Giving wings to AP aviation sector

The aviation sector in India had been an over regulated and under managed sector has transformed into a more open, liberal and investment-friendly sector since 2004. Entry of low-cost carriers, higher household incomes, strong economic growth, increasing FDI inflows, surging tourist inflow, rise in cargo movement, sustained business growth and supporting government policies are the major drivers for the growth of aviation sector in India.

Recognizing the exponential growth of air traffic in India, the AP State government has unveiled its Civil Aviation Policy-2015 which seeks to set up a Rs 100 crore corpus for development with an objective of creating a world-class aviation infrastructure in the State that would help provide reliable and seamless air connectivity to regional, national and international destinations by 2020, with a slew of incentives to private sector, to make AP a preferred destination for investment in aviation and allied businesses by creating airports as hubs of economic activity.

With the onset of domestic and international airlines with an average operating ratio of 35 flights a day connecting Bengaluru, Hyderabad, Chennai, Delhi, Mumbai, Port Blair, Tirupati, Bhubaneswar, Kolkata, Vijayawada and international destinations such as Kuala Lumpur, Singapore and dubai, passenger footfalls in Andhra Pradesh gradually picked up for the fiscal year 2014-15 nearly to 1.68 million, and the expected growth for 2015-16 is likely to be 1.75 million, a 5% year-on-year growth.

Domestic airlines have been allowed to fly overseas, forge partnerships with foreign carriers, while foreign carriers in turn have been interlining with domestic airlines to access secondary destinations. With the rise in the number of airlines, growing passenger segment and route expansion, there is, however, an urgent need for airports in the State of Andhra Pradesh to have their infrastructure in place, which unfortunately at present is the weakest link in the chain.

To ensure a strong growth story for AP in the next decade, which is on global radar, what is required is removal of bottlenecks in the system. To create world-class infrastructure facilities for the aviation industry, AP would need gigantic investments. To make that happen, the State government needs to formulate conducive regulatory mechanisms and provide a level-playing field to all the players, which will attract large investments from private sector in India as well as abroad.

The approval of Greenfield Vizag International Airport at Bhogapuram in Vijayanagaram district by Airport Authority of India on 5,040 acres of land, which was marred by stiff resistance by the farmers, and the current acquisition of 857 acres for the expansion of runway at Gannavaram airport to be completed within 6 months will be biggest shot in the arm for the booming sector.

The government should take people into confidence by explaining factual information as to why land acquisition is required for the development of airport, which is key to the region’s prosperity and will ensure growth for all the stakeholders. Precaution should be taken before declaring schemes, supported by a good PR strategy, to achieve the desired objectives. Mere issue of GOs and adoption of coercive methods will only lead to undesirable results.

The government should come out with a liberal policy on public private partnership model. Policy formulation is one aspect and implementation of it is another. We have a history of having rules and regulations in place, but not of their implementation. The purpose should be create minimum facilities for aircraft to operate, without compromising on safety and security. Systems should be such that one can walk into an airport minutes before a flight, check in luggage, walk on to the tarmac to board a plane. Rules will have to be changed for this and the aviation watchdog will need more teeth.

Aviation space offers promising opportunities in the areas of maintenance, repair and overhaul (MRO), aircraft manufacturing, ground support equipment, ground handling services, trained manpower, air cargo, fuel hedging, aerotropolis etc. The need of the hour is commissioning of infrastructure in a timely manner. However, there is a shortage of qualified pilots, technical staff, aircraft maintenance engineers and air traffic controllers. There is a need to address these issues and sort them out, paving an unobstructed growth path for the various opportunities.

Good days are coming back as the economy is growing and the market is waiting to explode – there are good indicators of them. Andhra Pradesh can indeed make this sector a profitable. Once infrastructure and systems are ready, the sector will really zoom off. It will take more than just an engine thrust to keep these beautiful, metallic birds flying in the azure skies.

By Javvadi Lakshmana Rao