At its first meeting this week, a group of Union ministers examining a new national policy for civil aviation saw strong views and positions being taken by various members reflecting the contentious nature of the high-stakes proposals that could offer competitive advantage to some powerful players in India’s already crowded aviation market.
For instance, railways minister Lalu Prasad, for one, is believed to have opposed a civil aviation ministry suggestion to open up international routes to young aviation firms, such as Kingfisher Airlines, something the existing laws don’t allow.
Hanging in balance is access to an international aviation market to and from India that some analysts estimate to be worth as much as Rs60,000 crore and expected to grow by up to 20% this year.
The unusually large 12-member group, dubbed GoM, is debating a draft new civil aviation policy that, among other proposals, is considering diluting a minimum five-year domestic flying experience norm for carriers seeking to fly internationally.
The new proposal, if approved, will open the way for Kingfisher, Air Deccan, SpiceJet, IndiGo and Paramount Airways, which all started operations less than four years ago. Just three Indian carriers, Air India, Indian and Jet Airways, which also runs Jet Lite (formerly Air Sahara), currently fly foreign routes with a 30% share of passenger traffic (the rest goes to foreign carriers.)
At the Tuesday meeting, which was anchored by a presentation by civil aviation secretary Ashok Chawla, Prasad opposed any change to the international flying rules. “He (Prasad) did not give any justification,” said a government official familiar with the matter. Prasad’s line of thinking found support from law minister H.R. Bhardwaj, who is said to have asked the civil aviation minister Praful Patel not to tamper with the flying norms.
Home minister Shivraj Patil was of the view that the policy should keep in mind the expected growth in the aviation industry. He is a former civil aviation minister. He said the policy instead should be broadened further to expand the scope for civil aviation in the country.
The meeting was attended by all the members except shipping and road transport minister R. Baalu. External affairs minister Pranab Mukherjee heads the group that also includes finance minister P. Chidambaram, defence minister A.K. Antony, agriculture minister Sharad Pawar, tourism minister Ambika Soni, urban development minister S. Jaipal Reddy and Planning Commission deputy chairman Montek Singh Ahluwalia. But, the meeting was cut short with barely time for three ministers to put forth their views.
Prasad’s opposition to the policy could mean a consensus is not likely to emerge anytime soon. “We will take the process forward when we meet again,” is all that civil aviation minister Patel said coming out of the the meeting.
“It (a final policy approval) is likely to take at least two more months,” said a government official.
The group is expected to meet again within the fortnight.
The two players likely to gain most—or lose—are Kingfisher Airlines Ltd, which is soon expected to control a majority stake in Deccan Aviation Ltd, the company that owns Air Deccan, and Jet Airways (India) Ltd. Both companies have been lobbying hard ahead of the meeting.
Deccan Aviation chairman G.R. Gopinath, in a 14 August letter to Mukherjee, called the old norms “anomalies” that should be done away with.
When foreign airlines such as Thailand’s Nok Air with a much smaller fleet and less flying experience could be allowed to fly to India, Gopinath argued, there was no reason why the five-year rule should be held against Indian companies.
Meanwhile, civil aviation ministry senior officials have already decided not to renew the exclusive West Asia flying rights for state-owned carriers Air India and Indian when they lapse at the end of December. That will allow Jet Airways to start flights to the profitable West Asian routes, something the airline’s executive director Saroj Datta has said the airline is already planning for.
If the five-year norm is not scrapped, the four-year old Air Deccan will qualify to fly abroad by mid-2008 potentially, letting the two-year-old Kingfisher Airlines to use Air Deccan to fly international.
International passenger traffic has grown faster in the past two years.
In 2006, India displaced Italy, Korea and Scandinavian countries with a 17% growth in international passenger traffic over 2005, according to International Civil Aviation Organization, to move to the 12th spot worldwide. The list was led by the US, China and Japan with Brazil ranking at 11th position and Canada at 10th.