The Hindu Business Line : 2004 — Aviation on a high

The year gone was important for the Indian aviation sector in many ways. The permission to private airlines to operate to any part of the globe, the start of the long-pending modernisation of the two major airports of Mumbai and Delhi and the hike in the FDI ceiling in the sector were as important as the burgeoning popularity of low-cost airlines.

THE year just gone by was momentous for the Indian aviation sector as it saw a number of pending issues finally cleared for take off. During the year the Government liberalised the rules for private sector domestic airlines to operate to more international destinations.

On December 29, the Union Cabinet cleared a proposal allowing private sector airlines which have a minimum of five years of experience and have a fleet strength of 20 aircraft to operate to almost any part of the globe. However, Indian Airlines, Air India and their subsidiaries will be the only Indian carriers to operate to the Gulf region including the UAE, Qatar, Oman, Bahrain, Kuwait and Saudi Arabia for the next three years.

The two major existing private sector airlines, Jet Airways and Air Sahara, are likely to be the immediate beneficiaries of this decision and could soon launch flights to more destinations including those in the Far East such as Singapore, Kuala Lumpur and Bangkok.

The Government decision came just about six months after Jet Airways and Air Sahara had made their initial forays in the international skies. In March 2003 the two airlines had launched services between Chennai and Colombo thereby signalling the start of a new chapter in the history of Indian aviation.

The year saw the Government hiking the ceiling for foreign direct investment in the domestic aviation sector from 40 per cent to 49 per cent. However, the earlier policy of not allowing foreign airlines to invest either directly or indirectly was not done away with.

The year saw the long pending work on the modernisation of the two metro airports at Delhi and Mumbai finally getting off the ground with the Government receiving Expression of Interest (EoI) from 10 entities including those from some of the biggest names in Indian industry such as Reliance, L&T, DLF and GMR.

In addition, action for finalising the Request for Proposal and other project agreements such as operation, management, development services agreement, lease deed, shareholders agreement and state support agreement is also on going for the modernisation and development programme of the two metro airports. The year saw the signing of the concession agreement for the two greenfield airports in Hyderabad and Bangalore. This is likely to boost the development of the airports in these two southern cities.

Besides, to ensure all-round development of the sector, the Airports Authority of India started work on modernising 25 non-metro airports to bring them to world standards.

The year saw some steps being taken vis-à-vis the two state owned airlines — Indian Airlines and Air India. In October 2004, the Public Investment Board met to clear the 43-Airbus acquisition deal for Indian Airlines — another issue that had been pending for long as the airlines board had cleared the proposal in March 2002.

In hindsight, this delay could prove advantageous for the country as during this time the cost of the acquisition has come down from the original Rs 10,000 crore to Rs 9,475 crore. Besides, the airline also set up a committee to examine acquisition of wide-body aircraft so that it is in a better position to face competition.

Further, the Air India board not only approved a proposal to acquire 50 aircraft but also got a Boeing 777 aircraft during the year gone by. At the same time not only did Air India announce its plans of launching more flights, but started operating to more destinations such as Shanghai and Los Angeles and introduced an Ahmedabad to London terminator flight .

The year saw Air India starting work on launching a new low-cost airline called Air India Express which is to operate with Boeing 737-800 aircraft to several destinations in the Gulf and South East Asia.

Last year saw the country's first low-cost airline, Air Deccan, not only acquire Airbus A-320 aircraft but also launch flights on trunk routes at fares which were lower than what was being charged by the other existing airlines.

Yet, from the point of view of the passenger, the year brought both good news and bad. The bad news was that with aviation turbine fuel prices spiralling up, airlines were forced to hike fares. And the good news was that various airlines launched a number of schemes to woo customers.

So while the state-owned Indian Airlines introduced schemes including the Family ticket scheme under which the parents pay the full fare and two children up to 12 get to fly free with them, and the business class companion offer which gives a 50 per cent discount in the business class for a companion accompanying a full normal fare paying passenger, Air Sahara came up with the Suprice scheme which offered a return ticket between Delhi-Mumbai for Rs 4,444 or between Delhi-Chennai for Rs 6,666. Similarly, Jet Airways also launched such schemes as Check fares, Monsoon Super Apex fares and Night-saver fares to woo the passenger.

The Government did its bit to help international air travellers also during the year by approving the addition of more than 5.44 lakh seats for international airlines during the five-month open sky period which comes to an end on March 31 this year.

In addition, air service bilaterals were firmed up with several countries including the United Kingdom. The successful completion of the bilateral talks with the UK will see the number of non-stop flights being operated between the two countries doubling in a year.

Airlines of the two countries will be entitled to operate 40 services per week in their winter (beginning end October or early November) schedule — up from 19 flights a week which these airlines were allowed to operate before the bilaterals were concluded.

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