Civil Aviation Reforms

15 December 2003

Mumbai: The best thing that happened to the Indian Civil Aviation sector was that in the early nineties, private airlines were allowed to operate. Indian Airlines (IA) pulled up its socks and improved its
efficiency by leaps and bounds. This is what liberalisation and reforms do. The worst thing that happened to this sector is that nothing else happened ever since.

The Ministry of Civil Aviation, in its attempts at reforms, did come out with mission statements and strategic objectives, which till date remain only on paper. The previous minister for Civil Aviation, Shahnawaj Hussain was loathe to bringing about reforms in this sector as that would deprive him of his stranglehold over IA and Air India (AI) along with the loaves and fishes of office which he and his ilk enjoy. To illustrate, Mayawati, former Chief Minister of U.P had constructed a swank bathroom at the Lukhnow airport, complete with fancy fittings, jacuzzi and piped music to soothe her aching bones, flabby muscles and jangled nerves.

Mercifully, Hussain was replaced by Rajiv Pratap Rudi earlier this year. Rudi is a second - generation leader who appears to be a man in a hurry to set things right in this sector. He quickly constituted a committee headed by former Cabinet Secretar, Naresh Chandra, to prepare a road map for the aviation sector. The committee released the report last week and if the recommendations are implemented it will change the face of flying in India.

The committee's main thrust was to perceive civil aviation as an area of growth and not a play- thing for the elite. What it recognised was that flying was not about a Parmeshwar Godrej jetting over to Los Angeles to attend Richard Gere's stepson's graduation ceremony. It was about a Sivaramakrishnan from Coimbatore jetting over to Los Angeles to crack a computer server breakdown problem.

To make air travel more affordable, the committee has recommended that the taxes, excise as well as sales tax be brought down. Taxes on aviation turbine fuel make up 45 per cent of the fuel cost. Nowhere in the world are taxes on aviation turbine fuel as high. If the rate of taxes are brought down to international levels, the cost of air travel will come down by 25 per cent. Sounds too good to be true ! The catch is that Rudi has to convince the cash-strapped state Governments to cut sales tax. We know how the proposal to implement the uniform value added tax system was scuttled by these same state governments.