Domestic landing for foreign carriers

NEW DELHI: To ease the growing pressure on airport infrastructure due to the ongoing aviation boom, the government is considering a package of suggestions from the Investment Commission including modernisation of 10 non-metro airports with private sector participation. The panel has also suggested that foreign airlines be allowed to acquire stake in domestic carriers and the conclusion of open skies pacts with key countries like the UK and Singapore.

Reduction of the price of aviation turbine fuel (ATF) to international levels and modernisation of the Kolkata and Chennai airports on the same lines as Delhi and Mumbai are also among the other key suggestions under consideration, government sources said. The package is aimed to attract investments of around $17 billion by ’10.

Headed by Ratan Tata, the Commission has recommended that special purpose vehicles (SPVs) be formed to expand and modernise non-metro airports. The government should also provide viability-gap funding.

Upgradation of air traffic control (ATC) systems and training for ATC personnel is also important to ensure that airport infrastructure is developed adequately to meet air traffic growth needs, the panel has said. The ATC system, for example, should be comparable with the infrastructure available at Hong Kong, Singapore and Dubai. Growth in passenger and cargo traffic could be sustained only if infrastructure is upgraded and expanded, the Commission thinks. Present investments in airport infrastructure is only 20% of the requisite levels.

The call for allowing foreign airline investment in domestic airlines is significant as the present rules permit 49% foreign direct investment (FDI) in domestic airlines while closing the door on foreign airlines. The Planning Commission holds similar views but the civil aviation ministry wants Indian airlines to achieve critical mass before they are subjected to competition from international giants.

Many players like Virgin Atlantic have expressed their desire to invest in Indian carriers but the government rules are keeping them away.

The Investment Commission says steps should be initiated without delay to build new airports in Navi Mumbai, Noida, Nagpur, Goa and Ludhiana. The government should also ensure that airport developers have the capability and experience to develop international class infrastructure.

The recommendations have come at a time when the government is waiting for the Supreme Court’s verdict on the Delhi-Mumbai airport modernisation case. While GMR-Fraport and GVK-South African Airports have been selected as private sector partners for modernisation of, respectively, Delhi and Mumbai airports, Anil Ambani Group company Reliance Airport Developers has gone to court against the selection process. As a result of the litigation and resistance to airport modernisation with private sector participation, the government is not rushing ahead with its plans for Kolkata and Chennai.

Probably keeping this backdrop in mind, the Commission has also called for consistency and transparency in tender conditions and project execution in the aviation sector. Lessons from the process for selection of partners for the Mumbai and Delhi airports should be used to expedite modernisation of Kokata and Chennai airports, the panel has emphasised. Delay in achieving financial closure for greenfield airports should also be cut, the panel said.