‘No FDI in aviation, for now’

Delhi: From the time, he took charge as civil aviation secretary more than a year ago, MM Nambiar has been fire-fighting problems ranging from the price of fuel to workers on strike, and finally the crisis at Air India. Building adequate infrastructure both on the ground as well as in the skies seems to be his predominant goal, which he feels will also give a necessary fillip to the airlines. Quashing all rumors that FDI in the aviation sector is going to be hiked, he candidly admits in an interview with Lisa Mary Thomson & Shantanu Nandan Sharma that the ministry sees no reason to raise the existing limit. Excerpts:
Could you give us a macro-economic view of where the aviation industry stands today, both globally and in India?
If you take a global perspective, airlines all over the world have suffered losses of the tune of $11 billion in 2009. In the US alone, many airlines have declared themselves bankrupt. Both globally and in India, the civil aviation sector is going through a very difficult phase. The financial condition of many Indian airlines too is very bad predominantly owing to the prices of ATF (air turbine fuel). In fact, in 2008-2009 itself, the cumulative losses of airlines in India was about Rs 10,000 crore. The task ahead of us is to see how we can work closely with the airlines to help them improve their performance. To achieve this, both loads and yields need to be improved. Moreover, greater focus needs to put on route planning and rationalization.
Can we expect any policy change on the pricing of ATF then?
Out of the total expenditure that airlines incur, about 38% is spent on fuel and another 18% is the allocation to wages. In fact, the issue of ATF and sales tax levied by the individual states has come up many times. Unfortunately, the prices of fuel are entirely guided by the market and the airlines will have to learn how to manage their costs and run a commercially successful venture.
15/11/09 Economic Times

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Categories: Foreign Nov 2009, Indian Aviation- In General Nov 2009