(Weekly Organ of the Communist Party of India (Marxist)
January 20, 2013
The Naresh Chandra committee on civil aviation submitted a comprehensive report in 2004, some recommendations from which have been cherry-picked and implemented in bits and pieces. The Ministry of Civil Aviation (MoCA) Consultation Paper in early 2012 on air connectivity to regional, remote and inaccessible areas of the country is another glaring example. Comments were sought but, almost a year afterwards, one does not know if there is in fact a firm Policy in place and, if so, what this policy is.
IN AD HOC MANNER
various action plans and projects continue to be announced
in an ad hoc manner.
For instance, the Minister of Civilian Aviation announced at
a meeting of the
Parliamentary Consultative Committee of his ministry in
December 2012 that steps
were being taken to liberalise the procedures regarding new
and that air connectivity with smaller cities and towns
would be enhanced. Earlier
in October, the minister had declared that approval had been
granted for 15
Whatever the merits or otherwise of these three airports, problem is that such random statements and ad hoc announcements do not constitute a policy. Regional airports require careful consideration of various developmental aspects with long-term implications. Criteria for deciding on new airports also need to be clearly spelled out and projects cleared taken transparently so as to guide investors, planners, administrators, regulators and other stakeholders. Otherwise any so-called policy not only remains hollow, but also dangerously allows all kinds of ad hoc actions in a framework that encourages arbitrary decision-making by authorities.
New regional airports will mean a lot of money changing hands in large projects for infrastructure firms and myriad contractors, and new opportunities for many businesses. Airports are also seen by many politicians as prestige projects for their states, constituencies or home towns. The doors to cronyism and favouritism will be wide open.
the policy vacuum, there is serious danger of vanity
projects, over-capacity in
airport and allied infrastructure, and non-viability of many
with attendant pressure on the state to subsidise a
particular form of
transportation, that too one used by upper-income sections
of society. This
would further skew transportation policy in
It is a widely accepted notion, although requiring qualification as seen later, that civil aviation promotes wider economic development by increasing efficiencies in manufacturing and commerce, boosting tourism with its known large multiplier effects, and creating ancillary jobs in many sectors. Within this framework, regional airports are expected to help reduce regional disparities and structural backwardness especially of remote regions, and promote cultural exchange and national integration.
traffic growth in
But there seems to be a big gap between reality and these dreams.
present, the Airports Authority of India (AAI) runs a total
of just 115
airports, of which only 71 are commercially operational and
the rest are lying
closed, chiefly due to non-viability. Only a handful of AAI
running at a profit. While the new airports at
CUSHY PLAYING FIELDS
Nevertheless, given the projections and the eagerness of government to bring in private players and possibly FDI, construction, infrastructure and realty corporates, along with engineering and financial consultancy companies, are excited and looking to get in on the ground floor. Also expectedly, these corporates are not only eagerly grabbing opportunities now being offered up, they are also tomtomming inflated growth predictions and lobbying for rapid expansion and more favourable terms.
instance, Regional Airport-Holdings International (RAHI)
Ltd, a joint venture
led by ILFS, a major player in transportation infrastructure
and finance, has
announced plans to invest over Rs 3000 crore in 15 airport
projects over the
next five years. RAHI with other partners is already
point to the poor performance of
However, only one airline chose to operate from Mysore, flying around 10,000 passengers in 2011. The airport was closed in November that year. Operations are being resumed next week through a thrice-weekly flight to Bangalore.
The AAI was left holding the baby, but nobody knows if AAI actually favoured the project. But what would happen if such a fate befell a private operator?
One company, Reliance Airport Developers Pvt Ltd, came up with a wish list to ensure viability of privately operated regional airports. Recognition by government that such airports are “national assets” deserving of continuous support, especially subsidies as provided for air traffic to the North-East; assurance from airlines that they would continue operations; exemptions from various taxes; and governmental promotion of SEZs, large industries, tourism and other projects in the area. If government has to do all this, then why have an airport there at all, or why should AAI itself not also build and run the airport?
Answer perhaps lies outside aviation. Experience of some privately operated airports such as in Delhi shows that the city-side business is a major factor attracting investors, and that there is much corner-cutting and cronyism involved in obtaining additional land and securing permits for all kinds of businesses. The minister’s recent announcement includes a decision to remove any need to obtain AAI approval for any city-side project within the allotted airport land. Whether municipal bodies will be consulted is anybody’s guess. Greater value may lie in manipulating airport concessions for real estate deals than from airport operation itself.
