Mumbai: The best thing that happened to the Indian Civil Aviation sector was that in the early nineties, private airlines were allowed to operate. Indian Airlines (IA) pulled up its socks and improved its
efficiency by leaps and bounds. This is what liberalisation and reforms do. The worst thing that happened to this sector is that nothing else happened ever since.

The Ministry of Civil Aviation, in its attempts at reforms, did come out with mission statements and strategic objectives, which till date remain only on paper. The previous minister for Civil Aviation, Shahnawaj Hussain was loathe to bringing about reforms in this sector as that would deprive him of his stranglehold over IA and Air India (AI) along with the loaves and fishes of office which he and his ilk enjoy. To illustrate, Mayawati, former Chief Minister of U.P had constructed a swank bathroom at the Lukhnow airport, complete with fancy fittings, jacuzzi and piped music to soothe her aching bones, flabby muscles and jangled nerves.

Mercifully, Hussain was replaced by Rajiv Pratap Rudi earlier this year. Rudi is a second - generation leader who appears to be a man in a hurry to set things right in this sector. He quickly constituted a committee headed by former Cabinet Secretar, Naresh Chandra, to prepare a road map for the aviation sector. The committee released the report last week and if the recommendations are implemented it will change the face of flying in India.

The committee's main thrust was to perceive civil aviation as an area of growth and not a play- thing for the elite. What it recognised was that flying was not about a Parmeshwar Godrej jetting over to Los Angeles to attend Richard Gere's stepson's graduation ceremony. It was about a Sivaramakrishnan from Coimbatore jetting over to Los Angeles to crack a computer server breakdown problem.

To make air travel more affordable, the committee has recommended that the taxes, excise as well as sales tax be brought down. Taxes on aviation turbine fuel make up 45 per cent of the fuel cost. Nowhere in the world are taxes on aviation turbine fuel as high. If the rate of taxes are brought down to international levels, the cost of air travel will come down by 25 per cent. Sounds too good to be true ! The catch is that Rudi has to convince the cash-strapped state Governments to cut sales tax. We know how the proposal to implement the uniform value added tax system was scuttled by these same state governments.

Another major recommendation of the committee is that foreign airlines be permitted to pick up a 49 per cent equity stake in the domestic and international scheduled air transport services. To ensure that underworld elements like Dawood Ibrahim don't invest in these airlines, the investments will have to be approved by Foreign Investment Promotion Board and not come in through the foreign direct investment route, as had happened earlier. That apart, the foreign investors will also bring in their experience, managerial and technical talent, which the Indian operators would gain from as domestic airlines will now be allowed to fly internationally.

Regarding privatisation of Indian Airlines and Air India and the likely transfer of their management to strategic private investors, the committee has recommended that the Government may consider placement of shares of the two airlines with domestic financial institutions and foreign institutional investors.

The committee has also recommended divesting the Government's stake in Pawan Hans Helicopter Ltd and, thereafter, go for an initial public offering (IPO).

There are 125 airports in the country out of which just about 10 are profitable. Not every airport can be run profitably, but most of them can. The committee wants the government to privatise these air ports. The committee has suggested that Mumbai and Delhi airports be privatised first which can then set standards for the future.

Airline operation in certain routes like the North East are financially non-viable propositions. However, while the Parmeshwar Godrejs need not have to jet over to the North East, the Svaramakrishnans need to. Hence, these routes also need to be serviced by the airlines.

To this end, the committee has called for the creation of an Essential Air Services Fund to provide Government subsidy support and to be supplemented by a sector specific cess of 5 per cent on the air fare along with the proceeds from the privatisation of airports. These funds will be available for aviation activities in non-viable areas like the North East.

After receiving the report, Mr Rudi told newspersons that the recommendations of the committee would help the Government in coming up with a new civil aviation policy. "We hope to have the policy ready before the Parliament by January.' he said.

Mr Rudi deserves our best wishes. Only, he needs to be a bit careful of the booby traps, land mines and quick sand that lie ahead.