That the civil aviation ministry has lifted the restrictions it placed on the overseas expansion of domestic private airlines is good news. Those restrictions, which were brought into force in March 2011 in order to protect state-owned Air India from competition, were misguided. Air India, which carries only a fifth of the country’s international passengers, was always unable to take full advantage of the bilateral routes that were reserved for it. Meanwhile, the domestic aviation sector has slipped into indebtedness and low growth, hampered both by artificially low domestic fares and controls on their expansion to more profitable routes. The removal of such controls is an important step in helping domestic airlines towards recovery.
A consequence of the government’s policy of favouring Air India, which is consistently less popular with passengers than alternative airlines, is that it has boosted travel on foreign carriers — which means flyers pass through offshore aviation centres rather than treating India’s main airports, such as those in New Delhi and Mumbai, as hubs. Thanks to this policy, Indian carriers have consistently been unable to match foreign airlines in terms of utilising the quota of seats made available under bilateral agreements. This inefficient state of affairs, created by government action, must not be allowed to continue. However, it is not just policy towards airlines that is responsible; it is also the management of India’s airports — particularly those like Indira Gandhi International Airport (IGIA) in Delhi, which aspire to be hubs for global traffic. Aviation turbine fuel is certainly expensive in most domestic jurisdictions. But, for airlines and passengers, the mismanagement of airports and consequent ballooning fees are no less problematic.
These errors in management have been highlighted in the disagreement over whether landing charges at IGIA should be increased. Delhi International Airport Limited, or DIAL, which operates IGIA, insists that it is unable to turn a profit, and has applied to the regulator for a 774 per cent increase in airport fees. DIAL is already charging an extra fee for airport development, imposing an additional burden on passengers for its cost and scale overruns. The airport in Hyderabad, too, has seen airlines pull out of operation because the operator has charged a high user development fee. The airport regulator reduced the proposed increase at IGIA to 280 per cent — but as dismayed airlines have pointed out, that still makes Delhi’s airport just about the most expensive in the world, even more than those in the famously high-priced cities in Japan. The response of GMR, the lead member of the consortium that manages IGIA, was to suggest that all costs be passed on to passengers. This is a phenomenally passenger-unfriendly way of managing an airport. Passengers have already expressed concerns that IGIA’s new terminal, although an improvement, is poorly designed. Now they are expected to pay higher fees for the privilege of using it. Unsurprisingly, passengers and airlines are turning away from India’s airports. Government policy should be to bring them back, and ensure that India’s metropolitan cities become hubs for air travel, not spokes.