The story of the Indian Aviation Industry (Part 2)
We now pick up (or take off?!) from where we left off (or landed!?) in the last edition…
The years 1972 and 1986 saw the formation of the International and Domestic Airports Authority of India respectively.
Airports Authority of India (AAI)
The Airports Authority of India Act, 1994 combined these then-independent domestic and international authorities in the year 1995. Thus was conceived this statutory body which was christened as AAI. It comes under the Directorate General of Civil Aviation, Ministry of Civil Aviation. Whenever you travel to an Indian airport, you will see the famous AAI logo for sure. That is because the AAI handles all the airports in India- the AAI either single handedly manages the airport duties or gets into a joint venture (Mumbai’s Chhatrapati Shivaji International Airport is managed by the AAI and a GVK Industries Ltd led consortium, for example). Broadly speaking, the AAI is responsible for ‘creating, upgrading, maintaining and managing civil aviation infrastructure both on the ground and air space in the country.’
The aviation industry is highly valued because it offers connectivity. While this is a vital subset that characterizes the aviation industry, India had initially been lagging behind in this aspect. The introduction of the UDAN scheme helped speed up the development of this area.
UDAN- RCS (Ude Desh Ka Aam Naagrik- Regional Connectivity Scheme) was introduced in the year 2016 with the objective of making air travel accessible- both, physically and literally. The introduction of this scheme laid the foundation for several regional airports. In fact, the flight that I was taking (in the first part of this article!) was also a part of the UDAN scheme.
Here’s how the scheme was proposed to operate:
- Several concessions like subsidising the airfare with the aid of vitality funding gap, reduced service tax on the tickets, reducing the State Governments’ GST to 1% or less etc. are offered
- The State Governments are also tasked with providing infrastructural facilities like fueling infrastructure, land for developing the airport (which is also easily accessible by the pre-existing modes of connectivity), providing water and electricity- and so on.
- The State Governments are also to provide trained security personnel and contribute 20% share of the vitality funding gap. And of course, any additional concessions from the State Governments are always welcome!
- Apart from these aforementioned concessions, the airlines also don’t have to pay the landing and parking fees and the Terminal Navigation Landing Charges (TNLC). And the airlines also get a solid 42.40% (of normal rates) discount for the Route Navigation and Facilitation Charges (RNFC).
These are some big concessions! And, the cargo flights also get similar concessions, except they don’t get the Value Gap Funding.
While these concessions were initially limited to the Fixed Wing aircrafts, the second phase of this program included helicopters as well. And finally in 2019, this scheme also included the seaplanes and the ‘ski and bush’ planes. This is also when the GoI awarded 18 routes which connected six water aerodrome sites with seaplanes.
This scheme has brought several remote locations on the radar. By encouraging the airlines to fly to remote places, the tourism sector in these areas has also benefited significantly. The pandemic has hit the aviation industry but a ‘100-day plan’ which was recently revealed by the GoI to revive India’s civil aviation industry looks pretty promising. It also aims to work on the following infrastructural projects:
- The Kushinagar Airport in Uttar Pradesh.
- A new airport at Jewar, Uttar Pradesh.
- Upgrading the Agartala airport. The initial stages of this project were delayed due to the pandemic.
- Construction of a new terminal at the Dehradun Airport, Uttarakhand.
Airlines in India
The Indian aviation industry comprises several airlines which handle passengers and freight as well. While it all started with the flag carrier of India, Air India, a series of good policy reforms brought private players in this industry. But that’s an article in itself which will be published in the next edition! Stay tuned!