AVIATION POLICY 2021

Bikash Choudhury

Aviation, one of the most risk prone business after gambling(if it were called one);the popular joke doing the round in page three parties in National Capital—in Aviation business, you need to start as a billionaire to become millionaire. However, the sex appeal of Aviation business always attracts the rich, famous and mighty. Keeping in view of the current financial health of Airlines both private and public; it is imperative, country formulate a forward looking ‘Aviation Policy2021’ to promote seamless connectivity to top 100 cities & towns with full service airlines, next 100 cities should be linked by low cost airline and most importantly the District HQ should be connected to the respective State Capitals by ultra low cost regional airlines by 2021.
The biggest stumbling block in Aviation in India is the high cost structure of the Industry itself. As, the aircraft does not come cheap @ Rs150-250 crore a piece, neither, the fuel (ATF) aviation turbine fuel nor the Pilots who actually fly the machine and passenger @ Rs 5-15 lakh a month and engineers who keep the Birds ‘Air Worthy’ and also the prohibitive cost of spares parts that comes with an expiry date does not help. Further, Airport cost and Insurance drive big hole in the pockets of any airline; on top of it the volatile petroleum pricing that rule above 100 USD a barrel makes airline business extremely volatile in current times. The paradox in Aviation sector is to keep paying the high cost of inputs while you need to charge less in fare to attract new customers. But, how on earth can one airline survive???Our Aviation Industry has done very well in trying circumstances though most of the Airline, both private and public are bleeding profusely which is not good for the future health of the Industry. The other Jigsaw puzzle of the Industry is the pricing policy of the Industry. The solution to the vexed problem lies in a consensus driven uniform pricing policy across the Industry for long term gain and survival. The pricing mechanism should be such that the route allocation and earning of trunk routes must cross subsidies the non trunk routes, instead of burning cash with Air India the central Govt. and State Govt. should subsidies the routes of top 51-200 cities in the range of 20-35% in the interest of economic growth and better Governance. The pricing of Air connectivity between District HQ and respective State Capital require altogether a unique business model that subsidies the cost in the range of 30-50% for 5-10 years.
In the trunk routes the pricing should be ideally be twice of the first AC fare, and that of 51-200 cities should be two times of third AC fare and between District HQ and State Capital should be ideally in the range of two times of second class sleeper fare of Indian Railways. These pricing is just indicative cost of average cost of air transportation in India; but, eventually the pricing should be able to recover the cost with a normal profit to continue in Business.

Both central Govt. State Govt. and top 100 corporate houses must collaborate to offer the country new airstrips wherever required and renovate the unused and older air strips and make those available to schedule, Non-schedule Airlines and Chartered Operators at a reasonable cost in the initial period of 5-10 years. Further, Govt. must also find ways and means to create a separate fund for "Aviation Industry”. This fund can be accessed by the operators at lower rate of interest than the prevailing market rates.
The central Govt. has taken steps to develop one mid size 80 seated aircraft in collaboration with a Russian Company that should be ready by 2016-17. Simultaneously, Govt. should encourage corporate sector to invest in research & development and actual manufacturing of mid size low cost aircraft with 80-150 seating capacity with lower maintenance cost for typical Indian requirement in the span of 10-15 years.
With a robust and proactive "Aviation Policy 2021" the Aviation sector would mature while offering seamless air link to over 700 destinations in the country by the end of next decade.