NEW DELHI - Year 2004 was a
watershed in Indian civil aviation. Reforms in the
sector aimed at making flying more affordable gathered
momentum as the year drew to a close. The process of
opening up the sky, launch of several new private
carriers, the much-awaited fleet acquisition program of
public sector airlines and modernization of airports
also went ahead at full-steam during the year. The only
dampener was the high cost of aviation turbine fuel
(ATF) caused by high taxes and an unprecedented hike in
world crude prices.
As the United Progressive
Alliance government completed seven months in office, a
major change witnessed in the aviation sector was the
emergence of a fare war caused by the entry of low-cost
carriers, a feature hitherto unseen in India. The
aviation sector saw a massive hike in domestic load
factors as travelers took advantage of the competitive
prices to shift from air-conditioned superfast trains,
whose high-end fares are now only slightly lower than
the special prices that many airlines now offer.
Bangalore-based Air Deccan, India's first
no-frills airline which connects nearly 20 destinations
in southern and western India, was a huge success. More
budget airlines are popping up. Visaa Airways plans
operations in India's western region. Its US$18.50
Mumbai-Pune fare is about $4 more than the railway
first-class ticket. ModiLuft, a failed private domestic
airline, is reincarnating itself as a budget-airline,
Royal Airways. Yet another Bangalore-based company,
United Breweries (UB) group, has jumped on the budget
airline bandwagon and is in the process of fleet
acquisition.
There was also a major increase in
the inflow of foreign travelers during 2004, pumping up
the competition in the skies. Keeping in mind the entry
of more private players in the domestic sector and their
operations in the international arena, the government is
planning to finalize a new Civil Aviation Policy and
present it to parliament in the budget session to create
a roadmap for the next decade. With a massive jump in
India's passenger traffic projected in the coming years,
estimates show the country would require over 200
aircraft in addition to the existing 100-plus planes in
the next five years.
But the high passenger
traffic and the growing number of airlines and aircraft
is already beginning to strain the aviation
infrastructure. Airlines have been complaining of
traffic congestion during landing and take-off besides a
lack of adequate parking and ground handling space at
major airports. The government is thus working on a
major plan to refurbish the major airports.
Indian Airlines (IA) and Air-India (A-I), the
two public-sector carriers, have been bogged down by
fleets that are too small to meet the high demand and
take on the competition. The new government has given
them the go-ahead to enlarge their fleets. While IA's
plan to acquire 43 aircraft has been ratified by the
Public Investment Board, A-I has finalized plans to
acquire 50 wide-bodied aircraft to boost its fleet
strength from 34 to 74 by March 2013.
During the
year, AI floated a low-cost subsidiary, Air India
Express, to primarily operate from the southern state of
Kerala to the Gulf and West Asian destinations with an
18-aircraft fleet. The service, widely anticipated by
the huge number of Indian expatriate workers in the Gulf
and West Asia, is likely to start early next year.
The government has decided to infuse an
additional equity of Rs3.25 billion (US$74 million) in
the IA, linked with its aircraft acquisition program.
The government is also likely to provide fresh equity to
allow AI to work out its future growth strategies and
fleet plans. So the coming year is poised to see the
national flag carriers, with a larger stable, giving
private airlines a run for their money. And Indian
travelers can look forward to even cheaper fares, if the
crude prices behave, of course.
(Asia
Pulse)
Dec 25, 2004
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