India sitting on bilaterals, want to change that: Civil Aviation Minister Ashok Gajapathi Raju

What were the sticky issues after you took charge? How far have you moved?

The sticky points are: you have about 31-32 airports of Airport Authority of India today where flights can probably land and take off, but it’s not happening. You can call it low-hanging fruit. There is nothing cheap about an airport. It is basic infrastructure. Even if you put a low price of Rs 100 crore on each of these, that is Rs 3,100 crore of non-performing assets ready to perform, but not performing.

In the BJP manifesto, there was an issue of regional connectivity. We are trying to make that a reality. One of the major constraints is: passenger traffic is increasing, but the number of aircraft is not. The aircraft are getting bigger in size. And some of these places will not be able to accommodate those big aircraft. So we need smaller aircraft to make regional connectivity a reality in our country.

Two years ago, you talked about a civil aviation policy. The policy is yet to be announced, isn’t that a failure on your part?

I don’t think it is a failure. No doubt it is slow, but it is in an advanced stage now. It has gone through its rounds like agnipariksha.

First of all, there was no comprehensive policy in the past. It was just knee-jerk reactions to some situations.

Why do you need a policy? Because it gives economic activity a chance to plan. It will come out shortly, but I won’t put a time frame.

Is a consensus eluding it?

A consensus can never happen in certain situations, but a better understanding can. For the first time, a draft policy was thought of, put on the Net in the public domain, suggestions were called for, lots of suggestions came. Many states do not understand aviation. Those who understand it have benefited — the aviation-friendly states. They have cornered quite a bit of growth. My own state (Andhra Pradesh), for instance. Before we were bifurcated, we had planned an airport in Shamshabad when I was in the state government. We brought down the tax on aviation turbine fuel to 4 per cent. After the project came, the government hiked it to 16 per cent. When the state was bifurcated, it became 16 per cent. I had a chat with the CM, who asked if it should be brought down to 0. As a former finance minister of the state, I suggested: maximum 2, minimum 1. He decided on 1. The state witnessed huge growth. But look at Delhi. Since passenger traffic is inelastic, they increased tax from 20 per cent to 25 per cent. West Bengal wouldn’t reduce VAT in Kolkata, but brought it down in Bagdogra.

What holds for Air India in time to come?

It is a beautiful Air India. The airline’s problem is cohesiveness. If they work as a team, they will deliver. No government can commit taxpayers’ money for eternity. They have to pull up their socks. They have made operating profit for the first time in so many years. This is a good trend. If they keep the momentum going. I would like it to survive.

You won’t look at Air India as a candidate for disinvestment?

Its books are not at that level, there will be interest. As far as Air India is concerned, they have to develop confidence for others to see value. Only then can these options be considered. They have the capability.

Growth in passenger traffic has been quite good. What about cargo?

We are concentrating only on passenger traffic while the world’s largest airline is cargo. The airport is like a road. You run a truck on it, you run a bus on it, you can run a mini-van on it. And India is blessed — you name the climate and we have it, from snow-capped peaks to deserts. But there is a mindset that cargo is not glamorous. But it will contribute to the economy, it will gain from the economy. So we need a push. As it is, Indian cargo is doing well in terms of percentage growth – 6-7 per cent — but it is on a minuscule activity. E-commerce is also growing. There are a lot more areas. Outside the country, dwell time is an issue. We are working with them so that it comes to internationally acceptable levels.

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How do you see the way forward for India’s bilateral with other countries? Has it been optimum?

I don’t want to go the way it was handled in the past, but it doesn’t make economic sense. The air service agreements, or bilateral as we call it, are done on a level playing field with countries. If you look at today’s position, we are not able to perform on it, the partners are able to perform. If you break it down further, whether its the public sector or private sector, India is sitting on bilaterals, not performing. That is what we want to change. If 100 seats are opened up in a particular destination, it means India gets 50 seats and the partner country gets 50 seats. If a country is able to allocate 62 per cent of its bilateral, we are able to allocate just 32-33 per cent of our bilateral. We want a transparent procedure of auction for allocating seats.

I can understand if the External Affairs Ministry says India wants to score brownie points with a country, this is how we will benefit. As Indians, we have to work in the interest of our country. But what has happened is, countries that can’t give the type of destination that India has given have made India part of their spoke, made their country the hub for the rest of the world. Eight per cent of their passengers are Indians. Indians are not going for tourism there, some are in the workforce. What kind of impression does it give? While a travel demand has to be met, we are expected to be contributing to the Indian GDP, not to the country with which we have a bilateral.

What about the 30-31 airports that are ready to take off but see no traffic?

With the right policy and smaller aircraft coming in, three-fourths of them will become active. In our policy, the imagination on regional connectivity — Rs 2,500 fare for an hour of flight — has been the tipping point. If cess becomes a reality, and we are able to fund it. It can’t be a subsidised activity for all times to come. but it has to be a route promotional thing. The nitty gritty on the subsidy is being discussed. A transparent procedure has to be followed. The idea is to open it to all existing airlines, and whoever wants the lowest viability gap funding for the least period of time, and whichever state participates. Small players will automatically come. The viability gap funding will be 80 per cent from the Centre and 20 per cent by states. Guidelines are being formulated simultaneously.