATSL) and Airline Allied Services Limited (AASL). Further, AISAM has, inter-alia, approved the contours for sale of subsidiaries of AI and directed to expedite the sale of AIATSL.

Pawan Hans Disinvestment: The disinvestment process of Pawan Hans is progressing as per schedule. Considering the confidentiality of the process, not much information can be divulged at this stage.


What kind of progress has been made in privatisation of airport policy?

There is no such policy on privatization of airports. However, Cabinet in its meeting held on 08th November 2018 has accorded approval to proposal for leasing out six Airports viz. Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru of Airports Authority of India (AAI) through Public Private Partnership (PPP). AAI has completed the bidding processes and identified the successful bidder. A proposal for seeking the approval of the Cabinet for the award of bids is under process.


Tell us about the drone policies and the vision for this space in the next five years

Drone Policies and the vision for the next five years:

  • Directorate of Flying Training in DGCA has recently prepared guidelines for existing Flying Training Organisations (FTOs) to impart training to remotely pilot aircraft (drones) which is available on DGCA website. In future DGCA plans to make guidelines for individuals to set up drone training organisations, independent from flying training organisations.
  • Civil Aviation Requirement (CAR) Section 3 Series X Part 1 on operation of civil Remotely Piloted Aircraft System has been effective from 1st December 2018 which is also known as Drone 1.0.
  • Going forward, in next 5 years, the following issues will be addressed:Certification of safe and controlled operation of drone hardware and software,

    Air space management through automated operations linked into the overall airspace management framework,

    Beyond visual-line-of-sight operations,

    Contribution to establishing global standards,

    Package delivery, RPAS Pilot Licensing and Night Flying.

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