“Privatisation of Air India is one of the options”

The beleaguered national flag carrier may soon get privatised. The Maharaja carrying a red balance sheet may not remain a public entity any more. In an exclusive interview, new civil aviation minister P Ashok Gajapathi Raju told Sweta Ranjan the government was seriously considering the issue of privatising Air India. Excerpts:

sweta-ranjan

Sweta Ranjan | December 3, 2014


P Ashok Gajapathi Raju, civil aviation minister
P Ashok Gajapathi Raju, civil aviation minister

You have taken over a ministry full of challenges. It has just been a few months but how much progress has it seen?
For me, individually, it has been a learning experience, because my experience as a layman with aviation was just buying a ticket, getting into a flight (and) going somewhere. So, from that place if you get into the nitty-gritty of aviation and try to understand it, you feel there are lots of things that need attention. So, from that level, probably we have started understanding the processes. We have started understanding the terminologies used. We are trying to evolve a policy so that there is a transparent way in which work is done. So that you have kind of a roadmap which you understand (and) which others can understand. Because whatever gets achieved is achieved with the team work. In the ministerial sense, you have to bring cohesiveness in the team.

You have spoken of the need for a new aviation policy, the draft of which is in the public domain. What are its key features?
We have made a draft paper and have released it for comments. We want to evolve something where everything is a conscious decision. It is common knowledge now that civil aviation in India has missed out on certain economic activities. There is tremendous scope of improvement. Cargo angles of it have not been thought of, so that is one angle. There is an economic thrust. Cargo has the potential to put income in areas where it’s most required. To enhance cargo (business), marketing and production come closer to deliver high value, low volume goods and perishables that are going by cargo. I don’t think there is any Indian player who owns a cargo aircraft. In that sense, it is really in infancy. It has the potential. So that potential probably other ministries will be looking at, but civil aviation should not be an impediment. We should be able to perform. I guess we will have to gear up for that. Yet another area where we are finding a potential is the MRO (maintenance, repair and overhaul).

Yes, the draft policy stresses the need for the MRO. Does India have the potential to become an MRO hub?
I have a feeling it has, because there are aircraft going to, for instance, Sri Lanka. What is it that Sri Lanka has and India doesn’t have? We have to develop regulation that is conducive for society. These are high-investment zones (where) probably our skilled employment can be better harnessed. In that sense it has a future. The turnover of this segment is about $700 million per annum. However, most of the business is going outside the country due to lack of facilities and an appropriate policy on taxes and duties. Effective steps will be taken for developing the sector and attracting investment by providing land and infrastructure and suitable incentives in terms of taxes and duties.

Then there is the cash-strapped Maharaja. The airline seems doomed. How do you plan to infuse life into Air India?
Air India is an airline – once upon a time an airline which had the largest number of aircraft. Probably, it still has the largest reach within India. So it has its strengths. On the economic side, it has a red balance sheet, which is a major impediment, and whatever decisions they have taken, a large number of them do not make commercial sense. In that sense the airline is burdened. We are not against or for public sector. But, they have to perform. Otherwise…

Are you considering privatisation?
Yes, why not? It’s one of the options. There are a few options available. This could be one.

Don’t you think it should remain as a public entity?
Why? What is so sacrosanct (about Air India)?

But the challenge is to turn the loss-making public entity into a private one.
The challenge aside, what should be the focus of the government?

To make it profitable?

It has to be a sustainable airline. This paramount (point) we should keep in mind. How it is managed, how it is owned, I think, is immaterial.

Who do you blame for the disaster?
I don’t want to blame anyone.

The work culture?
The work culture has a lot to do with it. How you motivate a team is important and where your focus ought to be. I am not against the public sector at all. I won’t be able to justify this to the country. So, they will have to pull up their socks and they will have to work.

No major airline operating in India, none of them is making profits, except IndiGo.
One should have a business plan. IndiGo is also flying in the same skies.

What difference do you see when you compare Indigo and Air India work culture?
When we look at it, we find all people working in IndiGo take pride in their job. I have travelled as a passenger in IndiGo. I have traveled as a civil aviation minister also in IndiGo, they fly on time. They take pride in their work. Somehow, I don’t find the same pride (among Air India employees). So, if you take pride in your work you do that much better. In today’s context it is basically hospitality industry. The customer has to feel good. There are people who feel good about Air India, there are also people who do not feel good.

What is the response of the states on the appeal to lower taxes on jet fuel?
It is highly taxed in most states. We are a federal structure, so we have requested all chief ministers to bring down the taxation on aviation turbine fuel (ATF). Some of them have responded. When they realise they are losing out and what they get in terms of revenue becomes notional, they will start thinking. The response has been encouraging in certain states like Madhya Pradesh, Chhattisgarh and Andhra Pradhesh. They have all brought down the taxation. They are trying to woo airlines, because for the airlines, 40-45 percent cost is fuel. Due to high rates of taxes, the cost of ATF in India is 40-45 percent higher than the international cost. Steps will be taken in association with the ministry of finance and state governments to rationalise taxes, so that our costs are competitive.

