Mr Sinha, what is the government’s plan for the growth of the aviation sector?
We already have a blueprint of what is likely to be the future. In the foreseeable future, what will the aviation sector look like? Even the prime minister is talking about it. From 500 planes in the sky to some 2,000 planes in the sky; we are going from 200 million passenger trips to a billion passenger trips. And we are going to grow from 200 helicopters to 400 helicopters.
We are going to grow from 75 airports to 200 airports. From auto rickshaws to air rickshaws. This where things are headed as far as aviation is concerned. So it is a massive growth industry that is going to grow and grow and connect up India and transform India. In my own life, there is the example of Hazaribagh, where I hail from. It was impossibly remote from Delhi. If you took a Rajdhani, it would take 14 to 16 hours. Today, I can do a day trip. I take an 8.40 a.m. flight, I reach Ranchi at 10.30 am and by 12.30 p.m. I am in Hazaribagh. And from 12.30 to 6.00 p.m. I work in Hazaribagh and you can take the 8.30 p.m. flight back and you are back in Delhi by 10.30 p.m. This was inconceivable even a couple of years ago. Of course, it also includes a very high quality highway that got built—NH 33— which allows you to do the 125 km in two hours. But that is what connectivity is doing to India.
Similarly, there was no flight between Delhi and Bikaner. We introduced the Delhi-Bikaner flight through UDAN [Ude Desh Ka Aam Nagrik-Regional Connectivity Scheme] and under UDAN II, we are getting a Bikaner-Jaipur flight too. But the flight from Delhi to Bikaner has completely transformed Bikaner and people are flying to and fro from Bikaner every day. People are willing to live in Bikaner because they know that they can be in Delhi in one hop. People are even willing to set up factories in Bikaner.
It can also stop the migration from the rural to the urban areas. Hawai chappal se hawai jahaz mein [This line] became so popular that it was also used in the finance minister’s Budget speech. Because it is the zeitgeist. Because it is saying that it is not just the middle class. It is not that just because you are working in ONGC or the Indian Railways or that you were in the IAS that you can afford to fly in an airline. That was already happening, but today even the security guard… and the kid who is studying in Bhopal should be able to travel by air. The aspirational new middle class—the people who used to drive motorcycles—are now going to travel in airlines. That is what aviation is doing right now.
So how is the allied infrastructure coping up with this growth?
Yes, we are looking at all these starting from increasing the capacity of the airports. You see, the finance minister launched Nav Nirman in the Budget speech—it is the next generation airports for Bharat. Nav also means akash or the sky. We are working towards quintupling capacity. We are planning for a billion trips in the country. Previously, the way people thought about airport capacity was in a three- to five-year time frame. We have changed that and made it into a 15- to 20-year time frame. In Patna airport, it has increased from 1 million trips to 4 million trips in the past three years. So we are saying, let’s plan for 20 million to 25 million passenger trips for Patna, because that is the inherent potential for Patna. Patna is an aviation location and it is serving 80 to 90 million people and there is a potential for 20 to 25 million trips.
Jaipur has a potential for 20-25 million trips because Rajasthan has a population of 8 crore people. You have to take care of the underlying demand and prepare for it, otherwise you will always be playing catch-up. And if you are playing catch-up then you will be imposing a high congestion cost in the economy. Look at Mumbai, which is causing high congestion cost on all of us at this time. Navi Mumbai, which should have been there 10 to 20 years ago has finally been given the go-ahead because of us. We are now playing catch-up with Navi Mumbai. We don’t want to play catch-up but want to stay ahead of the curve. When we get ahead of the curve, three good things happen. There is no congestion cost so you can expand quickly. Two, you can do it at a lower cost. Land is becoming more expensive, construction costs are going up so it is much cheaper to do it now. It will boost the economy now and that will have a compounding effect on the future. So the faster you do it, the better off you are.
That is why we have switched gears completely and moved to a completely different mode where we are saying, let us not think of only three to five years of growth but the next 15 to 20 years and build the airports now. We are building an airport at Jewar, in western UP, which has an incredible catchment area like Noida-Greater Noida and the National Capital Region. Then you have Muzaffarnagar, Meerut, and Agra and you have all of western UP. And all that is going to feed into Jewar and Jewar could itself have 40 to 50 million trips a year. Those are the ways that we are thinking about it.
But how do you propose to finance all this?
Experts have said that if we go out and build airport capacity for a billion trips it will cost us Rs 4 lakh crore. And the vast majority of the money will have to come from the private sector. See, the greenfield projects are now largely being done by the private sector like Navi Mumbai and Mopa, in Goa. All these are going to come largely from the private sector. As a part of Nav Nirman, we are looking at both revising the regulations for existing airports as well as for new greenfield airports. And we are also seeing what we can do for the Airports Authority of India so that AAI can finance growth quickly, like leverage its balance sheet, raise debt and so on, like recycling some assets. We are bidding out Ahmedabad and Jaipur right now. So, what are the various ways and means that AAI can accelerate its fund raising capacity.
