India to shortlist airports for next phase of privatisation plan

The central government is expected to offer 6-10 airports for the next stage of airport privatisation, a senior official said. The process  is expected to commence from FY22.

At present, the centre is in the process of identifying these airports which will be offered via competitive bidding to the private sector for a lease period of 50 years for operation, management and development of their infrastructure.

Briefing about the Budget 2021-22 proposals for the aviation sector, Civil Aviation Secretary Pradeep Kharola said that both profitable and non-profitable airports will be clubbed for bidding.

On Monday, Finance Minister Nirmala Sitharaman proposed to continue with the next round of airport privatisation on a lease basis.

She said that the next lot of airports will be monetised for operations and management concession.

At present, six airports, namely Lucknow, Jaipur, Ahmedabad, Guwahati, Thiruvananthapuram and Mangaluru, have been awarded via a competitive bidding process.

On the fare price band, Kharola said this norm will be removed, as and when demand and capacity utilisation reaches normal levels.

According to Kharola, till now only 60-65 per cent of the allowed capacity of 80 per cent has been utilised.

In the wake of the coronavirus outbreak, the centre had implemented a cap on domestic airfare.

The price band has been extended till March 31, 2021. These fare bands came into force with effect from May 21, 2020. It is based on the duration of a flight with seven route classification.

The base minimum airfare of domestic flights in each category ranges has also been fixed from Rs2,000 to Rs6,500 and the maximum ranges from Rs6,000 to Rs18,600.

Airlines have to make available 20 per cent (earlier 40 per cent) of total seats in an aircraft at less than the midpoint price between the highest and lowest fares.

The COVID-19 pandemic heavily dented India’s aviation sector with its domestic air passenger traffic plunging by 55.6 per cent in 2020 on a year-on-year basis.

As per the data furnished by the International Air Transport Association (IATA) on Wednesday, the fall in India’s domestic air passenger volume - measured in revenue passenger kilometres - was the third highest amongst major aviation markets such as Australia, Brazil, China, Japan, Russia and the US.

In the period under consideration, India’s domestic passenger traffic decline was preceded by that of Australia at 69.5 per cent and the US’s at 59.6 per cent.

The country’s domestic available passenger capacity — measured in available seat kilometres (ASKs) — fell by 48 per cent on a YoY basis.

India’s domestic air passenger volume plunged in March 2020 due to the imposition of a nationwide lockdown and the scare around the spread of COVID-19.

It was on May 25 that gradual re-opening of the domestic operations was allowed.

At present, no foreign flights are allowed, however, operations under ‘air bubble’, evacuation and cargo are going on.

In terms of global passenger traffic demand, the data showed a fall of 65.9 per cent in 2020 from 2019 levels.

“International passenger demand in 2020 was 75.6 per cent below 2019 levels. Capacity declined 68.1 per cent and load factor fell 19.2 percentage points to 62.8 per cent,” IATA said.

“Domestic demand in 2020 was down 48.8 per cent compared to 2019. Capacity contracted by 35.7 per cent and load factor dropped 17 percentage points to 66.6 per cent.”

As per the data, bookings for future travel made in January 2021 were down 70 per cent compared to a year-ago, putting further pressure on airline cash positions and potentially impacting the timing of the expected recovery.

IATA’s baseline forecast for 2021 is for a 50.4 per cent improvement on 2020 demand that would bring the industry to 50.6 per cent of 2019 levels.

“While this view remains unchanged, there is a severe downside risk if more severe travel restrictions in response to new variants persist.”

“Should such a scenario materialise, demand improvement could be limited to just 13 per cent over 2020 levels, leaving the industry at 38 per cent of 2019 levels.”

Meanwhile, Tata Boeing Aerospace would make vertical fin structures for the global aerospace major’s 737 family of aircraft, an official of the joint venture (JV) said on Friday in Bengaluru.

“A new production line has been set up at our Hyderabad facility to make vertical fin structures for Boeing-737 jets,” said the JV in a statement on the margins of the 13th biennial Aero India 2021 at Yelahanka air base on Bengaluru’s northern outskirts.