Many of these and other kinds of uncertainties and arbitrariness can be done away with if clear criteria are adopted and actually used to decide on and implement regional airport projects, and what should be expected from them.
It is always argued, with some justification, that civil aviation in both passenger and goods, makes a significant contribution to economic development in that region as well as nationally. The International Civil Aviation Organisation (ICAO) estimates that 100 dollars of air transport expenditure produces 325 dollars of benefits and 100 additional jobs in air transport results in 610 new economy-wide jobs. ICAO attributes over 4.5 per cent of global GDP to the air transport component of civil aviation which provides several multiplier effects. However, the idea that creating civil aviation infrastructure will somehow by itself drive economic development is simply not true.
Attractive tourist spots, remote locations especially, would obviously benefit enormously from air connectivity provided, of course, adequate tourist infrastructure exists or comes up quickly. The examples of Bali and tourist hot spots in Thailand are often cited as examples. With a very few notable tourism destinations, however, India as a whole has failed to attract large numbers of international tourists. Annual arrivals are currently around five million a year, a meagre 0.5 per cent of global tourist traffic, less than a third of much smaller Thailand and only one-tenth of China. Analysts are unanimous that this is due mostly to weaknesses in infrastructure such as accommodation and amenities of varied price ranges, communications, and tourist attractions. An airport will not make these happen. Similarly, industrial or commercial development will be boosted by a local airport, but will not happen solely because of one.
One of the very few tangible criteria actually spelled out in the airports policy is that connectivity with state capitals will be promoted. This may be politically desirable but it might not have great economic rationale or even passenger appeal in all cases. Many airports in state capitals in India have quite low traffic, but may well qualify for some state support on grounds of broader social good.
Another important criterion is remoteness and inaccessibility of otherwise important and commercially potential locations, and the social desirability of air access for people and goods. Air connectivity to the North-East has for long been promoted on this basis, including through direct and cross subsidies. Such social cost borne by the state, albeit transparently and in a manner that does not penalize public sector airlines or airports, is clearly justifiable. Flights to the North-East have gone up in recent times from 87 to 286 flights per week, and Agartala has twice the passenger traffic of Bhopal. The new greenfield airport being built by AAI in Pakyong, Sikkim, will undoubtedly benefit this remote state immensely and the nation by promoting its integration. The boost to tourism, the local economy and residents of Ladakh due to air connectivity of Leh is immeasurable.
But it is a gross misinterpretation, perhaps even a wilful distortion, to club together airports in “regional, remote and inaccessible areas of the country,” as the very title of the Consultation Paper does. New regional airports in the mainland cannot be justified by the legitimacy of connectivity to hinterland areas, but need a clear and integrated policy frame.
The EU has a well-developed set of criteria approved by the European parliament. In general, the EU favours economically viable regional airports catering to around 500,000 passengers a year, a general rule-of-thumb figure for airport viability. The EU recognizes the need for state support for air connectivity to “remote, inaccessible and island locations” but which need to be “strictly defined and transparent.” It stresses the need to “avoid a proliferation of regional airports” as that would run “counter to efficiency and sustainability criteria.”
A more integrated view of regional airports as part of a larger national transportation system and policy frame, as recommended by the EU, would also enable more rational and cost effective decisions. One of the reasons why Dehradun, Mysore or even Bhopal airports have comparatively low passenger traffic is that they are well connected by rail and road. Even if regional airports are built in Tier-II or Tier-III cities, absence of good road or rail connectivity would undermine their utility. Conversely, if good surface connectivity were made available, the very need for some regional airports may be obviated.
Even from the point of fuel economy, energy efficiency and emissions reduction, prolific or unplanned expansion of regional airports and air transportation are undesirable. The UK, for instance, with high petrol costs and high rail fares after privatisation, has seen a jump in internal air traffic which is estimated to account for about 70 per cent of the country’s emissions quota. Air transport is estimated to be responsible for three to five times the emissions of rail travel per passenger-km. An upgraded rail network, linkages with which Indian airports sorely lack unlike other medium-income countries, would throw a very different light on the need for regional air connectivity.
India needs to consider the pros and cons of regional airports carefully. A cogent policy must be evolved, with clear criteria for new projects as well as an independent, effective and transparent mechanism for approving these. Regional airports should certainly not be viewed as vanity projects or as vehicles for cronyism involving favoured infrastructure developers and builders.