1. BOOM IN AIR TRAVEL:-
The civil aviation sector has been witnessing a boom as the domestic passenger carriage, cargo movement and international air traffic have shown exponential growth. This growth has been largely fuelled by the policy of increased liberalization, which has been followed by Government on both domestic as well as international side. After dismantling of monopoly of national carriers on the domestic skies in 1994, the civil aviation sector has seen increased competition resulting in significant growth. The competitive tendencies have, in turn, resulted in adoption of aggressive, innovative pricing strategy and low cost model by the upcoming new airlines. On the international side, Government has taken several initiatives to increase the availability of seats as well as better connectivity by entering into several bilateral agreements. The year 2006 has been especially remarkable for the growth witnessed in passenger traffic. The airlines have carried nearly 29 million domestic passengers till November, 2006, which is a growth of 47% over the corresponding period of 2005. Further, the scheduled domestic air services are now available to/from 75 airports as against nearly 50 in the year 2000.
Traffic Trends :
(A) Domestic:
| Year | Passenger (000) | Growth % | Freight (Tonne) | Growth % |
| 2002-03 | 13951 | -- | 210858 | -- |
| 2003-04 | 15677 | 12.4 | 234641 | 11.3 |
| 2004-05 | 19445 | 24.0 | 325456 | 38.7 |
| 2005-06 | 25200 | 29.59 | 342563 | 5.3 |
(B) International:
| Year | Passenger (000) | Growth % | Freight (Tonne) | Growth |
| 2002-03 | 13160 | -- | 555006 | -- |
| 2003-04 | 14628 | 11.2 | 616746 | 11.1 |
| 2004-05 | 17267 | 18.0 | 739451 | 19.9 |
| 2005-06 | 19626 | 13.7 | 814878 | 10.2 |
In accordance with the policy of liberalization in the civil aviation sector and with a view to attract more foreign passengers, the Government has adopted a liberal approach in the matter of grant of traffic rights under bilateral agreements with various foreign countries. A revised air services agreement was signed with USA to increase co-operation in the aviation sector. Under this agreement, both sides can designate any number of airlines to operate services to any point in the territory of the other country with full intermediate and beyond traffic rights. Trend of liberalization gained further momentum during 2006 and traffic rights were enhanced with various countries in order to enable greater connectivity to/from India e.g. UAE (Dubai), Thailand, Italy, Russia, Taiwan, Finland, Maldives, Tanzania, Japan, Sri Lanka, UAE (Sharjah), Kuwait, Spain, Oman, Scandinavian countries, Egypt, Bangladesh.
3. SAARC INITIATIVE:-
In a significant move to improve connectivity in the region and to foster friendship with the neighbouring countries, the Hon’ble Prime Minister made the following offer to all SAARC countries, except Pakistan, on reciprocal basis during the last SAARC Summit (13th) held in Dhaka on 12th-13th November, 2005:-
Ø The designated airlines of SAARC countries may be allowed up to 7 services/week to the 6-metropolitian cities of Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore, if they are presently operating less than 7-flights a week to any of the 6-cities.
Ø In addition, they would have unlimited access to 18 tourist gateways of Patna, Lucknow, Guwahati, Gaya, Varanasi, Bhubaneswar, Khajuraho, Aurangabad, Goa, Jaipur, Port Blair, Kochi, Trivandrum, Calicut, Amritsar, Visakhapatnam, Trichy and Ahmedabad.
Ø The designated airlines of SAARC countries may exercise unlimited 5th freedom rights, both intermediate and beyond within the SAARC region except between two points in India.
Ø Incorporation of ‘multiple designation’ clause in the respective air services agreement with the SAARC countries, where it does not exist.
Ø Abolition of the existing mandated commercial agreements with the carriers of SAARC countries.
Ø This offer was made without prejudice to the existing rights and subject to reciprocal rights to the Indian side.
