State Civil Aviation Ministers Conference

10092013

“Beginning of a Fruitful and Mutually Beneficial Partnership”: Shri Ajit Singh

With the recognition that civil aviation is a growth engine for economic development, it is high time that Central Government and State Governments join hands together and let the sector soar into greater heights, said Union Civil Aviation Minister, Shri Ajit Singh while addressing the Conference of State Aviation Ministers and Secretaries of the state governments here today. He said the Conference was a “beginning of a fruitful and mutually beneficial partnership bringing synergy in efforts.”  Highlighting the causes of losses to the airlines, Civil Aviation Minister said, “One of the major reasons for the economic losses of the airlines is the high cost of ATF, which constitutes 40-50% of the operational cost of all domestic carriers. Compared with our neighboring hubs, ATF prices in India are 50-60 % costlier. This is mainly due to the high base price of ATF topped up by the very high ad valorem VAT imposed by state governments.” The Civil Aviation Ministry has taken this up with the Ministry of Petroleum and state governments. Some states have responded positively. Jharkhand has reduced VAT on ATF to 4%, Madhya Pradesh has agreed to reduce it to 23% at Indore and Bhopal and 13% at other airports. West Bengal has agreed to reduce it with certain conditions. The Minister said, “The reduced VAT on ATF can be a game changer for the states also as seen in the case of Chhattisgarh. Chhattisgarh had reduced VAT on ATF to 4% in 2010 and it has since seen six-fold increase of ATF uplift from Raipur and an increase in number of flights from Raipur from 8 to 18 per day. With more people travelling to the state, there has been considerable spin-off effects to the economy.” He made a request to the representatives of the state governments to reduce VAT on ATF to 4%. This would significantly reduce operational expenses of the airlines leading to reduced fares and more passenger traffic.  Emphasizing that growth in the civil aviation sector is equitable and inclusive, Shri Ajit Singh said, “The issue of providing regional and remote area connectivity therefore, attains great significance. Considering the vastness of the country and varied terrains- ranging from the high mountainous region in the North, hilly terrains in the North-East, and deserts in the West and thickly populated congested regions in the South, the number of airports in the country is very small. We need to develop smaller low-cost no-frill airports in potentially economically growing cities identified in various parts of the country, with the help of the state governments.” There are 454 airports and airstrips in the country out of which only 93 are operational. Many of the smaller airstrips are owned by state governments. The respective state government can provide land required for expansion free of cost and develop road and electricity connectivity to the airports.  There is a need to encourage the airlines to operate flights to provide regional air connectivity to Tier-II & Tier-III cities and connectivity to remote and difficult areas. “This is possible only if operational costs of the airlines are reduced to minimum and the State Governments can contribute by bearing some operational expenses like cost of security, power, fire and rescue machinery and providing incentives by minimizing property tax of the airports and also under-writing of seats in the flights,” the Civil Aviation Minister said. Ministry of Civil Aviation is already working to bring out an integrated policy regime in this regard which includes encouraging airlines to acquire smaller planes and reduction of various airport charges.  An Inter-Ministerial Task Force was constituted by the Planning Commission to prepare a financing plan for the 12th Plan period. The Task Force has provided a blue-print for robust expansion and modernization of airports across the country, especially with private participation and recommended the development, operation and management of several airports through Public-Private Partnership (PPP). In line with the recommendation of the Task Force, Government of India has decided, in principle, to operate, manage and develop 20 airports of Airports Authority of India under PPP which include Kolkata, Chennai, Ahmedabad, Lucknow, Jaipur, Guwahati, Bhubaneswar, Coimbatore, Trichy, Varanasi, Indore, Amritsar, Udaipur, Gaya, Raipur, Bhopal, Agartala, Imphal, Mangalore and Vadodara. RFQs for Chennai and Lucknow airports have already been uploaded and RFQs for another four airports are in the process. Further, Government of India is in the process of identifying 50 low cost small airports for their development in collaboration with state governments through feasibility studies to be carried out by Airports Authority of India.  The Ministry of Civil Aviation is also trying to provide international connectivity to new destinations not only from Metro International Airports but also from the Regional International Airports. Only last week, the Ministry gave new Bilateral International Traffic Rights to Indian carriers to fly to different destinations from Lucknow, Chandigarh, Madurai, Mangalore, Trivandrum, Hyderabad, Bangalore and Bagdogra. “I hope the Indian carriers, who have been given these rights, would start their flights effective Winter-13,” the Minister said. There is a need to set up an expertise in the state governments to look into the issues associated with general aviation, he added.  During the meeting the delegate from West Bengal raised the issue of night landing at Bagdogra and demanded pro-active steps from Pawan Hans services between Kolkata and Durgapur whereas the representative of the Government of Meghalaya requested for granting permanent refuelling facility in the state. The representative of the UP Government drew attention towards making flying rules more realistic and user friendly while the Jharkhand Government appealed for waiving off night parking charges in cases of non-scheduled operators. The Conference was also addressed by Minister of State in Civil Aviation, Shri K. C. Venugopal. It was attended by about fifty delegates including Aviation Ministers of eight states.