Friday, May 26, 2017

UDAN Indian aviation's biggest achievement in the past year: Jayant Sinha

New Delhi: Indian aviation has witnessed one of the fastest phases of its growth in the last three years. With the government’s policy reviving the regional aviation market,India has become the third-largest market globally in terms of domestic traffic. However, the market continues to face a massive infrastructure crunch. Jayant Sinha, minister of state for civil aviation, speaks to Arindam Majumder on a wide range of issues -- from regional aviation to infrastructure and bilateral rights. Edited excerpts of the interview:

I would begin with an anecdote. Close to your media address announcing the guidelines for the UDAN scheme, which aims to boost regional air connectivity, a regional airline was grounded. It is yet to get off the ground. Isn't there a dichotomy here?

This is about the airline business as a whole. I thought you wanted to know what we have done through Ude Desh ka Aam Nagrik (UDAN) scheme to make regional aviation successful, even as people had not succeeded in the past.

We have done four things to reduce the cost but make regional aviation profitable and attractive. One is through a cut in taxes on aviation turbine fuel from over 20 per cent to 3 per cent.

Two, we have eliminated all airport navigation and landing charges for Regional Connectivity Scheme (RCS) flights from both the origin and destination airports.

Three, we have given exclusivity for three years. For instance, Alliance Air won the bid for Delhi-Shimla. They will be the only one to operate on that route for three years.

And four, we have put in place a number of steps for lessors that makes it easier for them to repossess a plane if an airline defaults. As a result, leasing cost has come down. Lessors are now charging you less because their risks have come down.

Additionally, we are giving viability gap funding (VGF). The first three things are themselves so attractive that we have many routes awarded at zero VGF.

In the first round of bidding, we have put 1. 3 million seats into the regional aviation with a total subsidy of Rs 205 crore. That’s how well designed the scheme is, as this money will be recovered from passengers flying in national markets.
26/05/17 Arindam Majumder/Business Standard