Recovery visible in aviation sector, pushing for greater manufacturing in India: Jyotiraditya Scindia

Green shoots are visible in the aviation sector as average passenger traffic has neared pre-COVID levels, along with greater manufacturing and more direct long-haul flights, said India’s Civil Aviation and Steel Minister Jyotiraditya Scindia in an exclusive interview to Moneycontrol.

Speaking to Moneycontrol at his office here, Scindia said the aviation industry has received a boost with added infrastructure, pointing out that more regional and last-mile connecting flights have been started, especially linking the northeast region of the country.

The minister, who holds the additional charge of the steel ministry, said that efforts are on to activate advance landing grounds for passenger flights to make air travel a more accessible option.

In terms of traffic growth, the minister said that prior to the pandemic, in 2019-2020, the country had 144 million domestic and 60 million international travellers. “Last month, we had close to about 11.4 million travellers, which means we have come very close to the pre-COVID average, which was 12 million travellers a month,” he said.

“I'm very confident that in the years to come, this number will grow, very healthily, to a total number of close to 400 million travellers over the next three to four years in India. It is a sector that's experiencing tremendous growth opportunities.”

Infra boost

He noted that India had only 74 airports in 68 years of independence. “We have added 69 new airports in the last eight years, including water (for seaplanes), drones and heliports, which means that the civil aviation infrastructure has almost doubled in the last eight years in terms of what was created in the first 68 years of India's independence.”

“This doubling of infrastructure in terms of airports is not constrained only to cities like Delhi, Bangalore and Mumbai, which is what we hear of, but it is really in tier two and tier three cities.”

The minister added that the Centre is now concentrating on last-mile connectivity by activating advanced landing grounds. “So the spread is both wide as well as deep for civil aviation, and I see that trend continuing in the years to come.”

Jet fuel 

Alluding to another major pain point of state levy (value-added tax) on jet fuel, Scindia said, “The very fact that we had only 12 states that were in the bracket of 1-4 percent VAT was a major bottleneck.”

“Twenty-four states were in the bracket of 20-30 percent VAT on aviation turbine fuel (ATF). Therefore, within the ministry, we decided to attack the problem head-on, and we started writing and conversing with states on the plausibility of reducing the level of VAT on ATF, which will then be a new harbinger for greater connectivity into their states, as well as greater revenue from refuelling flowing into their states.”

As of now, the minister elaborated that 16 states out of the 24 that were in the higher bracket have moved to the lower bracket. “We now have a basket over 28 states and Union territories that are in the 1-4 percent bracket,” he said.

Scindia added that eight states are on the cusp of moving over to a lower VAT regime.

Long-haul connectivity thrust

Scindia, who had earlier urged airlines to acquire more wide-body aircraft to provide long-haul point-to-point flights, said carriers now have “a very robust” pipeline of these aircraft.

“Through international Udan (referring to the regional air connectivity scheme), we are trying to connect the Northeast with our neighbours in the days to come,” he said.

He added that the Centre is trying to create a hub airport within India. “The first exercise that we are trying to conduct is with the Delhi airport. We are trying to create a hub-and-spoke environment,” he said.

Enhanced safety ecosystem

The minister also said that safety aspects are being closely watched. Notably, even the problem of flight cancellations due to global supply chain bottlenecks is being monitored.

He said that over 400 additional posts in the Directorate General of Civil Aviation are being created apart from those in Airports Economic Regulatory Authority and Airports Authority of India to provide the sector a growth-oriented environment.

Manufacturing push

In addition, Scindia said that the Centre is pushing for greater manufacturing in the country as this brings a tremendous multiplier effect to the whole aviation ecosystem.

As a case in point, he referred to Airbus’ new manufacturing unit in Vadodara, Gujarat, which will be utilised to build the C295 transport aircraft.

“We are also looking at MRO (maintenance, repair and overhaul) investments in India, and (French aircraft engine manufacturer) Safran has come forward to set up an MRO facility of almost $150 million in India, seeing the huge growth in this market,” he said.

“The green shoots are very, very visible for the aviation sector.”