TCS Daily


A Tale of Turbulence

By Vijay Dandapani - September 9, 2003 12:00 AM

December 2003 marks the centenary of the first flight of the Kitty Hawk, when the Wright brothers demonstrated that an object heavier than air could fly. While this centennial is being celebrated around the world, in India, there appears to be scant enthusiasm for both the invention and the occasion; a reflection, perhaps, of the stagnation and confusion that has characterized civil aviation in the country for the past 40 years.

 

The Wright brothers acted as private individuals, pursuing their dreams with nary a penny of government funding. In fact, the odds were heavily against the upstart bicycle mechanics; physicist Samuel Langley, with a princely grant of $50,000 from the Smithsonian, was widely expected to be the first off the ground. His government-funded craft was launched twice before the Wrights got their craft into the air; on the first occasion, it pitched straight into the Potomac river outside Washington D.C., and on the second, it careened into the ground and was destroyed. Subsequently, much of civil aviation, for the next three decades, progressed along private lines.

 

India's aviation industry, too, had its foundation firmly anchored in private enterprise. Then Nehru nationalized this incredibly punctual and profitable airline to save the government's failing domestic airline; state control of the economy being the mantra of the day.  Few dared to question the rationale behind that decision. Five decades later, despite the success of Jet Airways, public enthusiasm for a free market approach to India's anachronistic civil aviation structure is virtually nonexistent and India's aviation industry lags woefully behind a range of countries including Chile, Argentina, and most
Southeast Asian countries. Even a cursory glance at the airlines of any one of those countries reveals a worthy template for India to emulate. A notable example is Chile's flag carrier, LanChile. For years, the airline was riven with poor service, faulty equipment and little accountability. In 1989, the government privatized it and since then, both the airline and government have benefited significantly. By 1997, the airline had completed a hugely successful IPO.

 

Air India's woes, on the other hand, continue relentlessly, with each new year bringing a fresh round of recriminations and excuses for lack of profitability and little to add by way of either revenue or routes. Ironically, one of the most notable aspects of the airline's international presence is its many offices around the world, including a whopping 26 in cities across Europe.

 

Another loaded topic is the issue of devolution of airports to the private sector. Bangalore's new international airport, slated to open in 2006, is to be built largely by Siemens, but progress on the project remains mired in red tape. While that city may eventually get its new facility, most politicians and bureaucrats continue to sound off against such a free market enterprise.

 

In the zero-sum scenario envisaged by them, the private sector will be interested only in the two principal airports of Mumbai and Delhi. Without them, the Luddites argue, the government will be unable to operate the remaining (unprofitable) airports. Assuming the first instance to be true, the government's calculus ignores both the proceeds from the sale as well as recurring revenues either as fees or lease payments for the facility. Secondly, the government ought to reconsider its unstated but implied intent of using airports as another means of social and economic policy. Private operators are likely to acquire them with a view to turning them around, consider them for alternative uses or simply decline the opportunity. A likely outcome will be an outcrop of new routes to the better-run airports around the country along the lines of what prevails in Canada after that country privatized most of its airports in 1992.

 

There is a move to name Bangalore's forthcoming new international airport in honour of J.R.D. Tata. Instead, a far better tribute to the founder of Indian aviation would be the deregulation of both airlines and airports. Civil aviation will then take off and be a testament to J.R.D.'s remarkable vision 70 years ago.

 

Vijay Dandapani is the COO of a small New York-based hotel company. He is a licensed private pilot, and has published in a range of international newspapers.

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