Will FDI help stabilise the aviation sector?

See, the government of India has recently announced its FDI policy. We will adhere to that and hope the Indian skies become more volant.

Air Asia and Vistara have not been welcomed so well…
What do you mean by not being welcomed?

Other airlines have lobbied against them.
It’s ok. The government need not get into that. Regulation has to be a level-playing field.

What difference will it bring if 5/20 norms are removed?
5/20 is a regulation that you will not find anywhere else in the world. What is the sanctity of 5 years? What is the sanctity of 20 aircraft? Our concern is regional connectivity. We won’t like to throw the baby with the bath water. Bath water has to go, baby has to remain. When we want regional connectivity why don’t we see that clearly? For us it is sacrosanct. India is a big country so we keep the regional connectivity. Implement something that will be workable, which will invite new players. The 5/20 guidelines will be reviewed with a view to encourage the entry of new Indian carriers. We can have a transparent kind of regulation which will be transferable from airline to airline. Suppose some airline decides to go into propeller-type aircraft and connect our own smaller places. We have unutilised airports.

What is the roadmap to utilise such airports?
We need to have a strategy. We need to have smaller aircraft, also probably with schedules. We are one of the few countries that have scheduled airlines, unscheduled airlines, 5/20 – all these regulations. Our regulations should not compromise on safety and security. We have to be clear on that. Probably that’s it. And we want regional connectivity, so we must be clear these are the things we are going to stress on.

Is there a plan to revive unutilised airports?
Why not? It’s infrastructure. There is nothing cheap about an airport.

You have also spoken about no-frills airports. Can you mention any that needs to be converted into one?

What do you mean by no-frills? If you don’t have air-conditioning it doesn’t matter but security and safety you can’t compromise on. You are not expected to either. But airports have become a symbol in our country. Everybody feels... rather you talk to a member of parliament, he will say no-frills (is a) very good idea, but not in my place. It becomes a symbol for that area. These types of problems we are having. But no-frills means less comfortable air-conditioning or sofa sets. Cutting out on frills means cutting out on cost. The flying cost should be minimum. They have identified some places, because connectivity is important. In India, time consciousness is also increasing. People have started realising the value of time. Once that realisation goes up, air travel will become more popular.

Is there any possibility of bailing out loss-making airlines?
I don’t really think so. Kingfisher has crashed.

Another airline is following the footsteps of Kingfisher….
I won’t name an airline. We don’t hope that such a situation should happen. We would like them to survive. We would like them to go ahead. But it is wrong to get the taxpayer to pick up the bill. What is the type of package that can be given? So, within our constraints, which is not going to be a burden for the tax payer, we will eventually keep the airline
flying. Strategies on those lines can be thought of, but bailing out and giving you so many millions of dollars? For what?

What is the reason that the aviation sector in India is not able to flourish that well? No airline is doing well, except one.
If they weren’t doing good how are more airlines coming up? If they don’t see a potential they won’t try it. You have to evolve a policy which is workable, comprehensible and not an impediment.

What are the plans to enhance regional connectivity?
If we can get smaller aircraft – propeller aircraft – back to fly in the Indian skies, it could be a relief. I can give you an example. Mahindra is manufacturing aircraft, the wing spans are being done in Bangalore, (it is then) taken out of the country. In 32 countries that aircraft flies, except for India. And the FAA (Federal Aviation Administration, the national aviation authority of the US) downgrades India from category 1 to category 2, and that aircraft flies in America. It passes their regulation. It’s a small aircraft, 8-seaters, 12-seaters. If we can get those things to fly in Indian skies, won’t our connectivity improve?

Now, regulation has effectively kept that out, that kind of aircraft, that kind of airlines. I am sure those 32 countries value life of their citizens as much as we value the lives of our citizens, so why not allow them to fly in Indian skies?

The variation can be tremendous. So, get smaller aircraft to connect the Indian airports. We are a big country, probably our demands of filling aircraft will reduce. Among existing airports you see Patna. The DGCA says you fly there with load restrictions because the airport is not compatible. Safety is important. Now, a smaller aircraft might qualify for such runways.

But why not upgrade the airport and the landing strip?
Why not? If land is available and the states give us the land, it can be done. We are looking at it as a facility and an economic activity.

By when is the DGCA going to get replaced with a civil aviation authority?
I am not thinking of replacing DGCA as such. It has a role. Probably, we have to modernise it. We have to change the highly regulated culture to one which does not compromise on  safety.

But is it to become an autonomous body?
You see, autonomous means it has to modernise itself. As it is, it has started becoming more transparent. We have recently even put up a site for passengers. They are trying to modernise it, but a lot has to be done.

By when Pawan Hans Helicopters Ltd and the Airport Authority of India will be listed?
They will be listed now. Let this suggestion thing get over. Not everybody will sing a favourable tune. There will be plus points, there will be negative points. Let them say why they want, or not want, it listed. This paper has been released for inviting ideas from all stakeholders. Let it serve its purpose first, then we’ll see.

The interview appeared in December 1-15, 2014, issue

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