Symptomatic stall – on Go Airlines collapse | 6th May 2023 | UPSC Daily Editorial Analysis

State of the Civil Aviation Sector in India:

• India is one of the fastest-growing aviation markets in the world. 
• Its domestic traffic makes up 69% of the total airline traffic in South Asia. 
• India’s airport capacity is expected to handle 1 billion trips annually by 2023.
• The Ministry of Civil Aviation is responsible for formulating national aviation policies and programmes. 
• The aviation sector came under severe financial stress during the Covid-19 pandemic.
• After air travel was suspended in March 2020, airline operators in India reported losses worth more than Rs 19,500 crore while airports reported losses worth more than Rs 5,120 crore.
• However, several airline companies were under financial stress before the pandemic affected passenger travel. For instance, in the past 15 years, seventeen airlines have exited the market.

Government Initiatives:

• Accessing Northeast India:
  • Over 30 airport development projects are under progress across various regions in Northeast India.
  • AAI plans to develop Guwahati as an inter-regional hub and Agartala, Imphal and Dibrugarh as intra-regional hubs.
• Infrastructure:
  • The Government is planning to invest US$ 1.83 billion for the development of airport infrastructure along with aviation navigation services by 2026.
• Private Sector and PPP:
  • With the opening of the airport sector to private participation, 6 airports across major cities are being developed under PPP.
  • Currently, 60% of airport traffic is handled under PPP, while the remaining 40% is managed by AAI. Participation by the private sector has improved service levels and enhanced the passenger experience.
• Open sky policy:
  • An Open Sky Air Service Agreement allows for airlines from the two countries to have an unlimited number of flights as well as seats to each other’s jurisdictions.
  • India has signed Open Sky Agreements with multiple nations like the US, Greece, Jamaica, Japan, Finland, Sri Lanka etc.
• National Civil Aviation Policy, 2016:
  • The policy covers 22 areas of the civil aviation sector. Under the policy, Airlines can commence international operations and will have to deploy 20 aircraft or 20% of their total capacity (whichever is higher) for domestic operations.
• Regional Connectivity Scheme (RCS) – UDAN (Ude Desh ka Aam Nagrik).
• FDI:
  • The Government has allowed 100% FDI under automatic route for greenfield projects, whereas 74% FDI is allowed under automatic route for brownfield projects.
  • 100% FDI is allowed under automatic route in scheduled air transport service, regional air transport service and domestic scheduled passenger airline.
  • FDI over 49% would require Government approval.
  • FDI inflows in India’s air transport sector (including air freight) reached US$ 3.54 billion between April 2000-March 2022.

Challenges in the aviation sector:

• Infrastructure:
  • One of the main infrastructure challenges faced by the aviation industry in India is the need for adequate airport facilities.
  • Many airports in the country are old and need modernization, while others are located in areas that are difficult to access, which can lead to congestion, delays, and safety issues.
  • Another challenge is the need for more runway capacity. As the number of flights and passengers continues to grow, there is a need for more runways to accommodate the increased traffic.
• Regulation:
  • The regulatory framework for the aviation industry in India is complex and often challenging to navigate.
  • There are multiple government agencies involved in regulating different aspects of the industry, including the Ministry of Civil Aviation, the Directorate General of Civil Aviation (DGCA), the Airports Authority of India (AAI), and the Bureau of Civil Aviation Security (BCAS).
  • These multiple agencies can lead to clarity and delays in obtaining permits and licenses and result in the consistent application of regulations.
  • One of the biggest challenges in the regulatory framework is more clarity and consistency in policies.
  • Regulations are often subject to interpretation, which can lead to different outcomes depending on the agency involved.
  • The aviation industry constantly evolves, and regulations must keep pace with these changes to ensure safety and efficiency. However, the process of amending regulations can be slow and cumbersome, which can impede the growth and development of the industry.
• Skilled Workforce:
  • The aviation industry requires a highly skilled workforce, including pilots, aircraft maintenance engineers, air traffic controllers, and ground handling staff.
  • However, there is a need for more trained professionals in the industry, which can lead to delays and safety issues.
  • One of the main challenges in developing a skilled workforce is the high cost of training. Aviation training is expensive and requires significant investment in infrastructure and equipment.
  • This can make it difficult for individuals to pursue careers in the industry, particularly those from low-income backgrounds.
• Cost Structure:
  • The aviation industry is capital-intensive with high fixed costs. These costs include aircraft acquisition, maintenance, fuel, and labour costs.
  • In addition, there are regulatory fees, airport fees, and other operational costs that add to the overall cost structure of the industry.
  • One of the main challenges in the industry's cost structure is the high cost of aviation turbine fuel (ATF).
  • The cost of ATF in India is among the highest in the world due to high taxes and other levies. This increases the overall cost of operating flights, making it difficult for airlines to remain competitive.
• Security:
  • Aviation security is a critical issue for the industry, given the potential for terrorist attacks and other security threats.
  • The industry is subject to a wide range of security regulations to ensure the safety and security of passengers, crew, and aircraft.
  • One of the main challenges in aviation security is the constantly evolving nature of security threats.
  • Terrorist organizations and other criminals are constantly developing new tactics and methods to evade security measures and carry out attacks.
  • This requires a consistent and proactive approach to security, with the industry and regulatory agencies working together to stay ahead of evolving threats.
• Environmental Concerns:
  • The aviation industry significantly contributes to greenhouse gas emissions, which contribute to global climate change.
  • The industry's impact on the environment is due to the high consumption of fossil fuels and the emissions of pollutants such as carbon dioxide (CO2), nitrogen oxides (NOx), and particulate matter.
  • One of the main challenges in addressing the industry's environmental impact is the need to balance economic growth with environmental sustainability.

About the Airports Authority of India (AAI):

• It is a statutory body under the aegis of the Ministry of Civil Aviation.
• It is responsible for creating, upgrading, maintaining and managing civil aviation infrastructure in India.
• It was founded in 1995 and is headquartered in New Delhi.