The aviation industry has grown steadily in recent years, yet it still faces numerous problems. Comment (150 words)
Approach
- Highlight the recent expansion of the aviation industry.
- Mention the different issues affecting the aviation industry.
- Finally, consider the necessity for aviation reform in the context of expanding economic growth.
Introduction
India’s civil aviation industry has emerged as one of the country’s fastest-growing industries. It has seen significant transformation since India’s aviation industry was liberalised. The Directorate General of Civil Aviation reports that India’s aviation passenger traffic has increased from 14 million in 2000-01 to 140 million in 2017. Despite this spectacular rise, airlines in India are still struggling to maintain operations due to a variety of structural challenges.
Body
Problems plaguing India’s aviation industry:
Policy paralysis: Governments have failed to develop a long-term vision for the airline industry. The airline business has been allowed to fend for itself, serving the affluent class in a few major cities.
High taxes: There are high taxes on aviation turbine fuel as well as maintenance, repair, and overhaul (MRO).
Rupee depreciation: Because airlines pay for services in dollars, rupee depreciation and exchange rate changes affect their profitability.
Price-sensitive market: India is a price-sensitive market, making it difficult for rival airlines to raise ticket rates.
The Udan scheme’s viability: UDAN has inspired a slew of new regional airlines to launch and existing operators to expand into regional flight. The Udan system is supported by a fee on metro riders. The money raised is then utilised to finance Udan routes. According to recent indicators, if all Udan routes bid on are flown, there will most certainly be a financing gap.
The government authorises 100 percent FDI in airlines but limits it to 49 percent if a foreign carrier wants to invest in an Indian company. Aviation is a capital-intensive industry, and FDI restrictions impede it from adopting new technology and best practises.
Route Dispersal Guidelines (RDG), which require airlines to fly a set percentage of their flights on smaller, less profitable air routes, push up costs and introduce inefficiencies.
Conclusion
As India sets itself to lead and dominate the world stage, its aviation sector must not be forgotten. Especially since this sector functions as a growth multiplier for economic output, jobs, and trade, all of which are enabled by improved connectivity. However, for this expansion to be sustainable, legislative interventions are required. The National Civil Aviation Policy, 2016, was a positive beginning in this regard, but the aviation sector need additional revisions in existing rules to solve the widespread difficulties.
