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Posted on Nov 18, 07:44PM | IANS
Despite the current turbulence in India's commercial aviation space, the government sees robust growth ahead if airlines reduce tariff, induct small aircraft and connect cities beyond metros -- for which a policy will be announced soon.
"We need more connectivity to smaller cities. There is also the need to build low-cost airports at these places. This will surely encourage a growth in passenger traffic," Civil Aviation Minister Ajit Singh told IANS in an exclusive interview.
"Tier-II and Tier-III cities are the ones that are showing rapid economic growth. These are the places where the aviation service must improve," said Singh, who completes one year at the helm at Rajiv Gandhi Bhavan here next month.
According to the minister, even though India's overall economic growth slumped to around seven percent in the past few years, the domestic commercial aviation business continued to log a robust growth of over 15 percent, notwithstanding a dip in the past eight months.
"As a result of this growth, India's metros are now well connected. The need now is to promote this kind of growth in smaller cities, and that will be our main focus," said Singh, an alumnus of the Indian Institute of Technology at Kharagpur.
"For this, we will soon announce a major policy for regional airlines. We have already hired a consultant for this," said Singh, who also has a masters of science degree from the Illinois Institute of Technology.
The minister, who represents the Baghpat constituency in Uttar Pradesh in the Lok Sabha, said airlines must induct small aircraft that can land on short runways, as only 90 runways in the country can handle jet operations.
"In fact, many out of those 90 runways are non-operational. This leaves a gap -- how to connect places which have shorter runways. Airlines are in touch with the manufacturers of small aircraft that can land there," Ajit Singh told IANS.
The minister's mantra for the aviation industry comes at a time when passenger traffic slipped 8.03 percent for the fifth straight month in September, due to slowing economy and high operating costs.
Minister Singh said he has already started taking steps required to address such issues.
"High price of aviation turbine fuel is the biggest issue. We need to rationalise it. I have already written to the petroleum minister and I will also meet him in a couple of weeks," said Singh, referring to a proposal to notify this fuel as a declared good.
Once a product is listed as a declared good, a uniform sales tax is payable on it. In the case of aviation, airlines will have to pay a four percent sales tax across all states, as opposed to a wide fluctuation of 3-34 percent.
Oil regulator will also be in a position to keep a check on prices.
At present, aviation fuel in India is nearly 50-60 percent dearer than in countries such as Thailand, Singapore or the UAE, due to the additional 3-34 percent sales tax imposed by states. This pushes the cost of operations by close to 30 percent.
(Rohit Vaid can be reached at email@example.com and firstname.lastname@example.org)