The Economic Survey 2011-12 appeared to be favourably inclined to
grant permission to foreign airlines to invest in domestic airlines.
"The FDI policy currently does not permit foreign airlines'
investments that denies them access to potential sources of capital and
expertise," said the Survey.
HAILS ATF IMPORT
The Survey lauded the government's decision to allow airlines to
import aviation turbine fuel (ATF) directly, as "it will improve operational
economies."
However, it said that in the long run, "airlines will need to improve
their internal accruals, access to domestic and international capital, and their
overall operations to remain vibrant and viable. Air carriers have been affected
by high ATF prices because of high incidence of taxes. The recent decision to
allow them import of ATF will hopefully improve their operational
economies."
MAJOR CHALLENGES
Listing the major challenges for the sector, which is facing
turbulent times, the Survey said airlines were bogged down by high and growing
debt burden.
"The airline industry in India suffers from huge debt burden - close
to $20 billion (estimated for 2011-12). Half of this debt is aircraft related
and the rest is for working capital loans payments to airport operators and fuel
expenses."
Even though air traffic was growing, averaging 18.5 per cent in the
last seven years, the financial performance of airlines had not kept in sync,
and it necessitated more injection of money into the sector, it noted.
CONTINUOUS INVESTMENT
"High growth rates for the past few years in aviation, particularly
in the passenger segment, are not getting reflected in the financial health of
the carriers. To manage the next growth phase safely and efficiently,
significant and continuous investment will be required," it said.
The domestic passenger traffic handled at Indian airports grew by
19.4 per cent during January-November, 2011 touching 108.1 million. Further,
international passenger traffic and at Indian airports grew by 7.7 per cent
during January-November 2011.
GREEN-FIELD AIRPORTS
It said the government gave "in-principle" approval for setting up
green-field airports at Karaikal in Puducherry and Shirdi in Maharashtra. The
upgrading of the Kolkata and Chennai airports, including construction of new
terminals, were at advanced stages of completion.
"In another 18 non-metro airports, various upgrading works like
expansion of terminal buildings, aprons, taxiways, and aerobridges have been
taken up. For improving air navigation services, the Airports Authority of India
has installed the new ATS automation system at Chennai," the Survey pointed
out.
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