Rediff On The Net Business Commentary: Mahesh Nair on why the aviation policy is not taking off


	HOME \| BUSINESS \| COMMENTARY \| MAHESH NAIR

August 7, 1997

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Why is the aviation policy not taking off?

In the plush building of Rajiv Bhavan in New Delhi, which houses the headquarters of India's civil aviation ministry, Financial Advisor P K Brahma enjoys a beautiful panoramic view. Right in front of his glass window is the lush green Safdarjung airport. Occasionally, you can watch a glider plane drifting into view.

The Safdarjung airport looks attractive, but there is very little action. Once upon a time, it used to buzz with activity. Today except for the amateurish flights of the Delhi Flyers Club, no commercial activity takes place here. The view that Brahma's room has is symbolic of the state of India's civil aviation industry.

In fact, there is more action inside Rajiv Bhavan than outside. Commissioned a couple of months ago by the civil aviation ministry, Brahma is now preparing a dossier on why private airline ventures in India -- Modiluft, East West Airlines, and NEPC Airlines -- have crashlanded. A month ago, he sent a detailed questionnaire to these three airlines seeking information on their equity structure, flight operations, technical knowhow, etc. The airlines were supposed to send in their replies by the last week of July. But till date no information has come in. Not even a phone call

Brahma is nonplussed, angry and helpless. He is wondering why no shareholder of these airline companies has taken them to court for mismanagement. If only someone did, then the all the muck would hit the ceiling, and everyone could see how private airlines had messed up their own lives! Instead, much to Brahma and his colleague's ire, everyone is more interested in the fate of Rs 28 billion Tata-SIA project -- a proposal which was submitted to the industry ministry and not, as is customary, to the civil aviation ministry.

It is this line of thinking that is flying across the power corridors of Rajiv Bhavan:

private airlines themselves, and not government policy, are the culprits responsible for their failure. (proof: How has Jet Airways managed to survive?);

The reason Indian Airlines incurred losses was because it had to fly on uneconomical routes (like the North-East sector) whereas the unfettered private chaps made moolah from the passenger-loaded trunk routes;

Why did the Tata-SIA chaps not put in their application in 1992, like Jet Airways did, which would have allowed their foreign partner to have a 40 per cent equity stake?

Which country in the world (forget the EU which is a single market) allows foreign airlines equity in domestic airlines?

And why can't the Tatas run an airline with the help of foreign institutional investors and other foreign non-airline companies which is allowed under the existing aviation policy?

A month ago, I met Sujit Gupta, resident director, New Delhi, of Tata Industries. Gupta is a veteran in the capital and has been lobbying for the group's interests in almost all new ventures -- be it a airlines, the small car project, oil exploration, or telecom. When I asked him how the Tatas were planning to counter the policy being drafted in Rajiv Bhavan, he cynically remarked, "What policy? At first they said 40 per cent of foreign equity from foreign airlines was okay in domestic ventures, but when we came in, they slashed it to 26 per cent, and then later upped it back to 40 per cent, but this time without allowing foreign airlines! The Karnataka government invited us to build an international airport on the Build-Operate-Own system and then after we had signed on the dotted line, the Centre stepped in to say that the venture could be only allowed if we went ahead with a Build-Operate-Transfer method. How can you play a game when the rules are changed half way through?"

The reason why the mandarins at Rajiv Bhavan have not flown out with a concrete new aviation commandment is because of the foggy conditions. They have been often receiving conflicting signals from their political masters.

Their favourite is Civil Aviation Minister Chand Mahal Ibrahim, who gustily took on the Tatas and the liberals. They also love Ibrahim because of his blatant political favouritism -- he recently told a colleague of mine that the government considered Air-India's role to be that of an employment-generating company!

But Ibrahim does not cut ice with Prime Minister I K Gujral. Enter Minister of State for Civil Aviation Jayanti Natarajan. She has indicated that she would like a transparent new aviation policy and is not averse to foreign participation (her party, the Tamil Manila Congress, in fact, wants it).

In the meantime, Ibrahim's mentor former prime minister H D Deve Gowda, who is not favourably disposed towards Gujral, has started flexing his muscles now that his political adversary Laloo Prasad Yadav is in jail...

What has all this got to do with the civil aviation policy, you ask? Plenty. With no clear directions flowing from their political masters, the babus at Rajiv Bhavan are a confused lot. So committees are formed and reports written, but there is no conclusion. All they can do is to sit like Eleanor Rigby, waiting at the window, wearing the face that they keep in a jar by the door... and watch the glider planes go by over the abandoned fields of Safdarjung airport.

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