Union Civil Aviation Minister Jyotiraditya Scindia says bringing down excessive costs and introducing measures for the financial sustainability of airlines are top priorities of the government. In an interview with Preetha Nair, Scindia speaks about measures taken to reduce Aviation Turbine Fuel (ATF) prices and the growth plans for the aviation sector.
Excerpts:
The government has lifted the cap on domestic airfares from Aug 31. Can flyers expect respite in airfares?
We decided to do away with fare bands because ATF prices were showing a downward trajectory, and fares stabilised. It is a free market now, and airlines can offer fares as per demand and supply. I am hopeful that this will benefit customers as well.
To check predatory or excessive pricing, a tariff monitoring unit under the DGCA monitors airfares on 50 routes selected on a random basis every month. This is to ensure that airlines do not charge airfares outside the range declared on their websites. The fare bands came as a special measure during the Covid period to stop airlines from charging excessive fares and to ensure viability of operations.
Domestic air travel is on a rebound. Will higher ATF prices and rupee depreciation pose a threat to the recovery process?
The ATF price is market-determined and public sector oil marketing companies take decisions on the pricing of ATF in line with market conditions. The decision to include ATF under GST rests with the GST Council. Meanwhile, we have tried to persuade state and UT governments to lower the VAT levied by them on ATF from the exorbitant range of 1%-29%. More than a dozen states/UTs have brought it down to 1%-5% — Karnataka has brought it down from 28% to 18%. The remaining states are also being nudged to bring them into the low-tax regime.
The price of ATF, although still high, has relatively declined from the peak levels by almost 12%. We are working with oil marketing companies through the Ministry of Petroleum and Natural Gas to work out a mechanism to bring down the margin between crude oil and ATF prices. Bringing down excessive costs and introducing measures for the financial sustainability of airlines have been part of our top priorities.
Kerala has flagged ‘exorbitantly high’ international and domestic ticket charges affecting NRIs and the tourism sector…
Air ticket prices depend on various factors such as holiday seasons, festivals, weekends, among others. The current increase in airfares to and from Kerala can be attributed to two factors. There is more demand during July and August due to the Eid festival and school holidays in Gulf countries, Secondly, due to the unprecedented global geo-political situation, ATF prices have increased by about four times from Rs 32,424/KL in April 2020 to Rs 1,21,915/KL in August 2022. Currently, about 50% of operational cost is on account of fuel prices. Hence, there has been a steep rise in fares worldwide.
DGCA has flagged many safety concerns and maintenance-related glitches involving carriers. Are reforms needed?
I want to make it clear safety is paramount for us. The DGCA, the entity in charge of safety, has ramped up its oversight mechanism. In 2019-20, it undertook 2,275 checks as per its annual surveillance plan (ASP). This year, we have a strong ASP totaling 3,709 regulatory checks, which is on track. We are in touch with managers and flight safety in charge of each airline. We have sensitised them about their responsibilities.
Fresh measures are on the cards to ramp up oversight. We are also keeping a close check on every occurrence; there will be no compromise on the safety and security of passengers.
How will you increase the number of flyers from the current 4%?
Raising the number of travellers has been a work-in-progress for eight years, where reforms, both on the demand and the supply side, are envisaged; and many put into action as well. Owing to PM Modi’s vision of making travel affordable for the common man, the government brought the UDAN scheme. As a result, travel grew by 10.5% between FY 2010-15, which increased to 31.2% between FY 15 & FY 20. With new thrust on the proliferation of helicopters and small aircraft, this trend is only going to translate into greater last-mile connectivity, including in remote areas.
On the supply side, several measures are underway to ensure the financial sustainability of airlines and airports. The birth of Akasa Air is a healthy sign for the sector, and will infuse competition among low-cost carriers. We are bullish on building and upgrading airport infrastructure as well, especially in tier-2 and tier-3 cities. Our target is to take the total airports from the current 140 to 220 by 2025-26. Simultaneously, India’s aircraft fleet size is expected to double in the next five years (from 700 to 1,200 aircraft).
How will you ensure last-mile connectivity considering air and ground space are mostly controlled by mega airports?
Since Independence until 2014, India had about 74 airports that had scheduled operations. We now have 141 airports. Under UDAN, during the last 5 years which includes 2.5 years of the Covid-19 pandemic, 433 new routes have been operationalised. So far, more than 1.04 crore people have availed of the scheme. The North-East is connected to strategically-located airports. Based on UDAN, four states have developed their own civil aviation policy.
A large number of hitherto unconnected areas in 36 states and UTs are now present on the aviation map of the country. Last-mile connectivity is a natural way forward for India’s civil aviation sector. Here’s why while mega metro airports are currently driving the maximum chunk of traffic, the growth rate for air travel in the non-metro cities has been far greater. We have taken the UDAN scheme a step further by rolling out a small aircraft scheme to bring small aircraft and helicopters to the fore.