Committee on Estimates (2011-2012) Fourteenth Report
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14 MINISTRY OF CIVIL AVIATION DEVELOPMENT AND REGULATION OF CIVIL AVIATION COMMITTEE ON ESTIMATES (2011-2012) FOURTEENTH REPORT FIFTEENTH LOK SABHA LOK SABHA SECRETARIAT NEW DELHI FOURTEENTH REPORT COMMITTEE ON ESTIMATES (2011-2012) (FIFTEENTH LOK SABHA) MINISTRY OF CIVIL AVIATION „Development and Regulation of Civil Aviation‟ Presented to Lok Sabha on 26th April, 2012 LOK SABHA SECRETARIAT NEW DELHI April, 2012 / Vaisakha, 1934 (S) EC No._________ Price: ` ________ © 2012 BY LOK SABHA SECRETARIAT Published under Rule 382 of the Rules of Procedure and Conduct of Business in Lok Sabha (Fourteenth Edition) and Printed by the General Manager, Government of India Press, Minto Road, New Delhi – 110002. CONTENTS Page No. COMPOSITION OF THE COMMITTEE (iii) INTRODUCTION (iv) CHAPTER – I INTRODUCTORY 1-6 CHAPTER –II GENERAL BUDGETARY SUPPORT 7-14 CHAPTER -III POLICY FRAMEWORK 15-32 (a) Open Skies Policy 15-17 (b) PPP/ FDI Policy 17-21 (c) Role of the Central & State Governments 22 (d) Domestic Air Transport Policy 23-25 (e) Regulation of Mergers & Acquisitions 25-26 (f) Cartelization and Regulation of Airfares 27-29 (g) Taxes and other levies 30-32 CHAPTER -IV REGULATORY FRAMEWORK 33-72 (a) Directorate General of Civil Aviation (DGCA) 33-53 (i) Safety 35-43 (ii) Airport Licensing 43-47 (iii) Licences to Pilots & Engineers 47-49 (iv) Civil Aviation Authority 49-53 (b) Bureau of Civil Aviation Safety (BCAS) 53-60 (c) Airport Authority of India 61-63 (d) Airport Economic Regulatory Authority of India 63-72 (AERA) CHAPTER – V NATIONAL CARRIERS 73-115 (a) AIR INDIA LIMITED 73-110 (i) Administrative, legacy & other issues 73-88 (ii) Market Position 88-93 (iii) Financial Health 93-110 (b) PAWAN HANS HELICOPTER LIMITED 110-115 CHAPTER-VI DEVELOPMENT OF AIRPORTS 116-132 (a) Upgradation Of Old Airports (Brownfield Airports) 117-123 (b) Greenfield Airports 124-125 (c) Air traffic Management System 125-132 CHAPTER-VII HUMAN RESOURCE DEVELOPMENT 133-136 OBSERVATIONS / RECOMMENDATIONS 137-186 APPENDICES (I) Minutes of the Sitting of the Committee held on 01.07.2010 (II) Minutes of the Sitting of the Committee held on 12.10.2010 (III) Minutes of the Sitting of the Committee held on 20.12.2010 (IV) Minutes of the Sitting of the Committee held on 08.11.2011 (V) Minutes of the Sitting of the Committee held on 10.04.2012 COMPOSITION OF THE COMMITTEE ON ESTIMATES (2011-12) Shri Francisco Sardinha – Chairman Members 2 Shri Raj Babbar 3 Smt. Harsimrat Kaur Badal 4 Shri E. T. Mohammed Basheer 5 Smt. Bijoya Chakravarty 6 Shri Bhakta Charan Das 7 Shri Dhruvanarayana 8 Shri T. K. S. Elangovan 9 Shri Ninong Ering 10 Shri Prahlad Venkatesh Joshi 11 Shri P. Karunakaran 12 Shri Bapi Raju Kanumuru 13 Shri Chandrakant Khaire 14 Shri M. Krishnaswamy 15 Shri Datta Meghe 16 Shri Prabodh Panda 17 Shri Jagdish Singh Rana 18 Shri Magunta Sreenivasulu Reddy 19 Smt. Yashodhara Raje Scindia 20 Shri S. Semmalai 21 Shri Arjun Charan Sethi 22 Shri M. I. Shanavas 23 Shri Brijbhushan Sharan Singh 24 Shri Ganesh Singh 25 Shri Ijyaraj Singh 26 Shri Jagada Nand Singh 27 Shri Radha Mohan Singh 28 Shri Sushil Kumar Singh 29 Smt. Annu Tandon 30 Shri Hukamdeo Narayan Yadav SECRETARIAT 1. Shri P.K Grover - Additional Secretary 2. Shri S.C. Chaudhary - Director 3. Smt. Anita B. Panda - Additional Director INTRODUCTION I, the Chairman of Committee on Estimates (2011-2012) having been authorized by the Committee to submit the Report on their behalf, present this Fourteenth Report (Fifteenth Lok Sabha) on „Development and Regulation of Civil Aviation‟ pertaining to the Ministry of Civil Aviation. 2. The subject was selected for detailed examination by the Committee on Estimates (2010-2011), taking into account the urgent need to overhaul the entire structure of the Indian Civil Aviation sector so as to bring radical changes/improvement in its overall financial and infrastructural health and make it more profitable and competitive sector in the entire arena of civil aviation of the world. 3. The Committee held five sittings on the subject. The Committee have been briefed by the Ministry of Civil Aviation on 1st July, 2010 on the subject. The Committee took the oral evidence of the Ministry on 12th October, 2010, 20th December, 2010 and 8th November, 2011 respectively. 4. The Report was considered & adopted by the Committee at their sitting held on 10th April, 2012. 5. The Committee would like to express their deep appreciation of the valuable work done by the Committee on Estimates (2010-2011) in connection with the examination of the subject. 