Government readies policy blueprint with range of proposals for liberalising industry

India's aviation market is transforming rapidly, with at least four new carriers aiming to launch this year, and the government is introducing reforms.

"A national civil aviation policy is in the final stages of drafting and will be launched in the next two months or so," the Indian secretary for civil aviation Ajay Prasad last week told delegates at a Singapore conference, organised by the Sydney-based Centre for Asia Pacific Aviation.

Proposals under consideration include establishing an airport regulator to set price caps on aeronautical charges and monitor service standards; starting an "essential air services fund to support uneconomic but essential air services and airports"; and "rationalisation of the tax structure on ATF [aviation turbine fuel] and providing greater choice to airlines in sourcing ATF", says Prasad. He adds that the government is also moving towards greater liberalisation of international air services.

India's two largest private carriers - Jet Airways and Air Sahara - are preparing to expand further internationally. Jet Airways chief executive Wolfgang Prock-Schauer says services to Singapore are due to start as early as April and the airline also wants to serve Bangkok and Kuala Lumpur this year.

Jet Airways has firmed up agreements for 10 leased and seven purchased 737s, which will be delivered from now to the beginning of 2007. Jet and Air Sahara are each negotiating for an undisclosed number of widebody aircraft.

These two carriers will also face increased competition domestically from entrants such as Kingfisher Airlines, Indus Airways, Royal Airways and a yet-to-be named carrier owned by Indian conglomerate Wadia Group. Kingfisher is likely to be the first to start, as it has set a 7 May launch date.

Meanwhile, Prasad says state-owned Air India and Indian Airlines are being encouraged to undergo "organisational, managerial and financial restructuring", with the two carriers to issue initial public offerings "possibly" in 2006.

The move comes as the government prepares to spend billions on aircraft. Air India has too few aircraft, which has meant it has failed to use more than 30% of its international traffic rights, whereas foreign carriers use around 65% of their rights, says Prasad.

India's government is aiming to grant Air India permission in June to purchase 50 medium- and long-range aircraft, says Prasad, adding that the carrier has also "firmed up" plans to purchase 18 Boeing 737-800s for its new low-cost arm Air India Express. This division will launch on 27 March, initially operating a fleet of leased aircraft.

Indian Airlines' long-running plan to acquire 53 Airbus A320 family aircraft is likely to gain government approval in March, says Prasad, who adds that the acquisition of nine widebodies, as well as regional jets and ATR turboprops, is also planned.


Source: Flight International