The government has no intention to regulate airfares, Civil Aviation Minister Jyotiraditya Scindia told NDTV, adding that the “market has to play itself out”. He was responding to a question on whether cut-throat competition between airlines in India meant that customers benefitted from cheap fares while the profitability of India’s financially-stressed airlines continued to be impacted.
He did, however, dish out numbers to underline that aviation is growing in India, which means airlines and customers both stand to gain in the “volume game”.
“After 20 years, we have a new entrant (Akasa Air) in a sector known for companies that shut shop,” he stressed.
He was speaking to NDTV in a week in which India yet again broke its record of daily fliers, crossing 4.3 million on December 24.
“The (aviation) sector is heralded for new growth… growth that’s going to be permanent,” he said.
He cited two factors behind a 15 per cent growth this year when compared to 2019, the year immediately before the Covid pandemic — one, “the desire” of people to travel; two, the growth “in terms of airlines increasing fleet size and the number of airports increasing”.
From 74 airports in 2013-14, the number has gone up to 146, he said, adding that the expectation in the next 4-5 years number is to cross 200.
About pressures on existing airports — Delhi recently saw huge waiting time and long queues — Mr Scindia said, “Growth brings tremendous demands”, and claimed that the capacity of airports, old and new, in the six metro cities will go from 192 million to 420 million a year in the next 4-5 years.
He reiterated his strategy to decongest airports. One is to schedule flights in a more spread-out fashion; the other being increase in capacity to handle security checks.
In Delhi the number of security check queues has gone from 13 to 21 in less than a month, he added, “We are in process of doing that in Mumbai and Bengaluru.”
On the business of airlines — all except Air India and IndiGo are struggling with cash flows — he said, “These are difficult times for airlines. And they are still not out of the woods.”
He underlined efforts made to reduce tax levied by states on Air Turbine Fuel (ATF). Fuel is about half the cost of running airlines.
“States levy a VAT (Value-Added Tax) ranging between 1 and 30 per cent. We had 12 states/UTs in the 1-4 per cent bracket, 24 in the 20-30 per cent bracket… We have requested them, folding hands… and now we have 16 more states in the 1-4 per cent tax bracket,” he explained.
He cited the example of Jammu and Kashmir, where VAT came down “from 30 to 3-4 per cent”. This made the Srinagar airport a preferred refuelling point, and refuelling went up by 360 per cent, he said.
On bringing ATF under the GST regime, he said that’s a consultative process and takes time, but a lot has already been achieved with states cutting VAT.
“States have to see that civil aviation is precursor to development,” he stressed.
He also underlined India’s improvement in air safety ranking — from 102 to 48 — and said he is working on making India an international flight hub too.
“My job is to be a facilitator and not a regulator.”