Sunday, September 12, 2021

Aviation Wrap: Jyotiraditya Scindia sets 100-day target and now, all eyes on Air India

"We will meet again after November 30 to announce our achievements during the first 100 days," Union Civil Aviation Minister Jyotiraditya Scindia told reporters on September 9 while announcing targets for his ministry for a period of 100 days.

Scindia, who took charge as the Union Aviation Minister on July 9, announced his targets including new terminal buildings at Agartala and Dehradun airports, the inauguration of Kushinagar airport, the foundation stone of Jewar airport, and launch of drone regulations. The 100-day target also includes the launch of e-BCAS and more online services on the DGCA website. In addition, the minister has also promised operationalising 50 UDAN routes, including 5 airports and 6 heliports.

The ministry has also tried to revamp the MRO (Maintenance, Repair and Operations) and FTO (flying training organisations) market in India. Under the new MRO policy, the ministry has proposed to process the allotment via open tender for a long term of 30 years as against short term spanning 3-5 years earlier. The rates are to be determined via bidding with the current lease rent proposed to be increased by 15 percent after every 3 years as against 7.5-10 percent per annum currently. The new MRO policy has also completely abolished royalty, which stood at 13 percent of the turnover in the old norms. The government has planned MRO hubs at eight airports and with the new policy in place, it remains to be seen what kind of investor interest will be witnessed.

The ministry has also tried to improve the FTO ecosystem by abolishing royalty and reducing minimum land rentals to Rs 15 lakh from several crores earlier. While eight FTOs are being set up in PPP mode, two of these have already done a soft launch of training operations at Kalaburagi airport on August 15.

Scindia also spoke about refunds, one of the major issues being faced by the passengers, especially since the onset of COVID-19. The minister assured that the ministry has started to keep track of refund status at the levels of airlines and travel agents.

The current restrictions on capacity and fares are expected to remain in place until the sector stabilises but Scindia said that the sector is close to stabilising with strong demand in view.

For now, all eyes are on national carrier Air India as the deadline for submission of financial bids ends on September 15. While multiple bids were received by the transaction advisor in the preliminary round, it remains to be seen what kind of investor interest has been shown for Air India.

12/09/21 Anu Sharma/CNBC TV18

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