It has become customary for speakers in any Indian civil aviation forum to project India as the third largest civil aviation market in the world by 2020 and possibly the largest by 2030. Various trends and statistics get quoted to support these laudable objectives. However, the ground realities pertaining to civil aviation over the last 12 years (since Air Deccan rejuvenated the private airline industry in 2003) have been rather disappointing. Infrastructure needs have been inadequately addressed and the regulatory mechanism has come under intense criticism and opprobrium, not only from the Indian stakeholders but also from International Civil Aviation Organisation (ICAO) and Federal Aviation Administration (FAA). The Government has in general been apathetic to the constant and plaintive cries of the sector, with taxation structures quite insensitive to the bleeding airlines and most policies unsympathetic to their economic haemorrhage. When the new Government, with Prime Minister Modi at its helm, came into power a year ago, there was widespread cheer and optimism across the aviation sector in anticipation of ‘Achchhe Din’ or good days, which, alas are yet to come.

Nonetheless, riding on economic indicators for the country as a whole (manifest in progressively incremental wealth creation opportunities), aircraft Original Equipment Manufacturers (OEMs) are upbeat about India’s future civil aviation scene. Currently India ranks ninth in the world civil aviation market rankings and, according to the Directorate General of Civil Aviation (DGCA) (http://dgca.nic.in/aircraft/regind. htm), all Indian scheduled airline aircraft holdings total up to 410, a figure that fails to impress, given India’s large geographical expanse. With customary manufacturer optimism, Boeing has projected that India would need another 1,600 new aircraft over the next 20 years; this estimate includes 235 wide bodied jets, 133 single aisle jets and 35 regional jets (a total of around 400 aircraft that would be appropriate for airlines). Airbus has a similar, slightly less optimistic prediction totalling around 400 aircraft for airline use. The implication is that the current total aircraft holding would have to double if Boeing and Airbus projections are to come true. The premises on which these projections are based are not very clear but their consummation appears a bit doubtful as of now, unless some things change at the establishment level.

A new civil aviation policy, as an illustration, has been on the anvil for months now. While expectations of some reformative changes from the new Civil Aviation Minister are as old as the new Government, there seems to be an unhurried approach to make any changes. A draft civil aviation policy was indeed released by Minister for Civil Aviation, Ashok Gajapathi Raju, in November last year with a promised finalisation by January, 2015. However, the policy did not address many long standing and glaring weak areas holding back civil aviation. Moreover, a final document is yet to see the light of day despite several deadlines having gone by. Although the document is not expected to bring substantial reform, the inordinate delay in its release highlights the lack of commitment of the establishment. With each passing day the civil aviation community grows restive on the one hand, and hopeful on the other that the more time it takes to produce the new policy, the more constructive it might turn out to be.

The new airlines eagerly await the final form of the replacement of the 5/20 rule (requiring a domestic airline to fly for five years on domestic routes and to build up its fleet to 20 aircraft before being permitted to fly on international routes) while the older ones who suffered that rule through their initial five years are crying foul over removal of the rule. A Government proposal to replace the 5/20 rule with a new Domestic Flying Credits (DFC) rule is in animated suspension within different ministries of the Government. The tangible effect of either policy being in place is to restrict the new airlines, which are raring to go international as that is where the lucre lies, is to impede their operations. When seen in the backdrop of the ongoing bitter war of words between the three top US airlines and the top three in the Gulf area (with each group accusing the other of benefitting from Government subsidies and regulations), the insistence of the Indian establishment to place impediments in the way of our airlines appears retrograde and obstructive. Hopefully, the solution that is finally arrived at by the Government will be guided by impartial judgment and a forward vision for Indian civil aviation.

Aviation fuel costs have come down with crude oil prices nearly halving from their recent peak but the taxation remains oppressively high, affecting the cost to the airlines. The Modi Government appears helpless in the face of stiff resistance from the state Governments to lower disparately applied and largely exorbitant Sales/ Value Added Tax (VAT ) rates while appearing powerless to place aviation fuel under the declared goods category (which would bring down the tax on fuel to a standardised four per cent across the country). The matter is a bureaucratic intricacy and it does not look like whether Mr Raju has a solution to it in the near future. An intervention by the PMO could resolve the problem, albeit at the cost of heartburn for the state finance secretaries, but appears unlikely, going by Mr Modi’s record so far.

The available air seats under bilateral arrangements with other countries are under utilised by Indian airlines due to various factors, one of them being the 5/20 rule mentioned above. The replacement to 5/20 rule is also likely to be an inhibiting factor for long haul flights by Indian airlines, at least for the first about two years of an airline’s existence as the arithmetic of the new Domestic Flying Credit (DFC) rule is likely to amount to that. Hopefully, the new dispensation will take into consideration the potential losses to Indian airlines if such provisions are made.

Maintenance, Repair and Overhaul (MRO) infrastructure also remains woefully inadequate for the country’s modest airline holdings and a substantial part of the airline MRO business is gifted to foreign entities. Again, the taxation and import duty regulations are playing spoilsport although there has been a recent let up in the constrictive guidelines for setting up MROs and there is optimism for some more easing off to come in the near future.

Conclusion

This is not a comprehensive repertoire on the problems facing civil aviation in India; there are many areas which need to improve for civil aviation in India to take off towards the rosy projections for the next two decades. Mr Modi’s personality has generated considerable optimism in the nation about what could come about in the future. Some of the promised results are yet to be manifest and the inertia of well entrenched, bureaucratic processes are largely to blame for the slow progress. However, there appears to be a slow but steady movement towards reform – including in the civil aviation sector. Hopefully, the sluggish movement will accelerate with passing time and pick up the required momentum to bring civil aviation to its full potential.

The Paris Air Show is just around the corner and one is reminded of the 180 aircraft order that IndiGo confirmed during the same Show in June 2011. Although aircraft orders – large or small – are not spot decisions, some announcements can bring surprises and perk up market sentiment. With the current air of tentative optimism that suffuses the Indian civil aviation scene, tidings of copious orders from Indian airlines will help to bring cheer to an otherwise lacklustre sector.