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Opinion: Proposed civil aviation policy is a good wish list but needs specifics – Bangalore Aviation
Air India Airbus A321 VT-PPO. Seen here handing in the early morning light at Bangalore Airport.
Air India Airbus A321 VT-PPO. Seen here handing in the early morning light at Bangalore Airport.

Opinion: Proposed civil aviation policy is a good wish list but needs specifics

This opinion is authored by an analyst at one of the world’s leading aviation consulting practices. For business reasons, anonymity is requested.

In a welcome move, the Indian government published a draft civil aviation policy via the ministry of civil aviation yesterday, November 10th. However, industry stakeholders the were left wanting. The document lacks the comprehensive, detailed, well laid-out, and deliberate plans that addresses the urgent, nay critical needs of the industry and by extension the nation and its economy.

Read the draft Indian civil aviation policy in PDF format.

The draft policy is just a statement of intent. It attempts to paint a broad level picture of what the government intends to do and covers 10 areas, namely:

  • Airport Development
  • ATF taxation
  • Cargo
  • Institutional reforms
  • Regional connectivity
  • MRO facilities
  • ANS providers
  • Helicopter aviation
  • DGCA
  • E-governance

For long the Indian civil aviation industry has languished with a lack of a comprehensive policy. This has resulted in ad-hoc decisions, many of which raised questions of propriety, and were investigated and slammed by India’s Comptroller and Auditor General (CAG).

While the draft is indeed a signal of good policy measures, how these are drafted into a comprehensive regulatory and policy framework and subsequently implemented in a manner conducive to the growth of the aviation sector in a progressive and transparent manner, remains to be seen. One of the stakeholders labelled the document as “window dressed PR.” On some level, one would tend to agree.

For starters the document is a mere four page draft – far from comprehensive for what is expected to become the world’s third largest aviation market within the next 10 years. It starts with outlining the growth in the “civil aviation sector” and this is arguably misleading. While the nation has undoubtedly seen traffic growth measured in passenger numbers, cargo volumes and aircraft movements, neither Indian airports or airlines or other parts of the aviation value chain have flourished with this growth. This is reflected in the accumulated losses of Indian airlines, to the tune of USD 10 billion (over Rs 63,000 crores) in the past few years. Debt levels are in excess of USD 22 billion and working capital challenges abound.

The airport sector has fared better but other than the PPP airports where the charges are exorbitant while investors complain of an inadequate return on equity, most government run airports authority of India (AAI) airports are registering losses. With the exception of two airlines, all others are haemorrhaging money hands over fist, and the national carrier Air India is considered one of the biggest white elephants in the forest of inefficient public sector units.

The country has seen a safety rating downgrade, and new regulatory and oversight challenges ranging from buffaloes on runways to licensing irregularities, surface each day. Punitive rules like ‘5/20’ or the poorly thought out route dispersal guidelines (RDGs) remain, and the draft policy only mentions that these be revisited. The issue of bi-laterals and freedoms of the air have not been addressed at all without which the Middle East airlines and airports will continue to grow at the expense of the Indian airlines and airports.

The few bright spots though are the suggested public list of Pawan Hans and Airports Authority of India. While an expert committee to develop a future roadmap for Air India is also a positive move, it is merely postponing the inevitable. Another positive is the call for reform of aviation turbine fuel (ATF) taxation which must be under-take on a footing. Yet this is totally dependent on states which levy absurdly high sales taxes. The government can bite the bullet and put ATF into the declared goods category, but does it have the political will and power to do so? Similarly, improving infrastructure for helicopters, a focus on the cargo sector and MRO facilities are all steps in the right direction — but — without deliberate, decisive and time-bound action all of this is futile. India can ill afford another five years of discussion and deliberation while aviation continues to suffer.

Hopefully, the new policy once drafted and released in entirety, will contain comprehensive and detailed action plans rather than broad, macro level, feel good signals of intent. Additionally, the policy must be cabinet approved else it would lack the gravitas required to signal to stakeholder, both domestic and international, that India is serious about aviation. Various ministries and state governments will work to realise this vision — and work in a manner that has never been done before.

The time for Indian aviation is now. It is a sincere hope that Indian aviation finally gets the focus that is required. We can no longer continue on a wing and prayer.

Your comments as usual are requested.

Related reading

Read our proposal for removing the 5/20 rule
Read our analysis of the proposed route dispersal guidelines

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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  1. It is a start but it lacks a vision or an end date. However, as you suggested it does not go into specifics; one way forward is to issue it to the various stakeholders for their comments on how they see their sector moving forward. Maybe the creation of an industry working group would help.

  2. Siddarth Bhandary

    As they say the devil is in the detail! Its is dis-appointing to see this re-haul policy lacking in details and specifics. Even worse it does not outline how some of these initiatives will be realized. And without a deadline to implement the vision, in a few years this document will be useless.

  3. The main problem is ATF taxation, high airport operating costs, nonsense rules like 5/20 and bureaucracy. These problems needs to be addressed immediately by the government.