This offer has already been accepted by Sri Lanka, Bangladesh, Maldives and Bhutan. Nepal has proposed bilateral air services talks to finalise this issue. In the case of Bhutan, Bagdogra has also been granted as another point of call. Also, after accepting the SAARC offer, bilateral air services consultations with Sri Lanka was held on on 9th October, 2006 and capacity entitlement has been enhanced from the existing 7 services/week to 14 services/week to/from Mumbai (with immediate effect) and Bangalore (with winter, 2008) for the Sri Lankan designated carriers. Coimbatore and Pune has been granted as additional points of call for the Sri Lankan designated airlines with 7 services/week with immediate effect. Reciprocally the capacity entitlements for the Indian designated carriers has been increased by 21 services/week with immediate effect and by further 7 services/week with effect from winter, 2008.
4. LIBERALIZATION OF CHARTER POLICY:-
The tourist charter guidelines were significantly liberalized in 2004. All airports in the country were opened for international tourist charters flights and Indian passport holders were also allowed to travel on the tourist charter flights. Government have now further liberalized the tourist charter guidelines, the salient features whereof are as under:
Ø The restriction with regard to minimum and maximum length of stay of tourists in India has been done away with.
Ø For outbound charters, the 2:1 condition between inbound and outbound tourists has also been removed.
Ø Based on the representations received from the chartered airlines, the penal provisions have also been revised.
This is expected to further boost the tourist arrivals in the country.
5. UMBRELLA AGREEMENT WITH USA:-
A Memorandum of Agreement (‘Umbrella Agreement’) between Federal Aviation Authority (FAA) of USA and the Indian civil aviation authority has been signed on 13th November, 2006 in New Delhi. The agreement provides for assistance by FAA to the civil aviation sector in India in developing and modernizing the civil aviation infrastructure in the managerial, operational and technical areas. All assistance under this agreement will be on reimbursement of costs basis.
The assistance essentially includes the following areas: -
· Providing technical and managerial expertise in developing, improving and operation of civil aviation infrastructure, standards, procedures, policies, training and equipment.
· Providing training for civil aviation personnel.
· Inspection and calibration of our civil aviation equipment and air navigation facility.
· Providing resources, logistical supports and equipment for air navigation facilities.
· Assistance in airport certification in India.
· Assistance in the field of Helicopter Operational Safety initiative.
This Umbrella agreement will create enabling provisions to sign agreements for technical and managerial expertise in civil aviation sector, technical co-operation in a range of aviation safety areas, training for civil aviation personnel, resources, logistical support and equipment for air navigation facilities and assistance in airport certification in India etc.
6. AMENDMENT IN AIRCRAFT RULES/ACT:-
To keep the statutory provisions abreast with the international standards and the latest developments in the civil aviation sector, Ministry of Civil Aviation has drafted the Aircraft (Amendment) Bill,2006. The Bill, introduced in the Lok Sabha on 07.08.2006, provides for the following:-
(i) Exercise of regulatory control on foreign registered aircraft for the time being in or over India.
(ii) Empower the Central Government to make rules on:-
(a) Licensing of personnel engaged in air traffic control;
(b) Certification, inspection and regulation of the communication, navigation and surveillance/ air traffic management (CNS/ATM) facilities;
(c) Safeguarding civil aviation against acts of unlawful interference and ensuring civil aviation security.
(iii) Safety oversight functions to be performed by the Director General of Civil Aviation.
(iv) Violation of rules made under Section 4 to give effect to the Chicago Convention shall also be punishable.
(v) To enlarge the power of the DGCA to issue directions under Section 5A of the Aircraft Act.
(vi) Quantum of penalty for violation of the provisions of the Aircraft Act/Rules to be enhanced to imprisonment which may extend to 3 years and fine which may extend to Rs.10 lakh.
7. MERGER OF AIR INDIA LIMTED AND INDIAN AIRLINES LIMITED:-
Taking note of the global trends in aviation industry towards mergers and consolidation of airlines and formation of global alliances, which enable airlines to optimize fleet acquisition, to leverage the asset base, to strengthen network and to achieve economy of seats, the Government has decided “in principle” to work towards merger of Air India Limited and Indian Airlines Limited. A consortium led by M/s. Accenture India Private Limited has been appointed as Consultant. The consultants have completed the initial work relating to pre-merger activities and have submitted a detailed note to the Government for its approval. After receipt of Government approval, the necessary merger process will be taken up. The exercise is likely to be completed by the beginning of the next financial year. Group of Ministers (GoM) constituted to consider issues relating to the merger has been briefed in the matter. The GoM had desired that the various issues may be first examined by a Committee of Secretaries (COS). The COS after detailed deliberations have recommended the proposed scheme for merger. The matter will shortly be placed for the approval of GoM and thereafter the Cabinet.
