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Civil aviation sunrise sector, to benefit from Air India privatisation: Economic Survey

LiveMint logoLiveMint 11-08-2017 Tarun Shukla

New Delhi: Civil aviation in India is a potential sunrise sector for growth and divestment in Air India Ltd will help the sector expand further, said the second volume of the Economic Survey 2016-17, tabled in Parliament on Friday.

“The civil aviation is a potential sector in the country which can be a sunrise sector of growth. Our country has favourable conditions which are highly conducive for the sector’s growth, i.e. favourable demographics, a rising middle class population, high disposable incomes, and faster economic growth,” the survey said.

Domestic air traffic in India has been growing at about 20% annually and international traffic at 10%.

Indian aviation provides direct employment to 220,000 people besides lakhs of indirect jobs. This figure will double by 2026-27, according to aviation consulting firm Centre for Asia Pacific Aviation (CAPA).

The Economic Survey noted that while domestic growth was commendable, the share of Indian airlines in international traffic was low compared with some other countries.

Despite a strong home market for air travel, Indian (domestic) airlines have not captured the Indian market for international travel unlike many other countries, the survey said.

In terms of passenger load, India’s airlines carried only 36.6% of the international traffic to and from India in 2015 compared with 60.6% for Netherlands, 49.1% for China and 48.9% for the UK.

The survey said there was a large increase in international flying rights that airlines from the Gulf and Southeast Asian countries used to their advantage by taking passengers to other countries via their own hubs.

There is also a paucity of wide-body planes in India, the survey said. With the exception of Jet Airways and Air India, which have 22 and 44 wide bodied aircraft respectively in their fleets, all other Indian carriers have a narrow bodied fleet, it added.

The survey also said that the government needs to continue moving on the path of privatisation for Air India.

“There is a need for committed action plan on privatization/ disinvestment of the national carrier Air India to enhance its operational and management efficiency because it is a major carrier of international traffic to and from India, accounting for 11.4% of the total international travel. The recent announcement of the government towards privatization of Air India is a well thought out decision,” it added.

The survey also asked the government to consider identifying major cities as aviation hubs because India is as advantageously placed in terms of geographic location as Dubai or Singapore.

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