Home / Industry / Infrastructure /  ‘Air travel poised to become biggest mode of mass transport’

Driven by travellers from smaller cities, air transport will become the largest mode of mass transport for most Indians one day, civil aviation minister Jyotiraditya Scindia said at the Mint Mobility Conclave on Thursday.

Air travel in India was always dominated by flights between top cities, as well as flights in out of the country. But, of late, air traffic growth between smaller cities has outpaced other categories, Scindia said.

Mobility in India is an idea whose time has come, Scindia said. “Though it was a sector in its infancy in earlier days, we are now going through a very major growth phase in civil aviation in India," the minister said.

Scindia said India had about 144 million air travellers in the pre-covid year of 2019-20. The closest competitor in the transportation sector, the railways, has about 185 million travellers in second class AC and first class AC, the minister said.

Compared to air-conditioned train travel, aviation still lags behind. “But if you look at the compound annual growth rates (CAGR) of both, within the second class and first class AC sectors of the railways, you are looking at a CAGR of roughly 5.3%. But when you look at CAGR in civil aviation over the last six to seven years, you are looking at a CAGR of 10.6%. Therefore, a time will come where civil aviation shall become the mode of mass transport for most of our citizens," Scindia said.

The minister said he was holding constructive discussions with states on having the value added tax (VAT) on jet fuel lowered so that they get the benefit of greater connectivity as well as a boost to jet fuel sales in the state. After taking charge as aviation minister last July, Scindia had set up eight advisory groups to study key issues in the sector. The minister said he has written to 22 chief ministers to lower VAT on jet fuel and followed that up with them. He said he wished to thank the chief ministers of 16 states who came on board and moved towards a 1-4% regime on VAT, which means that today, 28 states—up from 12 earlier—are charging VAT on jet fuel in 1-4% range. “We have only eight states left that are within the 20-30% bracket on ATF. I am still working with those eight states and imploring them to come on board," the minister said.

The advisory groups are looking into segments such as airlines, airports, maintenance, repair and overhaul businesses. “I believe our job in government is not to be one of a regulator but one of a constructive collaborator," Scindia said.

Scindia said last-mile connectivity is an area of focus, including by way of using smaller aircraft and helicopters. This particularly so in areas like the North East.

The minister said India was among the countries with a low per capita penetration of helicopters, which prompted the government to bring out a scheme called Heli Seva to improve helicopter usage by lowering charges and putting together a portal to give quick clearance for flights.

Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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