8. ACQUISITION OF NEW AIRCRAFT BY AIR INDIA LIMITED:-
Air India Limited (AIL) has signed a purchase agreement with Boeing Company on 31.12.2005 for the purchase of 68 aircraft comprising 8XB777-200LR, 15XB777-300ER and 27X B787-8 all powered with GE engines for Air India and 18 X B737-800W all powered with CFM engines for Air India Charters Limited (i.e. Air India Express) at a net project cost of approx. Rs.34,615 cores.
The delivery of 50 Aircraft to Air India Limited are scheduled between February, 2007 and February, 2012 and of 18 aircraft to Air India Charters Limited, between November, 2006 and October, 2009. M/s. Boeing has agreed to make its best efforts to complete the delivery of all aircraft by 2011 in place of 2012. First aircraft has been delivered on 30.11.2006. The manufacturers viz. M/s. Boeing, GE and CFM International have offered an offset programme valued at 30% of the net aircraft price (excluding BFE Items) and spare engines which amount to approximately USD 2 billions i.e. approx. Rs.9,000 crores (US$ = Rs.45). The timescale to complete such offset will be 5 to 6 years following the delivery of last aircraft. This decision of the Govt. would enable Air India to induct new aircraft in the fleet after a gap of almost 10 years. Last induction was in October, 1996. The induction of new aircraft is expected to strengthen Air India, as the State owned carrier would be able to offer better products/services thereby enabling it to compete more effectively in an increasingly competitive market.
9. MRO FACILITY AT NAGPUR:-
Pursuant to the purchase of aircraft from M/s. Boeing, as a part of its contractual obligation, M/s. Boeing has offered to facilitate setting up of Maintenance, Repair and Overhaul (MRO) facilities at an estimated investment of US$ 100 million. This would be a pioneering step in the field of aircraft maintenance and overhaul in India, where presently all private airlines have to take the services of foreign MROs for any significant repair requirement. Boeing has signed a Memorandum of Understanding with Maharashtra Government for establishment of this facility at Nagpur. Sites are being evaluated to finalise the land location.
10. NEW STATIONS CONNECTED/OPERATED BY AIR INDIA/AIR INDIA EXPRESS:-
Air India and its subsidiary viz. Air India Express, presently operate international services through their own operations to 31 cities. With the induction of new Boeing aircraft, Air India and Air India Express have plans to increase services to the existing destinations in the regions of North America, Europe, East Asia, Australia, Africa, SAARC etc. Air India, which presently operates all its services to USA via one stop in Europe, proposes to offer non-stop services between USA and India with the new Ultra Long Range aircraft B777-200LR.
11. HAJ OPERATIONS:-
The year 2006 saw Government undertaking two Haj Operations – while the second phase of Haj Operations 2006 was completed in end February, 2006, the operations for the first phase of Haj 2006-II commenced on 22nd November, 2006. The operation will be completed with the return of pilgrims in January-February, 2007. Around 1,10,000 pilgrims will be traveling to Jeddah/Madinah this year under the Government subsidy scheme as compared to 1,00,00 during the previous Haj. Air India, Indian Airlines and Saudi Arabian Airlines together are handling the Haj movement. As per the Memorandum of Understanding signed between the Saudi Arabian Airlines and Ministry of Civil Aviation, Saudi Arabian Airlines will be carrying 59,465 pilgrims and the remaining will be carried by Air India / Indian Airlines for which arrangements have been made. Air India has wet leased two Boeing 747-300 and one A-310-100 aircraft for direct operations to Saudi Arabia. Indian Airlines has dedicated two Aibus A-300 aircraft for direct operations to Saudi Arabia, mainly from Srinagar, besides sparing A320 capacity for hub and spoke operations within the country. There are 15 embarkation points from which the pilgrims are being uplifted viz, Ahmedabad, Bangalore, Chennai, Calicut, Delhi, Patna, Hyderabd, Jaipur, Kolkata, Lucknow, Mumbai, Nagpur, Srinagar, Guwahati and Aurangabad.
