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‘We don’t have enough planes to fly all domestic passengers': Jyotiraditya Scindia on govt's ambitious aviation plans

‘We don’t have enough planes to fly all domestic passengers': Jyotiraditya Scindia on govt's ambitious aviation plans

Jyotiraditya Scindia, Union Minister of Civil Aviation and Steel, reveals why there has been a surfeit of aviation orders from India, the government's plans for the sector, and the road to carbon neutrality

Jyotiraditya Scindia, Union Minister of Civil Aviation and Steel, reveals why there has been a surfeit of aviation orders from India, the government's plans for the sector, and the road to carbon neutrality Jyotiraditya Scindia, Union Minister of Civil Aviation and Steel, reveals why there has been a surfeit of aviation orders from India, the government's plans for the sector, and the road to carbon neutrality

He is among a handful of Cabinet Ministers to have been publicly praised by Prime Minister Narendra Modi for their achievements. As a minister handling the important portfolios of civil aviation and steel, 52-year-old Jyotiraditya Scindia has a clear mandate: to tap into the enormous potential of the two sectors to drive their growth. In an exclusive interview with Business Today’s Manish Pant, Scindia explains why there has been a surfeit of aviation orders from India, the government’s ambitious plans to turn the world’s fastest-growing aviation market into a global hub and make the sector carbon-neutral, and the extension of PLI 2.0 to the steel sector. Edited excerpts:

Q: Are you satisfied with the way India’s aviation sector has recovered after the Covid-19 pandemic?

A: The civil aviation sector in India is on a resurgent high. Where two years ago we had all our planes on the ground and not a single passenger, today we have all our planes in the air, and there is a sustained increase in [passenger] demand. We experienced a pre-Covid-19 high of roughly 420,000 passengers per day in October of 2019. Surprisingly, post the October-January high season, we are experiencing new highs with close to 455,000 passengers [per day] in February. And the important thing is that it’s not a blip. On a sustained basis, the average numbers have been between 390,000-440,000 every day.

Now, what does that mean? It means the demand for civil aviation within the country has reached a new high… It’s a sustainable demand and that growth is only going to escalate further in the months to come. Indian aviation, in the last nine years of our government, has completely transformed under the leadership of Prime Minister Narendra Modi. Prior to 2013-14, it was an industry that was dependent on international traffic. However, from 60 million domestic passengers it has grown to 144 million passengers in 2019-20. Our international passengers have gone up to 60 million [from 43 million in FY14]. And I see the 144 million plus 60 million, which is roughly 200 million [passengers], doubling over the next five years. That’s the kind of explosive growth that we are talking about.

Jyotiraditya Scindia, Union Minister of Civil Aviation and Steel

Q: How are you going about addressing the development of airports and other related infrastructure to match that growth?

A: In terms of the number of airports, we have gone from 74 airports in 2014—67 years after India’s independence—to building an additional 74 airports, heliports and water aerodromes in the past nine years, to double our capacity to 148 [airports]. I see that reaching about 200 to 220 airports over the next four years or so. In terms of the number of aircraft, we were roughly at about 400. That fleet size has almost doubled to 700 today. Air India has placed the largest order in civil aviation history of 470 planes, including 250 with Airbus and 220 with Boeing, amounting to [an] almost $70 billion order. In addition, all other airlines from IndiGo to SpiceJet to Akasa [Air] to even regional airlines are ordering planes. The shoe is now on the other foot: Whereas we didn’t have passengers to fly in planes, today, within India, we don’t have enough planes to fly the number of passengers that we need [to]. Therefore, what we have done from a regulatory standpoint is to make the policy for leased aircraft far more flexible. From three plus three months earlier it’s now become six plus six months so that we can get aircraft on dry or wet lease to bridge the gap between the current fleet size and the supply of new planes. As this growth has come about, there is also an urgency and effort to reiterate that the civil aviation ecosystem is not just about airplanes and airports; it goes way beyond that. The ecosystem covers ground handling, cargo, flying training organisations (FTOs), regional aircraft and helicopters. The government is trying to supplant the civil aviation ecosystem to also cover manufacturing. Along with the efforts that we’re doing on each one of these fronts, we have drastically redone both the maintenance, repair and overhaul (MRO) and FTO policies as well as brought about a new helicopter policy. We have done away with all the charges and royalties, and brought down land rentals or pretty much abolished them to provide a new growth avenue for those segments. At the same time, with regard to FTOs, we have got 35 FTOs in 52 locations. The latest tender will result in 15 FTOs coming on stream in the next 12-18 months, which will take our FTO capacity to 50. And, therefore, the foreign exchange outgo, which is about Rs 500 crore, will be saved as pilots get trained here.

