The minister of state for civil aviation, Jayant Sinha, did very well for his constituency Hazaribagh. He brought the hilly city on to the Railway map of India. He introduced more flights to and from Ranchi. He even tried UDAN for Bokaro. But, under his regime the aviation sector could not prosper. Air India, Jet Airways continue to bleed profusely while UDAN turned out to be a flop as most players backed out.
DGCA audit reports of Indamer, one of the country’s oldest MRO, revealed various man-made malpractices being followed. This indicates that all is not well with India’s civil aviation.
To the minister of state for civil aviation, Jayant Sinha, the lack of bidders for Air India was a “little unfortunate.” But he reiterated that the government “was and is” committed to strategic divestment of the national carrier. On Tata Group’s Vistara, which is facing a delay in getting an approval to fly overseas, Sinha said his ministry is seeking to ascertain that the carrier’s plans are delinked from the process of an investigation. “Policy making is a continuous process and it is definitely the art of the possible,” the minister said in an interview with ET.
While the government implemented many reforms, it has failed to implement the passenger Charter, divest Air India, or allow airlines such as Vistara to fly internationally….
Policy making is a continuous process and it is definitely the art of the possible. We made a very sincere attempt to have Air India go through the process. The offer we had put up was very fair and balanced, where Air India’s debt was reduced in line with the assets it had and the rest was taken over by the government. In the past four years, Air India has gone through an operational turnaround. Of course, what happened was that the industry condition changed with oil prices going up and rupee depreciating and no bidder turned up due to these conditions. Air India getting no bidders was a little unfortunate because the government was and is committed to the strategic divestment of the national carrier.
The other issue, of Vistara not getting the approval to fly overseas, is pretty unique. Is it policy paralysis?
Absolutely not! As you know, we had to work through the fact that there is an investigation on it (the procedure followed to relax 5/20 — foreign flying eligibility norm). We need to make sure that this investigation does not impede the decision to enable it to fly overseas.
As part of the financial package for Air India, the government has decided to take over Rs 29,000 crore of debt. How does the government plan to repay it?
We had decided at the time of strategic divestment itself that a substantial part of Air India’s debt will be taken over by the government and only the debt that matches the asset is transferred to the airline. We are following through on that. This debt transfer is a great benefit to taxpayers too because the borrowing cost for the government is going to be much lower than Air India. So, the tax payer’s money is going to be saved in this regard. The repayment would happen after we start disposing off Air India’s non-core assets, such as real estate and subsidiaries, which include AITSL (New Delhi would sell 100% in the ground handling subsidiary). As we sell these, we will be able to pare down the debt of Rs 29,000 crore.
Will these sales fetch the government that kind of money?
That we will have to see and I cannot predict that. It depends on the valuation and pricing for those transactions.
There is no movement yet on the Passenger Charter…
That is not correct. There have been many rounds of discussions with airports and airlines. The reason it has not been implemented is that there are one or two major objections the airlines have raised… The provisions we had announced would cost airlines money and the airlines, due to market conditions, are not doing well financially. They are reluctant to absorb this financial cost. We are trying to convince airlines to absorb these costs in a way that there is no undue financial burden on them. We are trying to work out a middle ground on the issue.
Why did the government decide against implementing the drone policy in full from December 1?
We have staggered the implementation of the drone policy to register first and then allow operations. From December, we have started the registration process for drones and pilots. Once these are all registered, we will allow operations.
How big a concern is the industry’s financial health?
The airline industry is cyclical around the world. There is an up part, which we saw for 3-4 years and a down part, which is playing out for a year now. Now that the rupee is appreciating and oil is coming down, we expect things to improve. The problems of every player concern me because our primary mandate is to ensure safety… We want to make sure that safety and security are very robust. Second is connectivity. If any capacity leaves the system, as it happened in the case of Kingfisher, it impairs connectivity and travel. Naturally, I am concerned about the financial condition of the airline.
Will the government be able to complete the privatisation of six airports within FY19?
We were trying to privatise Jaipur and Ahmedabad airports under a different model and tried to award them. That process was under way for the last two years. Now, we have got six airports…The model being offered is liberal and we aim to award these projects by February. The Request for Proposal (RFP) will come out in a week or two and we have made some adjustments with the existing Operations Management and Development Agreement (OMDA) model that was followed at Delhi and Mumbai airports.
While UDAN has helped improve connectivity, it could not create, despite the help from the government, an ecosystem for smaller carriers (operating 19 seater planes). Does it need a relook in that regard?
I must reject the characterisation. UDAN is extremely successful. We have got 34 airports operational and 100 new planes have been ordered. We have 10 lakh passenger trips on UDAN. It is true that two airlines — Air Odisha and Air Deccan — have had trouble and had to cancel some routes but the scheme has achieved its connectivity target. You need to visit cities that have got air connectivity and see how happy the people in these cities are. The policy goal of UDAN was providing connectivity… We wanted new players to join in and people joined. But then it’s a factor-operating model of the airlines. The biggest success is that IndiGo and SpiceJet have placed orders for smaller aircraft to create a model around UDAN. The world is studying this model.