Similarly, we are looking at safety—we are working on revamping and streamlining and completely automating DGCA processes. We are looking at the security angle and we have a lot of things going on from the point of security. So each element of delivery is being thought about and each chain in the aviation sector being readied for a billion trips a year. And it is 4x to 5x from where we are right now. We have completely changed the way we are looking at and preparing for the future. And that’s because it is going to be an irreversible trend.
If you look at the growth in passenger traffic in the past 20 years, it has been 12% a year (CAGR). So forget about the 15% to 20% that we had been experiencing currently, but even if we take a 12% growth a year for the next 20 years, we will grow by 5x. And again if we look at China and the U.S., which are similar continental-sized economies, look at where they are. Today we are at 200 million passengers trips, China is close to 600 million passengers trips and the U.S. is close to 900 million trips. And they are continuing to grow. China is growing at 8% to 9% in volume terms every year, despite having the world’s largest high-speed rail network.
And aviation is a very cost-effective means of travel. I have quoted this number many times; it is cheaper than the auto rickshaw where you are paying Rs 8 to Rs 10 per kilometre and even if two people are travelling, you are paying Rs 4 to Rs 5 per km. In the flight it is about a 1,000km but in terms of cost per km per passenger it is very, very cost effective like Rs 3 to Rs 4 per km.
And it is only going to get cheaper in the future because we are seeing a tremendous improvement in technology, we are seeing electric planes beginning to happen. And those electric planes will have far less moving parts and hence much less friction and the cost of maintenance will come down dramatically. So the cost of air travel will go lower and lower. Then again, passenger drones will be new things where we can really move from auto rickshaws to air rickshaws.
How much of all these costs will be borne by the private sector?
It is very difficult to say how much will come from the private sector and how much will come from the government. As you can see, a lot of it is coming from the private sector already. Again, most greenfield airports are virtually in private sector hands now because we are bidding them out; whosoever is the best bidder, including AAI, is able to win an airport and can build and operate it. It has already happened in Navi Mumbai, where GVK has won the contract and it has happened in Mopa in Goa. So these new greenfield projects are being won by private operators and then they are being operated at world class levels. We are seeing that with the major airports.
How do you see AAI’s role evolving?
AAI’s role is going to evolve, in the sense that it is going to become much more aggressive in bidding, building up capacity, and leveraging its balance sheet. It will also have to build different kinds of airports, water ports, and helipads. Another area where AAI is becoming more and more skilled is around urban planning around the airports. AAI has been given the go-ahead to use some of the excess land and have hotels and commercial complexes around airports. That feeds into the urban fabric of the city as well. So it is having to work much more closely with the civic authorities or city to ensure that the facilities that are available there are useful for passengers. And it is also working on multi-modal connectivity, partnering with urban development authorities. Its role is becoming far more multidimensional than it used to be. Because an airport is a very important urban growth driver as well. You can ask whether it is the airport that is driving Gurugram or the other way around .
How does the coming of drones and seaplanes change the role of the aviation ministry and that of AAI?
There are many dimensions to that. One, of course, is that we are putting up drone regulations; the legal framework that will help the drones to operate. The second aspect is around aerospace research, so that we can understand what the future is like, putting in place the regulations and the technology, the software and all that so that we can handle the issues. There is a third dimension around manufacturing. With the evolution of these new technologies and new industries, India should be at the forefront of it and that should be done domestically. Then there is an element of air traffic management. That has to be managed as we start getting different flying equipment operating in India, whether it is the helicopters, the sea planes, the drones, the jets etc. All of these will be in the skies, so how do we manage so many different flying objects? The plan is to ensure safe and seamless traffic management. So that is where the government’s and AAI’s roles come in.
When do you see these new means of transport coming in?
First, we have to ensure that the drone regulations are out in a way that it encourages alternative types of transportations. The industry has to evolve. On seaplanes, we are working very hard to put in place a legal framework for operation of seaplanes. And that can happen very quickly, within a few months. And then certainly helicopters which we are encouraging in a very big way through UDAN II. Many states like Arunachal Pradesh, Uttarakhand, Himachal Pradesh, etc. have got many routes that have been cleared under UDAN II. In UDAN II, it is Rs 120 crore per helicopter—the subsidies are over Rs 100 crore. That will provide a big boost to helicopter shuttle services as well, particularly in the hilly areas where you are travelling 50 to 100 km, which would take you eight to 10 hours. It will massively open up those areas
Who will be building all the helicopters etc?
We are working on that and we are talking to the major manufacturers, Boeing, Airbus and all the component manufacturers to ensure that we do as much of manufacturing and development in India as we can. At the same point in its evolution, China was very far in terms of aircraft manufacturing. So that is another area we have to play catch-up.
How are you keeping pace with the changing technologies in the aviation sector?
Of course, we have established the National Aviation University, which is doing research. We have IITs which have aerospace and aeronautical engineering departments. But we want to encourage and naturally build up more aerospace centres of excellence. So that is something that we definitely want to do but as I said this is a massive industry and don’t forget we have tremendous demand from the defence side as well. So we need hundreds of warplanes along with thousands more on the commercial side. India should become a very large aerospace manufacturer as well as in doing R&D. We are trying very hard to push this industry