6. The Committee wish to express their gratitude towards the representatives of the Ministry of Civil Aviation, who appeared before them and placed their views on the subject. The Committee also wish to thank them for furnishing the information required in connection with examination of the subject during the briefing and oral evidences. 7. The Committee would also like to place on record their deep sense of appreciation for the invaluable assistance rendered to them by the officials of the Lok Sabha Secretariat attached to the Committee. 8. For facility of reference and convenience, the observations and recommendations of the Committee have been printed in bold letters at the end of the Report. NEW DELHI; FRANCISCO SARDINHA, 24th April, 2012 CHAIRMAN, Vaisakha 04, 1934 (Saka) COMMITTEE ON ESTIMATES. CHAPTER – I INTRODUCTORY 1.1 The aviation sector has come into prominence in the last two decades as an engine of growth and fast connectivity to all corners of the country with lot of impetus provided by the Government of India. Airports have facilitated the growth of exports and imports in the country tremendously and the aviation sector may provide the only mode of connectivity to remote areas otherwise inaccessible by other modes of transport in the near future. Despite rapid advances in infrastructure in the aviation sector, India still fares poorly when compared with developed countries of the World. It has so far been unable to emerge as a cargo and courier hub to other countries in the Asiatic region despite its geographical advantage. Besides, air travel still remains confined to a small percentage of the domestic population. The share of India in total world aviation traffic continues to remain miniscule. An efficient aviation sector is critical to the success of the tourism industry. A vibrant and thriving civil aviation sector is essential to our economy as well as security. Besides, a strong airlines system backed with a well-planned network of airports would be valuable in any national emergency to provide timely evacuation and relief measures to the needy. 1.2 It was in this backdrop that the Committee decided to select and examine in detail the subject „Development & Regulation of Civil Aviation‟. HISTORICAL BACKGROUND 1.3 Civil aviation in India was born on 18th of February, 1911, when a French pilot Henri Piquet flew the first commercial plane in India between Allahabad and Naini, carrying mails covering a distance of about 10 km in as many minutes. The scheduled air services in India, in the real sense, began on October 15, 1932. It was on this day that J.R.D. Tata, the father of civil aviation in India and founder of Air India, took-off from Drigh Road Airport, Karachi, in a tiny, light single-engined de Havilland Puss Moth aircraft on his flight to Mumbai (then known as Bombay) via Ahmedabad. At Mumbai, Neville Vintcent, a former RAF pilot who had come to India from Britain three years earlier on a brain-storming tour (during which he had surveyed a number of possible air routes) took over from J.R.D.Tata and flew the Puss Moth to Chennai (then Madras) via Bellary. At the time of independence, i.e, in 1947, the number of air transport companies, which were operating within and beyond the frontiers of the country, carrying both air cargo and passengers, was nine. It was reduced to eight, with Orient Airways shifting to Pakistan. These airlines were: Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. 1.4 In early 1948, a joint sector company, Air India International Ltd., was established by the Government of India and Air India (earlier Tata Airline) with a capital of ` 2 crore and a fleet of three Lockheed constellation aircrafts. Its first flight took off on June 8, 1948 on the Mumbai (Bombay)-London air route. At the time of its nationalization in 1953, it was operating four weekly services between Mumbai-London and two weekly services between Mumbai and Nairobi. The joint venture was headed by J.R.D. Tata who ran it until its nationalization in 1953. 1.5 After World War-II the Airlines operating in the country went on an expansion spree, but the soaring prices of aviation fuel, mounting salary bills and disproportionately large fleets took a heavy toll of the airlines operating at that time. The financial health of companies declined despite liberal Government patronage, particularly from 1949, and an upward trend in air cargo and passenger traffic. The trend, however, was not in keeping with the expectations of these airlines which had gone on an expansion spree during the post-World War-II period, acquiring aircraft and spares. 1.6 The Government set up the Air Traffic Enquiry Committee in 1950 to look into the problems of the airline industry and eventually all airlines operating in the country were merged into either Indian Airlines or Air India by virtue of the Air Corporations Act, 1953. The Government of India held a monopoly on the airlines Industry for the next forty years.