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Fifth ASSOCHAM seminar on Civil Aviation
Demands to declare air turbine fuel (ATF) a ‘notified product’ soared at the fifth Associated Chambers of Commerce & Industry (ASSOCHAM) International Conference on Civil Aviation. Agreeing that ATF price in India is 50-60 per cent higher than other countries and is not transparent; Union Minister for Civil Aviation Ajit Singh, said that his Ministry is talking to the Finance Ministry to make ATF a notified good.
Thanking ASSOCHAM for the perfect timing of the conference, the Minister said that now with 49 per cent foreign direct investment (FDI) in aviation sector, the focus will now be on encouraging use of smaller aircraft to connect Tier-I, Tier-II and Tier-III cities with metros. “Our main focus now is to provide air connectivity to remote and interior areas of the country, North Eastern Region, Tier-II & III cities of India. For this, new and innovative solution in the form of route dispersal guidelines, aircraft acquisition and development of low cost airports will be put in place.” He further said that we need different kinds of planes as small cities don’t need bigger planes like A380s or Boeing 787s. There is the need for smaller airplanes with 17-20 seat configurations.
A sum of 30,000 crore has been allotted to Air India as a part of the turnaround plan for eight-ten years. And hence the struggling national carrier has been exempted from the new 49 per cent FDI policy. “There is no need for FDI in Air India.”
The Minister said that a bill will be introduced in the winter session of Parliament to set up of a Civil Aviation Authority which would be an autonomous regulatory body. Creation of the Civil Aviation Security Force, which would take over the security task from the Central Industrial Security Force (CISF), is also in the Ministry’s agenda. As a lot of money is required to develop airports, he said that the private-public partnership (PPP) model for airport development will be extended to smaller airports.
Singh agreed that there is a need to develop India as an international hub for the passengers. For the purpose, the Ministry is revisiting the policy regarding bilateral air services agreements with different countries and also rationalisation of all bilateral and traffic entitlements on international routes to Indian carriers.
The Minister released two reports on civil aviation by Yes Bank and KPMG and gave away the ASSOCHAM 2012 awards to Religare Voyages for being the most versatile company; Frankfinn for being the best training institute; Safexpress, the best air cargo logistics company; IndiGo, the best airlines and Emirates, the best airlines international; and Airbus for being the best global aviation company.
Earlier giving his welcome address, Rajkumar Dhoot, President ASSOCHAM said that the industry body welcomes the government’s decision for 49 per cent FDI, which will lift the operators’ sentiments and will stimulate the Indian aviation industry.
Addressing the seminar, M.K. Narayana Rao, Chairman of ASSOCHAM’s civil aviation committee said, “Long-term sustainable policy guidelines, effective implementation of ATF imports, further penetration of air-travel to suburban cities, coupled with entry of foreign players in the space would prove to be the game changer for both airport operators and airlines.”
Amber Dubey, Director at KPMG (India), said the year has seen challenges in terms of high fuel cost, high airport charges and declining traffic. The sector needs more initiatives in areas of taxation, regulatory clarity, infrastructure development and capacity-building.
Sanjay Verkey, Chief Executive Officer, Shell MRPL Aviation spoke on aviation fuel related challenges which are hindrances in enabling sustainable growth. “We need frameworks that will enable fuel supply to be safe and efficient and allow healthy, effective competition. K.S. Kohli, Chiarman, Frankfinn Group expressed dissatisfaction at private vocational institutes not being included under the education loan policy of many banks. Joost Van Der Hejidan, Head of Airline Marketing, Africa, India, SE Asia and Japan, Airbus, presented the Airbus market perspective and said that India is the seventh biggest Airbus operator globally.
The first session on the topic “India as an Aviation Hub—Time for Collaboration” was chaired by Kapil Kaul, Chief Executive Officer, Centre for Asia Pacific Aviation (CAPA) who said that India has both strong and weak points in becoming an hub. While having a large home market, geographic location, high quality airport infrastructure are the positives; having no hub carrier, regulatory regime, no clear bilateral and visa policy are the negatives.
Dr Manoj Singh, Adviser (Tranport), Planning Commission, Government of India said that the wheels in the bureaucracy do move slowly, but inexorably. He said that though we have missed the bus compared to Dubai and Singapore, yet there is a possibility to emerge as a hub.
Vipin Vohra, Vice Convenor, Air Freight Coucil FFFAI and CMD Continental Carriers Pvt Ltd, said that unless more and more airlines are given permission to fly to India to carry cargo; local traders and exporters will suffer. Besides ensuring increased cargo capacity and a free trade policy, he said that government should think of having an air freight station inside the airport to decongest the airports. Tussar Pandey, President, Strategic Initiatives, Governemnt & Advisory (SIGA), Yes Bank, spoke on the “Role of Private Sector in the Growth of Indian Aviation Sector.”
Request to dedicate Terminal-1 at the Indira Gandhi International Airport (IGIA) as a hub for low cost national and international airlines was made during the session. The Chair concluded by saying that we do not need a government regulator but a competent independent regulator.
The second session on “Looking beyond the obvious- Aerospace and MRO, General aviation, Cargo and Training”, was chaired by the Editor of SP’s AirBuz, Air Marshal (Retd) B.K. Pandey. Vivek Gour, CEO, Air Works, said that the cost of labour in India is less, but customs duty, bureaucratic red tape, lack of proper infrastructure and unclear policy are the drawbacks in India. He said that maintenance repair and overhaul (MRO) industry can grow like the business process outsourcing (BPOs) industry in the country. Chuck Pulakhandan, Regional Sales Director, South Asia, Embraer, spoke about the factors that make an aviation hub and said that India is a positive situation. India can develop as an aviation hub with growth of the secondary market which needs 70-120 seat planes.
Vineet Kanaujia, Vice President-Marketing, Safexpress, said that there are not enough warehousing facilities, X-Ray machines and security personnel, CCTVs for the air cargo business to prosper. Rajeev Mahajan, Executive Director, Corporate Finance, Yes Bank, opined that the new FDI policy will bring in expertise, open up opportunities to bring in new players and increase competition. “It is a welcome step but a lot more needs to be done.” R.G. Panicker, CEO, Cargo Service Centre India Pvt ltd, held that air cargo infrastructure needs to develop and complained that the cargo terminal in Mumbai looks no less than a dump yard.
The last speaker, Air Marshal (Retd) V.K. Verma, Director, Indira Gandhi Rashtriya Uran Akademi, threw light on the civil aviation training system in India and the flawed model of training in flying clubs. He opined that the government should merge smaller flying clubs. The Chair concluded that aviation industry is a fledging industry and needs tender care.
To a question raised by Jayant Baranwal, Editor-in-Chief, SP’s AirBuz, that how long will Singapore and UAE will remain as examples for us, Vivek Gaur said that India is an extraordinarily different, diversified and complex country and therefore should not be compared with a small and much less populated country like Singapore.
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