Q: But what about your capex plans?

A: We have very aggressive capex plans worth Rs 98,000 crore for the next three to four years. We also have close to about Rs 20,000 crore worth of capex for 42 brownfield airports of the Airports Authority of India (AAI). Plus, another Rs 35,000 crore worth of capex for the seven brownfield airports in the private sector. As far as greenfield development is concerned, there are three AAI airports, where we’re looking at an additional Rs 3,000-3,500 crore worth of capex. One of these airports at Donyi Polo in Itanagar in Arunachal Pradesh was completed recently at a cost of Rs 646 crore. The other two are Dholera (Rs 1,305 crore) and Hirasar (Rs 1,405 crore) in Gujarat. An amount of more than Rs 35,000 crore is set aside in the private sector for greenfield airports in Noida, Bhogapuram, Navi Mumbai and Mopa [inaugurated in December].

Jyotiraditya Scindia, Union Minister of Civil Aviation and Steel

Q: What’s the progress on the government’s plans to turn the country into a global aviation hub?

A: It’s very important to look at setting up a hub within India to serve India. Today, unfortunately, our international hubs are not in India. Our international hubs are either located in countries close to our borders in the East or in the West. Our effort, therefore, is that as airlines increase their fleet size, the civil aviation ecosystem gets supplanted. To develop an international hub within India, we are starting with the Delhi airport, where we are in conversation with Delhi International Airport Ltd (DIAL), as well as Air India and IndiGo, to look at key learnings internationally and flatten out the vicissitudes of arrivals and departures, to smoothen out that curve to provide a greater level of connectivity between their domestic and international flights. We are simultaneously working on minimising the connecting time between two flights at airport terminals to offer greater flexibility. The concerned parties are in the process of engaging a consultant and then the process will move forward. Clearly, we do want to establish that international hub within India. And more so now that Air India is getting many wide-bodied aircraft. Starting this year, IndiGo has also started its foray into several new international sectors. This is something that I have been requesting all our airlines to do for the last year and a half. We must venture into the international markets; we must eventually move into the long-haul markets, and we must be able to provide point-to-point travel for our domestic fliers internationally to ensure that we attract them to our carriers as opposed to them going via hubs lying outside the country’s western or eastern coasts.

Q: Your ministry has also reiterated that the country won’t be enhancing bilateral flying rights to foreign carriers. Emirates President Tim Clarke has gone so far as to say this was “a pity”. What’s your perspective?

A: I wouldn’t want to say that we have declined any offers. But I will say that this issue is under our constant watch. As dictated by the terms of bilateral agreements, when our carriers reach 80 per cent capacity and seats start getting exhausted, we shall certainly look into it. But at this point in time, we are both looking at issues domestically as well as making sure that there’s enough connectivity available in international sectors.

Q: Last year you told BT that passengers carried by airlines will exceed those carried by the Indian Railways in its air-conditioned compartments. However, won’t the launch of semi-high-speed and high-speed trains have an impact on that projection?

A: Firstly, the number of passengers travelling by our competition, which is air-conditioned first and second AC compartments of the Indian Railways, is about 185 million per year. The aviation sector carries about 144 million people. The CAGR of the railways is roughly 5.6 per cent, while the CAGR of aviation is about 10.2 per cent. Therefore, our projection is that in the next five years, we should hopefully be able to catch up with that segment of the Indian Railways. As our ability to transport more people with the growth in aircraft fleet increases, we will be offering last-mile connectivity to the hinterland. Many new airports have been built in locations that one would have never thought of. Connectivity from those airports is providing a feeder market from Tier III cities to Tier II and I cities. This will also induce a lot of new demand going forward. Therefore, I see aviation, railways, highways and waterways complementing and not competing with each other. At the end of the day, the transportation and logistics market in India is going to grow by leaps and bounds.

Q: You have sought an audit of airport assets to reduce Indian aviation’s carbon footprint. What other key initiatives, including encouraging carriers to use sustainable aviation fuel (SAF), are in the works for the sector?

