Ashwini Phadnis

The last one year of the UPA rule saw the birth of a low cost state-owned airline, Air-India Express.

IN THE one-year that the United Progressive Alliance (UPA) has been in power much has moved in the civil aviation sector.

The Government has taken a number of steps at various levels to ensure that passengers have a smooth and hassle free journey, both within and outside the country.

To further ease the problem of getting seats for travel to and from India, not only did the Government enter into liberal Air Services Agreements (ASA) with several countries including the US, France, Australia, China and the UK, but it also cleared a proposal allowing the two major private sector airlines in the country to fly to almost any part of the globe except the Gulf region.

The efforts of the Government, many may say, are already bearing fruit with the overall passenger traffic rising 23.2 per cent; the domestic passenger traffic grew 25.9 per cent from April 2004 to January 2005, and international traffic 17.9 per cent.

This period also saw the birth of a new state-owned airline, Air-India Express that is offering a cheaper alternative to the Gulf and South-East Asia.

While many may argue that this Government is merely carrying forward what was started by many of it predecessors, credit cannot be denied the Government fact for getting things to move in the development of world class airport infrastructure, strengthening the two state-owned airlines or extending the reach the state-owned and private airlines alike.

Besides, attempts have also started in right earnest to refurbish the image of Indian Airlines (IA) and Air-India (AI).

To help IA get over the problem of an aging fleet, the Public Investment Board (PIB) has cleared the airline's proposal to acquire 43 Airbus aircraft at more than Rs 9,000 crore.

In April the AI board too cleared a proposal to buy 50 Boeing aircraft at a deal valued at around Rs 30,000 crore. The induction of the new aircraft will help the airline to offer more direct non-stop flights from India to various destinations. In addition, both airlines are examining the option of acquiring wide body aircraft to operate in India and abroad. Early on in its innings, the Government perhaps realised that with both the state-owned airlines going in for multi-billion dollar acquisitions, allegations of impropriety are going to fly thick and fast.

Therefore, among the first things the Government did to ensure greater "transparency" in the acquisitions was to set up a new mechanism to whet the deals.

The boards of the two state-owned airlines have also been given in-principle approval for making Initial Public Offerings.

Realising that infrastructure development was a major constraint in the civil aviation sector, the Government not only pushed forward the modernisation and reconstruction of the Delhi and Mumbai airports but also plans to initiate work on transforming more than 20 secondary airports into world class entities.

Besides, the draft concession agreement of the Bangalore and the Hyderabad international airports were approved by the Union Cabinet to facilitate the construction of these tgreenfield facilities.

Though the Government has moved on a number of issues, several things are still pending. Despite all the efforts of this and the previous Government, the long awaited civil aviation policy has still not been cleared.

In addition, even as work on the re-structuring of the two airports is going on, the establishment of a regulator for the sector, through a Bill, has got delayed.

The attempts of the Government to rationalise the sales tax on aviation turbine fuel (ATF) that varies from 4 per cent to 39 per cent around the country and do away with the withholding tax on import of aircraft too have not produced results as yet.

Hopefully these and other pending issues connected with the sector will be taken up by the Government in the second year in office.

Otherwise the momentum that has been generated in the first year could easily get dissipated.

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