12. ACQUISITION OF NEW AIRCRAFT BY INDIAN AIRLINES LIMITEDThe Government had approved a proposal of acquisition of 43 aircraft, fitted with CFM engines, from Airbus Industries for Indian Airlines, comprising of 19 A-319, 4 A-320 and 20 A-321 Airbus at an estimated net project cost of Rs.9888 crores. An agreement was executed with Airbus Industrie and CFM International on 20.02.2006 in presence of Hon’ble Prime Minister and H.E. the President of France. These aircraft are scheduled to be delivered over October, 2006 to March,2010. The first A-319 was delivered on 19.10.2006 and the remaining aircraft would be delivered at the rate of one aircraft per month from June,2007 to June,2009 (except September,2007). The aircraft delivery during the period of July,2009 to March,2010 would take place at the rate of two aircraft per month. On induction of new aircraft, the entire fleet of A-300 and B-737-200 would be replaced in a phased manner.
13. NEWINTERNATIONAL/DOMESTIC CONNECTIONS BY IAL:-
IAL has started a number of new international and domestic services during the last one year:-
(A) International Services:
| Sector | Frequency/ week | Aircraft | With Effect From |
| Pune-Singapore | 2 | A-320 | 13.12.2005 |
| Mumbai-Dubai | 7 | A-320 | 26.03.2006 |
| Nagpur-Bangkok | 2 | A-320 | 15.04.2006 |
| Trivandrum-Kuwait | 1 | A-320 | 01.06.2006 |
| Sharjah-Kuwait | 1 | A-320 | 01.06.2006 |
| Varanasi-Kathmandu (Reintroduced) | 7 | A-320 | 15.09.2006 |
| Bangalore-Male | 5 | A-320 | 02.11.2006 |
(B) Domestic Services
| Sector | Frequency/ week | Aircraft | With Effect From |
| Pune-Hyderabad | 4 | A-320 | 13.12.2005 |
| Delhi-Khajuraho-Varanasi | 7 | A-320 | 15.09.2006 |
| Delhi-Tirupati | 7 | A-320 | 29.10.2006 |
| Bangalore-Bhubaneshwar | 2 | A-320 | 29.10.2006 |
14. RESTRUCTURING OF DELHI AND MUMBAI AIRPORTS:-
In a landmark decision, the Government on 01.02.2006 finalised the restructuring and modernization of the two International airports at Delhi and Mumbai through public-private partnership in the joint-venture mode. In the Joint Venture, Airports Authority of India (AAI) holds 26% equity and the remaining 74% is held by the strategic partner i.e. GMR consortium for Delhi airport and GVK consortium for Mumbai airport. The Foreign Direct Investment (FDI) in this transaction has been capped at 49%. It has been estimated on preliminary basis that the capital investment to the extent of Rs.7961 crores and Rs.6131 crores will be required for Delhi and Mumbai airports, respectively over a period of 20 years, in 4 stages of 5 years each. The two international airports have been handed over to the Joint Venture Companies, namely, Delhi International Airport Private Limited and Mumbai International Airport Private Limited respectively on 3 May, 2006. The Joint Venture companies have taken over the complete operational control on 3rd November, 2006. The two companies have submitted their Master Plans for development of airports. A new runway for operations upto A-380 type of aircraft and a new international terminal building will be constructed at Delhi airport by the year 2008 and 2010, respectively. The Delhi airport will become capable to handle 37 million passengers per annum by the year 2010. Special care is being taken to ensure readiness of the Delhi airport in preparation for the Commonwealth Games, 2010.
15. MODERNISATION OF CHENNAI AND KOLKATA AIRPORTS:-
The Government is now examining the upgradation and modernization of Cehnnai and Kolkata airports on priority basis.
Prime Minister has 'in-principle' approved the proposal to initiate the process of modernization of Chennai Airport through Joint Venture route. On the advice of Prime Minister, all stake-holders are being consulted to forge consensus on modalities to be adopted.
Airports Authority of India has planned following works for modernization and development of Kolkata airport.
(i) Development of Phase I International Terminal Building (Departure) at an estimated cost of Rs.225 crores.
(ii) Construction of additional parking bays & GSE area at an
(This is an archive of the press release and has not been edited by our staff.)