A: That’s something I have been pushing in earnest ever since taking over as the civil aviation minister. Allow me at the outset to state that aviation is naturally a very visible sector because the plane flies right above your head, as opposed to many other hard-to-abate sectors that are not visible to the naked eye. Having said that, we certainly are a contributor, but we are only 2 per cent of the world’s carbon emissions. It’s still important for us to be responsible and adaptable. As far as the airports segment is concerned, 11 airports in the private sector and close to 96 airports of AAI will be completely carbon-neutral by the second quarter of 2025. That’s the plan that we have in place and I’m personally monitoring it. Already, Delhi and Mumbai have received the Airport Council International’s [ACI, an organisation of airport authorities] level 4+ accreditation in the Asia Pacific and Middle East region, which is a gold standard in international aviation for carbon neutrality. Besides, two other airports have also received level 3+ accreditation. Thus, many of our airports have been early adopters. Along with that, there are three levels of creation of carbon emissions within an airport: Scope 1, Scope 2 and Scope 3. Scope 1 emission is directly by the airport; Scope 2 is indirectly by the airport in terms of the equipment it uses, and Scope 3 are circumstantial emissions that though external are in the airport environment. For example, emissions caused by the cab ferrying passengers to and from the airport. We are working across all three. Similarly, SAF’s efficacy as an aviation fuel has already been proven across the world. Within the country, we have put in place some thoughts in terms of what that mix should be and we’re looking at blending 1 per cent of SAF by 2025, 2 per cent by 2028 and 5 per cent by 2030 in regular aviation turbine fuel (ATF). If you take 5 per cent of SAF as a blend, in terms of current consumption you are looking at about 0.7 million tonnes of required capacity. India has the potential to produce 12 million tonnes. The problem certainly is not in terms of the usage of SAF in aircraft engines or the country’s capability to produce it. The problem globally and for India is about ensuring that SAF actually gets produced and the logistics of bringing it from the site of production to the bowser that goes to refill the aircraft. The Ministry of Petroleum and Natural Gas (MoPNG) and we have set up a committee that is looking into this. We are quite confident that MoPNG will draw up a road map based on what we have recommended for the production of SAF.

Q: Let’s talk about your other portfolio, steel. How confident are you of doubling steel production to 300 million tonnes from the present 155 million tonnes by 2030?

A: If you look at the trajectory that India has gone through in the past nine years, annual steel production has increased by 50 per cent from 80 million tonnes (MT) in 2013-14 to 121 MT in 2022-23. Additionally, per capita consumption of steel has gone up by almost 50 per cent to 77 kg per capita today. The bulk 60 per cent of steel demand comes from infrastructure, automobiles and FMCG. Under the ambitious expansion programme of the government, the budget for capex has grown by anywhere between 35-40 per cent to Rs 10 lakh crore from Rs 7 lakh crore, with a huge demand coming from automobiles and FMCG sectors. In the last year, steel consumption has grown by 12 per cent. Hopefully, in FY23, the sector would have registered a record production of 125 MT of steel. That’s an all-time high for India. On a CAGR basis, the steel sector has grown 6 per cent. Looking at the capex programmes of the private sector as well as our public sector enterprises, we are very confident of achieving our target of 300 MT production capability in another eight to nine years.

Q: Following the success of the government’s Rs 6,220-crore production-linked incentive (PLI) scheme for the manufacture of specialty steel, are you looking at expanding it in FY24?

A: We are very happy with the buoyancy and the bullishness that the PLI for steel has received. We had 27 companies come forward with 57 MoUs, close to Rs 30,000 crore worth of capex allocation, 25 MT of capacity addition and close to 60,000 jobs being created. That’s a great fillip for the specialty steel sector, in which most of the import demand would be coming in. We are now looking at the other areas where steel is either being imported or where a lot of value addition is required. Although we are still in the early days of the first PLI scheme, we are certainly thinking of PLI 2.0. However, that will only emerge after the completion of deep consultations with our integrated steel plants and the secondary steel industry. From there should emerge the amrit (nectar) of a very thorough, threadbare and granular assessment as to what should go into PLI 2.0. The process has just about started.


Published on: May 04, 2023, 12:02 PM IST
Posted by: Priya Raghuvanshi, May 04, 2023, 11:52 AM IST