After two years of the pandemic, there is optimism that India is set for a big boom in aviation. How do you see the prospects?
A/ I certainly hope the worst is behind us. As this pandemic has shown, it is important to be on our toes, hope for the best and prepare for the worst. The civil aviation sector underwent losses of $370 billion globally and close to $2.9 billion (around Rs2,200 crore) domestically. To reemerge like a phoenix post this torturous 26 months or so is certainly something to be celebrated.
Just to give you some numbers, we were close to four lakh passengers a day pre-Covid and we reached that level at 4.07 lakh persons travelling on a particular day in May. We are now averaging 3.6 lakh to 4 lakh on a daily basis, which is extremely heartening.
Even through these difficult times, airlines have been doing huge public service with the Vande Bharat flights and Operation Ganga. The successful divestment of Air India has freed up taxpayer money—it had Rs63,000 crore in debt and [was] making losses of Rs20 crore a day (Rs7,500 crore a year). That money would now be better utilised through investment in infra, education and health sector and other areas. That was an extremely important event for us, as it was a divestment that had failed multiple times.
The industry will for the first time see the birth of two new airlines—Akasa and the re-birth of the original Jet Airways. Airlines are looking at capacity augmentation of 125 planes per year. So we are looking at fleet size doubling in the next 4-5 years, which portends that the traffic will also go up. Airports have also doubled from 74 in 2014 to about 141 today. What we were able to achieve in 70 years, we have been able to double that in (just) the last eight years. So it is a huge achievement under Prime Minister Narendra Modi’s focus on infrastructure development.
I am also urging our domestic airlines to look internationally and cast our footprint on a global scale, and look at wide-bodied aircraft so as to engage much more on a global nature in addition to the domestic market.
Q/ The hike in the aviation turbine fuel (ATF) prices is a huge concern.
A/ One of the greatest challenges we have seen due to the rise of Covid as well as Ukraine is the rise in ATF prices, and it hugely impacts airlines where fuel is 40 per cent of their cost structure. I worked with state governments and I am pleased that 14 states have reduced their VAT from a prohibitive 25 per cent to 30 per cent range to 1 per cent to 4 per cent.
Lowering the VAT also means greater connectivity and increased refuelling. For instance, when Jammu & Kashmir lowered VAT, the level of refuelling went up by 360 per cent in the fortnight after the cut.
Q/ ATF prices were hiked nine times this year so far. Can anything else be done?
A/ As I mentioned, it is a large step we have already taken. But we are in conversation with the ministry of finance on additional steps that can be taken. Certainly, there are two or three things in our minds which we are working on.
Q/ India did an experimental biofuel flight in 2018. Is that an option?
A/ Twenty-five per cent of one engine on a SpiceJet flight was based on a biofuel mix. It is an idea whose time has come. Having said that, the key thing the world has to deal with is the production of biofuel, its cost, and the logistics of making sure it is available at an airport. Those are the challenges that need to be overcome.
Q/ Your ministry and the DGCA have been proactive in implementing many passenger-friendly measures. Has there been a strategy decision to focus on this?
A/ This is the ministry of civil aviation, which means that you are responsible for all your stakeholders in the ecosystem. Plus, most importantly, the customer. We are a service-oriented ministry, and we must have a serviced-oriented mindset, and we must make sure that travel is safe, secure and friendly. And there are certain SOPs that should be in place for all three of those parameters. Safeguarding those SOPs is our job.
Q/ Passengers are unhappy this summer because of the high fares. Ironically, it is believed that the cap on fares set during Covid times is to be blamed.
A/ Not at all. The whole issue is that when 40 per cent of your input cost goes up by 100 per cent then it becomes a reality you have to deal with. There are dependencies that one can control, and then there are independent variables that one can’t control.
That being said, I still think that fares in India are way below what fares are globally, even for domestic travel, say, within Europe or the US. And our airlines are fiercely competitive on pricing.
Airfare caps [were] to protect the interests of both customers as well as airlines. You do not want a situation of airlines having a price war for ensuring market share. At the same time, you want to ensure that passengers are not charged a prohibitive price. Therefore you have a floor and a ceiling that was introduced. And let me just say this that the current pricing is nowhere remotely close to the ceiling.
Q/ The allegation seems to be that the floor cap is a bit too high.
A/ Not at all.
Q/ There are major plans for expanding UDAN, but many flights have been discontinued. Many of the private players feel they cannot run the services without the subsidy.
A/ As many as 419 routes have been bid out. Our target is 1,000 routes by 2025. I am very confident that we will get there.
The Viability Gap Funding (the subsidy) was for a period of three years (for airlines to operate on less profitable routes). Certainly, there have been some routes not economically viable without the subsidy. But those are the exceptions. The majority of routes have been running without the VGF. As I mentioned, the 360 odd routes we are putting in place include usage of small aircraft, while the (upcoming) international UDAN will have 26 routes.
Q/ You wrote an essay recently where you said India can be the world’s No 1 domestic aviation market by 2040. What makes you believe so?
A/ Just look at the growth potential. You have 14 crore flyers out of a population of 140 crore. That means your penetration rate is just 10 per cent. The number I am looking at is 40 crore in the next four to five years. You tell me, which other aviation market has the potential that India has?