Indian aviation set for major reform if it accepts key panel's suggestions

There could be more real estate development, including three and five-star hotels and multiplexes near airports, the cost of capital for the aviation sector could head southwards and carriage of cargo on international routes could shift more in favour of Indian carriers. All this will happen if the recommendations of the 293rd Parliamentary Standing Committee on Transport, Tourism and Culture are implemented.

The report, which was tabled in Parliament on July 23, recommends that the Ministry of Civil Aviation (MoCA) ensure sufficient space for commercial shops while granting approval for new airports.

"Further, 5 star/3 star hotels and multiplexes should be constructed near the new airports. The committee recommends that the ministry should consider mandatorily earmarking minimum 100 acres of land while making plans for future airports. The committee also desires that extra land, if any, should not be sold and should be kept for future aviation developmental activities," the report says.

The committee’s recommendations are mere suggestions and it is not mandatory for the government or ministries to accept them. However, the recommendations act as signposts for the government about developing a political consensus on policy because opposition members are also part of parliamentary committees. The 293rd Parliamentary Standing Committee on Transport, Tourism and Culture includes opposition members including Derek O’Brien of the Trinamool Congress and Raj Babbar of the Congress among others.

The committee’s recommendations come in the backdrop of Finance Minister Nirmala Sitharaman saying in her Budget speech in February 2020 that 100 new airports will be opened across the country by 2024. New airports are already coming up in various parts of the country including Navi Mumbai, Mopa in Goa and Jewar on the outskirts of Delhi.

Also read: Why India's revised policy for privatising airports is faulty

What the committee has recommended has already been implemented in some airports like Delhi where there is an aerocity close to the airport which hosts a number of hotels of various categories, shopping plazas and office space.

The committee is also of the view that all airlines and aviation-related businesses must be treated as priority sector lending. “The committee recommends that the ministry (of civil aviation) should provide sectoral fund, which is professionally managed and which can provide structured debt to the airlines industry,” the report says.

The report also seeks to give a boost to domestic air cargo operators in international skies by recommending that the ministry provide a level playing field for Indian air cargo operators. It recommends that the ministry should make appropriate changes in the Open Sky Policy for cargo. An Open Sky Policy means airlines are allowed to operate any number of flights unhindered.

The country largely follows an Open Sky Policy for cargo in India, which has seen foreign carriers carry 90 to 95% of the total international cargo to and from India.

An Open Sky Policy for air cargo was adopted in 1990, initially for a three-year period, and extended in 1992 on a permanent basis. Under this policy, any airline, whether Indian or foreign, which meets specified operational and safety requirements, is allowed to operate scheduled and non-scheduled cargo services to and from any airport in India where custom/immigration facilities are available.

Also read: Mumbai to start second airport by 2023

In September 2020, the MoCA modified the policy to restrict non-scheduled freighter flights by international carriers to six Indian airports -- Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad -- with the objective of providing a level playing field for Indian air cargo operators.

In the post-Covid situation, the government has taken a number of measures to boost the movement of cargo by air including allowing airlines to carry cargo in the aircraft cabin.

At the moment, SpiceJet is the only scheduled airline that has a dedicated cargo wing, SpiceXpress. IndiGo has announced that it will be acquiring four aircraft purely for cargo purposes from the first half of 2022. At the moment, IndiGo has dedicated around 10 aircraft of its fleet to carry cargo in the cabin apart from carrying cargo in the belly of the aircraft. The other important player in the space is Blue Dart which has six Boeing 757 aircraft.

(Cover image courtesy: Wikimedia Commons/Wiki.cullin)