New Delhi: One of the sectors to have been hit the hardest by the COVID-19 pandemic was the aviation sector. Both airport operators and airlines took a severe hit as air travel was suspended for two whole months between March 25 and May 24. However, despite the shock, Arvind Singh, Chairman of Airports Authority of India (AAI), sounded an optimistic note when he said that India is on track to becoming the world's third-largest aviation market by 2030. In an interview with PSU Watch, Singh shared his opinion on the need for self-reliance in the aviation sector and the future of AAI as the Centre seeks to open airport operations to private players. Here are excerpts:
How has the COVID-19 pandemic and the subsequent lockdown impacted the aviation sector? And how has the recovery been so far?
Until March, there was growth in the sector. Then a nationwide lockdown was put in place to curb the spread of the COVID-19 pandemic. We opened domestic aviation only on May 25. Initially, passenger traffic was extremely low. Only about 25,000 people were travelling a day. But slowly it has increased to 1.5 lakh a day. So that's an increase of six times over the previous figure.
Initially, there was some fear among passengers about the spread of the disease, but contact-less operations and usage of PPE at airports and on planes has inspired confidence. We hope that domestic travel will become normal. And we would like that to happen soon because all airport operators have suffered in the first quarter. The revenues have gone down because of the shutdown. And AAI, which has always been a profitable organisation, is staring at a loss. So, we want travel to be restored.
What does the call for Aatmanirbhar Bharat mean for AAI?
The procurement of high-technology equipment and materials for airport construction are two areas where replacement can be done by Indian manufacturers. We have entered into a memorandum of understanding (MoU) with Bharat Electronics Limited (BEL), under which we will work with BEL to get some essential communication and navigation equipment manufactured in India.
Further, span steel, which is required for airport construction, comes from China. So, we have made an appeal to the government that we want the domestic industry to produce this kind of quality steel because airport expansion is going to happen in the time to come. And this is an area where self-reliance will allow us to substitute imports.
Keeping in view the COVID crisis, are we still on track to becoming the world's third-largest aviation market?
We are on track. As of today, we handle around 335 million passengers a year. And by 2030, it would go up to 900 million. Because of the Coronavirus pandemic, there will be a hitch for one or two years. But I still see potential because firstly, we have a large market, and secondly, the penetration of air travel is still very low. So, with more and more airports opening up and more destinations getting connected through the UDAN scheme, we will see low-cost carriers going to different parts of the country. And that will increase the number of air passengers.
With shrinking market share due to privatisation, what lies ahead for AAI?
AAI is a lead airport developer and a profit-making PSU. With privatisation, I think we would be at 30 percent of the market share in a few years, but we would be a leading entity in the sector.
Decisions to privatise airports have faced stiff opposition from employees at AAI.
In the case of AAI, privatisation of airports would only lead to more revenue for the company which can be channelised into building more infrastructures in the hinterland where the private sector wouldn't go. As far as AAI is concerned, employees know that their employment would not be hit. At most, they would have to relocate from airports that are being privatised to airports that are being built. And airport expansion is going to happen. We already operate about 137 airports at the moment. And the government's plan is to have both the public and the private sector open another 100 in the next five years.
Privatisation has fetched good economic returns. The privatisation of Delhi and Mumbai airports are cases in point. They have fetched good economic and commercial returns. Every year, we get around Rs 3,000 crore revenue from these airports.
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