Saturday, June 21, 2014

Aviation ministry’s PowerPoint to Prime Minister highlights safety, connectivity issues

Summary:  It is believed that Air India’s turnaround and financial restructuring plans and equity infusion in the carrier was also in focus.

Civil aviation minister Ashok Gajapathi Raju on Saturday briefed Prime Minister Narendra Modi on crucial issues facing the aviation sector like building of airports at non-metro cities, slashing of taxes on jet fuel and turning around the ailing Air India.

A detailed presentation is understood to have been made on the issues which also included downgrade of India’s safety ranking by US regulator Federal Aviation Administration (FAA) and review of the rule requiring an airline to have flown domestic for five years and having a 20-aircraft fleet, before it could be allowed to fly abroad.

The previous government was actively considering scrapping this rule on the grounds that an airline would have to first establish itself domestically before it could be allowed to fly abroad.

This issue would be crucial to start-up carriers like AirAsia India and Tata-SIA Airlines who would want to launch international flights as soon as they can.

Among other major issues raised were steps to encourage states to slash high sales tax rates on jet fuel, quick passage of the Civil Aviation Authority Bill giving the much-needed autonomy to the new aviation regulator and making India a hub of aircraft engineering facilities by helping maintenance, repair and overhaul (MRO) units.

It is believed that Air India’s turnaround and financial restructuring plans and equity infusion in the carrier was also in focus.

The national carrier is seeking infusion of Rs 8,000 crore this financial year — Rs 5,500 crore for FY15 and Rs 2,500 crore as the shortfall in committed equity infusion in FY14.

On improving air connectivity in non-metro cities, the NDA government has already made it clear that it would focus on construction of low-cost airports in such places to deepen the penetration of air connectivity.

Another major issue would be the stalled process of modernizing six airports, including those at Chennai and Kolkata, which were initiated and then halted by the previous UPA government.

Development of 50 no-frills airports by the Airports Authority of India in several states and greenfield airports are slated for development in Navi Mumbai, Juhu, Goa, Kannur, Pune, Sriperumbudur, Bellary and Raigarh are also part of the unfinished tasks of the UPA government.

The downgrade of India’s aviation safety mechanism to Category-II by the FAA, its implications and preparations being made to restore it to the top Category-I, also found considerable space in the presentation.

In January, the US aviation regulator had lowered India’s ranking placing it among countries which do not meet the safety norms stipulated by the ICAO.


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