Malaysia Airlines - Orient Aviation

AIR TRAFFIC MANAGEMENT
As dramatic traffic growth outstrips the state-run systems ...
India looks at private options
By Tom Ballantyne
Faced with the possibility
that bullish projections of
t raf f ic g row t h could be
underestimated, India has
asked overseas air navigation
service providers (ANSPs) to help it decide
whether to commercialise elements of its air
traffic control (ATC) operations or leave the
system in the government’s hands.
The plea came from Raghu Menon,
financial adviser to the Ministry of Civil
Aviation and one of the country’s most senior
civil servants, at a major air traffic control
conference in Cochi in Southern India.
He told the annual general meeting and
chief executives’ conference of the Civil Air
Navigation Services Organization (CANSO)
that, while long-term forecasts saw Indian
aviation growing at 8% annually to 2025
against a world average of 4.8%, “these
growth projections, impressive as they are,
may have to be all thrown out of the window
if India [is] to realise its true potential.”
Menon, who has worked in government
for 35 years and is a board member of the
state-owned Airports Authority of India
(AAI) which currently handles ATC
operations, was part of the team which
started the liberalization process.
“We went into liberalization mode some
time in 2002-03 and since then we have
been witnessing an unprecedented growth
in air traffic,” said Menon, who also sits on
the board of the newly merged Air India and
Indian.
“Today domestic passenger traffic
is seeing 40% growth and international
traffic is growing at around 15%. Air
transport services have moved away from
public monopolies and today there is fierce
competition in the skies.
“The reality is that with a country of 1.1
billion people, not even 2% to 3% travel by
air. With the Indian economy growing at 8%
and a middle class estimated at 300 million
people, even if 10% of India’s population use
aviation as their preferred means of transport
within the next 15 to 20 years, then all the
India is expecting a major increase in traffic,
putting a strain on airport infrastructure
current projections of growth would have to
be revised.”
Traffic increases provided tremendous
opportunities, but it had also exposed
infrastructure shortcomings, Menon said.
“Airport services, including air navigation
services, are fully stretched today. Upgrades
in technology and requirements of trained
personnel are inevitable. Conditions in
the air and on the ground are hitting both
‘Conditions in the air and on
the ground are hitting both
efficiency and costs’
Raghu Menon
Financial adviser, Ministry of Civil Aviation
efficiency and costs. These infrastructure
constraints, unless quickly addressed and
appropriately resolved, [could] become a
major impediment to growth,” he warned.
The investment required is huge. Working
on the assumption that for every US dollar
spent on aircraft purchases, 50 cents should
be earmarked for airport infrastructure,
some US$40 billion to $50 billion would be
needed by 2020 to match orders worth $82
billion, said Menon.
A committee was being set up to
formulate an air services master plan to cope
with the expansion. One area of debate was
whether to make air navigation a commercial
proposition or whether it should continue in
the public domain, he said.
“Does commercialization reduce costs
and does it tangibly enhance safety and
efficiency?” asked Menon. “The common
perception, whether right or wrong, is that
commercialization is a synonym for profit
and that everything is measured in terms of
the bottom line. What is profitable is good
and what is not is bad.
“In such a scenario there is a perception
that costs may actually rise steeply after
commercialization, particularly in a country
like India where a large number of airports
are unviable due to inadequate traffic. If this
happens the airlines would stop operating to
such airports owing to unviable ANS [air
navigation services] costs and many airports
might have to close down ... but we want to
enhance air connectivity, not limit it.”
Menon invited CANSO members to
advise the government on where to go next,
stressing that India would consider changes
carefully before implementing them.
“The point is that financial pressures
should not decide policies. It is also worth
considering that despite privatization the
delivery of ANS in a given air space still
remains a national monopoly owing to the
nature of the service,” he said.
“Of course there are many ancillary
services ... like communication that could be
commercialized, but air space management
is essentially a monopoly and will continue
to be so.”
JULY/AUGUST 2007 ORIENT AVIATION 29