Govt plans to extend UDAN scheme to international flights

Hyderabad: The success of the regional connectivity scheme, or UDAN (Ude Desh ka Aam Naagrik), has prompted the government to extend the scheme for international flights, aviation secretary Rajiv Nayan Choubey said.

The Assam government has expressed interest in connecting Guwahati airport with several South East Asian destinations, he added.

“The Assam government has expressed interest to invest Rs100 crore a year, for three years, (a total of Rs300 crore) to start flights to South East Asian destinations,” Choubey said at the Wings India 2018, adding the central government will only facilitate the bidding process for UDAN International for which the money will have to be invested by the state government.

However, other states are yet to show interest in UDAN International, Choubey added.

The civil aviation ministry is also in the process of amending the Airport Economic Regulatory Authority (AERA) Act, which will reduce the role of airport regulator in fixing tariffs while allowing private developers to monetize land, Choubey said, adding the government is working on a new concession model agreement, which should be out in the next six months.

Concession model agreement is a framework or guideline that defines the incentives private operators get in running an airport.

The government also plans to amend the Airports Authority of India Act to allow developers of brown field airports to monetize city-side land, a practice currently not permissible, which has resulted in lack of private sector investment.

“The Act specifically mentioned that the land usage of the city-side airport will be for passengers. There is a limit to how many hotels you can build outside the airport only for passengers. There is a need to relax that. We are working on amending the Airports Authority of India Act towards that end,” he said. The government is also looking at various models to expand airport infrastructure like land pooling, where land is made available to townships with airports, and swapping prime land in cities with land in outskirts for building airports, while monetizing the city land parcels, Choubey said.

The government is also looking at a model to develop state airports by creating joint ventures between state governments holding 49% and the Airports Authority of India 51%, where the state government funds the losses incurred by such airports for the first 10 years while the capital expenditure to develop such airports is spent by the Airports Authority of India, Choubey said.

“Currently, there are 116 such airports that can be developed under this model,” Choubey added.

Aviation consultancy CAPA estimates that investments up to $45 billion will be required for airport expansion and construction by 2030, to keep in pace with the projected growth in airport traffic, which would approach 1 billion annual passengers by 2030.

AAI’s capex is expected to go up five times to Rs15,000 crore a year, Choubey said, adding the balance sheet of the public sector airport operator will be leveraged to boost growth.

“Currently, 80 of 120 AAI airports are functional,” Choubey said, adding the government’s aim is to make airports efficient to handle huge traffic.

Indian passengers are expected to grow at 17.5% during 2017-18, against 20% (a year) during the last three years, Choubey said.

“Our country has witnessed the highest domestic passenger growth globally in the last 3-4 years and the nearest rival is some 30-40% behind us,” Choubey added.

To handle such a high passenger growth, the government is working to operationalise air strips across the country which have been dormant or unused since Independence.

“About 18 of 56 airstrips that were constructed during World War 2 era are operational,” Choubey said, adding the government’s aim is to operationalise all these airstrips.

“We expect to double the airport capacity (from current level) in the next 4-5 years and achieve over 15% annual compound annual growth rate,” Choubey said adding this growth is possible as long as the oil prices are below $80 a barrel.

The government is expected to seek Expressions of Interest (EoIs) for Air India and Pawan Hans in the next fortnight, Choubey said.

“Our ministry is presently engaged in the important task of finding buyers for Air India, its subsidiaries and Pawan Hans. We are committed to take it forward very, very fast,” he said.

“We expect that the EoIs for Air India should come out possibly in couple of weeks. A revised EoI for Pawan Hans will also be coming forward around the same time,” Choubey added.