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Source: The post is based on an article “Indian aviation needs a strong and steady tailwind” published in the “The Hindu” on 6th July 2022.
Syllabus: GS 3 Infrastructure, Transport Sector
Relevance: Aviation Sector and Industry
Context: Since 1991, India has witnessed radical changes in various sectors including the airline sector like the no. of airlines has grown from Air India and Indian Airlines to many more. But still, the aviation sector has been struggling on various fronts.
The Aviation Sector since 1991 Reforms
The reforms opened up the aviation sector, ended the licence raj and the monopoly of Indian Airlines and Air India.
In 2003, the concept of low-cost airlines overcame the cost barrier and the common man could think of flying.
Importance of Aviation Sector
The aviation sector is integral to economic growth. It can make India globally competitive.
It is important for balanced regional growth. For example, Passenger airlines and air cargo overcome geography and connect remote areas which are alienated from the mainstream.
It can boost tourism, which is the largest employment generator in the unorganised sector. This will resolve the issues of poverty and unemployment in India.
Air cargo integrated with road, rail and port infrastructure is the backbone of a growing economy.
Why has Indian aviation become ‘the sick man of India’?
There are choking regulations, tough entry barriers for new entrants, high fuel prices on account of sky-high taxes etc.
There are inefficient public sector airports which have monopoly in the airport segment. Due to this, there is absence of robust competition, and as a result, the airports are extortionist in nature.
There is an absence of a long-term visionary strategic policy not just for airlines but also for the entire gamut of sectors in aviation. The government resorts to frequent and knee-jerk actions.
India’s air cargo growth is also languishing. For example, Hong Kong airport alone handles more cargo than all of India’s over 100 airports put together.
India’s aviation fuel taxes both at the State and central level are among the highest in the world.
India has mega airports which do not connect rural and small towns from the large metros. India’s ‘Ude Desh ka Aam Naagrik (UDAN) initiative, has failed to bring much regional connectivity due to barriers like prohibitive costs in India.
India’s MRO segment is in a dismal state. High customs, other duties and tortuous rules make it difficult to bring in parts, to facilitate repair and overhaul, etc. Indian Airlines send their aircraft to major MROs abroad like in Dubai, Singapore or Germany.
Further, it is to be mentioned that India’s charter business has remained stagnant.
There are thousands of pilots and technicians unemployed in India. And Indian airlines have to look for foreign pilots and engineers. This pushes up costs in the process.
India’s Aircraft Act, 1934 and Aircraft Rules, 1937 has not kept pace with modern technology in aerospace. This has increased costs to the industry and ultimately affected passenger growth.
India needs entrepreneurs in the aviation sector because they have revolutionary ideas. They are the driving force in hi-tech companies. They are disrupting many conventional businesses. Therefore, this force must spread to other areas including the aviation sector. The Indian government should leverage the ‘Start-up India’ initiative.
India needs reforms in all areas of aviation, i.e., air cargo, airports, aviation fuel taxes and Maintenance, Repair and Overhaul (MRO).
India’s statutory regulatory authority, the Directorate General of Civil Aviation (DGCA) needs to be modernised, well-staffed, motivated and incentivised. It should be headed by aviation professionals rather than by bureaucrats from the Indian Administrative Service(IAS).
India has an inexhaustible market. The government should increase the figure of 4% who now fly to 50% in the next two decades.