Deepender Singh Hooda

Rad Links

 December, 1997: By this time, onerous restrictions, including the famed rule essentially banning new airports within a radius of 150 km of an existing one, were put in place, inhibiting any attempts to set up Greenfield airports. The Airport Infrastructure Policy of India declared “there are already sufficient airports in India”. The real problem, the policy document hinted, was of too many airports and insufficient utilisation. Air travel remained an elusive dream for the average middle-class Indian. Slow growth, dominance of public carriers, and absence of customer service characterised the industry.

December, 2007: The effects of the first wave of economic liberalisation, allowing private airlines to operate, were all too visible. Between 1997 and 2007, the growth in passenger traffic was close to 200 per cent, with the air traffic forecast to increase to 90 million by 2010. (Generally air transport grows at twice the GDP rate, so with the Indian GDP expected to expand to 10 per cent for 2008-2013, growth in the 20 per cent range is expected for the next five years.)

Amid all this growth, the problem of burgeoning demand for additional airport infrastructure was becoming serious everyday.

During a trip to New York, I searched from my rented car’s GPS system for airports within 150 km of Manhattan, NYC. “78”, screamed my GPS. “One”, I whispered, would’ve been the answer for New Delhi, what with policies restricting setting up any more within a 150 km radius. One and a half decades into the process of economic liberalisation, all our airports were — and are still — either solely operated by the AAI or by the AAI in partnership with private developers with little scope for fully private airports.

My real concern wasn’t for the lack of private participation in building aviation infrastructure in our country; it certainly wasn’t about the constant bickering by a few individuals about the inconveniences of flying personal aircraft from public airports with the AAI’s services.

No, my real concern wasn’t even about the air travellers who are the ultimate sufferers when the rapidly growing numbers of planes are faced with stagnant airport infrastructure — leading to congestion, delays, poor service, and importantly, higher landing charges translating into higher ticket charges. It wasn’t even because of the dire non-scheduled congestion situation. (Between 1997 and 2007, aircraft for private use have gone up from 96 to 229, for non-scheduled use have gone up from 46 to 196, and for government use have increased from 247 to 373.)

What really concerned me was the fact that the government was continuing to prop up the legitimacy of such a monopolistic regime.

But something was about to change.

April, 2008: Last week the government of India cleared a new airport policy allowing private investment, doing away with the need for cabinet approval for setting-up Greenfield airports outside a 150 km radius, and even relaxing the 150 km radius rule theoretically with some caveats. I know, I know, I don’t like caveats either, but for now let’s just acknowledge what has been achieved.

Much has been achieved in the past three years of the UPA government. Recent government initiatives including sprucing up government-controlled airports through private investment, renewing the mandate in the public sector airlines with new fleets etc., providing additional slots to foreign airlines at Indian airports, increasing the FDI limit in domestic airlines from 40 per cent to 49 per cent and allowing Indian private airlines to ply international routes, have all added meaningful value. But none of these have been big enough to signal the beginning of the second generation liberalisation wave in aviation. And that’s what last week’s policy promulgations have done.

There is criticism, of course. Are we creating another toothless tiger with the new policy? But the reason why these policy changes are ground-breaking is that these showcase a wonderful paradigm shift in how government views the future of civil aviation infrastructure, how it sees the future of the private players in that space, and how it sees its own role in shaping this future.

Now, the ‘caveats’. I prefer to call them ‘unanswered questions’. In case of building new airports within a 150 km radius of an existing one, no blanket policy withdrawal has been provided. There is an apprehension that since, even now each proposal will be studied, examined and taken to the cabinet by the Steering Committee, not all the decisions will be strictly based on the simple principles of supply and demand.

Then there is the question of legal scrutiny of existing contractual bindings. For example, there is a question mark on what will happen to the right-of-first-refusal type of contractual agreements between the government and the players like GMR in case of New Delhi. Many feel that the government should not be deciding on the viability of a new proposed airport based on a lingering contractual binding. And if the government does this, it will cast a shadow on the reasons for creating such contractual bindings in the first place.

Regardless of these apprehensions, something historic has been achieved. I remember reading a fascinating book on aviation called Hard Landing by Wall Street Journal reporter Thomas Jr Petzinger. He demonstrates how the highly competitive nature of the airline business has always benefited air travelers, sometimes even at the cost of the airlines themselves. The point is that in the airline world if you give the free market a fair chance, the traveler always ends up winning. With last week’s policy changes, I think we are a step closer to providing a freer, more transparent and competitive market environment in civil aviation infrastructure. The Indian air traveler can now look forward to timely take-offs and softer landings.

The writer, a Lok Sabha MP, is a member of the Consultative Committee on Civil Aviation