- Economic Survey Cli1: Aviation basics
- Aviation Current Affairs 2014
- GS3 Syllabus: Infrastructure: Energy, Ports, Roads, Airports, And Railways etc. So, combining new and old topics related to aviation-sector in this one page for quicker revision.
- Some of these topics not directly relevant to mains but have utility in bank MCQs and interviews. Readers’ discretion advised.
Greenfield airport reforms
- Current policy: Greenfield airport can’t be developed within 150 kms of existing airport.
- Jul 2014: Civil aviation ministry says we’ll permit, IF, existing airport unable to meet traffic requirement.
- Will develop new airports in Tier I and Tier II
- will Implement them via PPP / Airport Authority of India (AAI)
Topic in news: Jan-Feb 2014
- US Federal Aviation Administration (FAA)
- They reduced India’s safety rating from Category #1 to Category #2; meaning we’re as bogus as Ghana and Bangladesh.
- Hell, even Pakistani Airlines are safer than India!
Main reasons cited
- India doesn’t have sufficient number of Flight operation inspectors.
- India’s aviation regulator Directorate General of Civil Aviation (DGCA) does not meet the safety standards set by ICAO. [as we saw earlier this post has become retirement house for IAS.]
- (conspiracy theory) America intentionally downgraded the safety rating to “teach” us a lesson for the Devyani Khobragade controversy.
- When Indian flights go to USA, their officers will do more safety checking = more time will be wasted, inconvenience to Desi passengers.
- Jet airways’ share prices fell down.
- Domino effect: Singapore’s aviation authority also started inspecting Indian aircrafts. The aviation regulators of EU, Japan, UAE may also reduce our rating – leading to more timewaste and inconvenience to passengers.
New update in September 2014 (Week2)
- India’s DGCA [Directorate-General of Civil Aviation] says we’ve addressed those deficiencies.
- He is hopeful that in a month or two, we should move back from Category II to Category I
Topic in News April 2014
- What is predatory pricing: how is it good/bad for business/ economy?
- Why is Spicejet accused of predatory pricing?
- What has DGCA done in this regard?
What is Predatory Pricing?
- Means deliberately selling product below the cost price, to eliminate competition.
- Usually predatory pricing is done by firms with deep pockets (like Walmart), because they can afford to make such temporary losses.
- in short, it may appear good to customers- because products available @cheap rate
- But in long term, the firm establishes monopoly and starts exploiting the same customers.
- Sometimes the strategy misfires, company makes heavy losses (e.g. AirDeccan and Kingfisher).
Why Spicejet accused of Predatory pricing?
- They’ve launched a scheme “Rajiv Gandhi One Rupee Air ticket”
- Sounds good? but there are hidden terms and conditions
- Offer valid only if you book tickets during April 1 to 3.
- Only one or two seats offered in each flight under “One rupee” scheme.
- So this is both “predatory pricing” + misguiding customers.
- Spicejet already making losses, and now they’ve launched this scheme=> other aviation companies will also be forced to launch similar schemes to stay on competition => everyone starts bleeding and making losses=> ultimately some get on verge of collapse like Kingfisher= staff salary not paid, loss EMIs not paid, Bank NPA increases and so on….
What has DGCA done?
- Directorate General of Civil Aviation (DGCA) is empowered to take action against such predatory pricing (under Aircraft rule #135)
- He has ordered Spicejet to immediately stop this scheme.
Topic in News: July 2014
- Star Alliance, the world’s largest network of airlines. Lufthansa, Air India, Airchina….total 27 members.
- Air India latest member to join (2014, July).
- These members coordinate arrival and departure times with each other => passengers’ waiting time reduced.
- Joint ticketing, check-in and baggage facilities => smoother and faster travel experience.
Benefits to AirIndia’s premium customers:
- Will get “frequent flyer benefits” irrespective of airline chosen.
- Access to more than 1,000 lounges across the global network.
- increased baggage allowance
- Priority boarding and baggage delivery.
Topic in news: Septeber Week2, 2014
Q. Write a shortnote on features and significance of No-frills airports. 200 words.
No frills airport features:
- Government wants air connectivity to remote / backward areas. But profitability is always a challenge, hence private sector not interested.
- Therefore Airport authority of India (AAI) will develop No Frills airports at such places, with only basic safety and security features.
- No fancy lounges with airconditoners, no aerobridges, no carousels or conveyor belts for luggage. Single storey building without any posh glass-steel elevators….hence operational costs will be low.
- AAI will be able finish these airports in2-3 years, with just 85-90 crore investment in each. It’ll be able to squeeze profit even with very few passengers.
- 2014, September Week2: Government approved no-frills airports in five cities:
|Rajasthan||2.Kishangarsh, near Ajmer|
|Karnataka||4.Hubli and (5) Belgaum|
In future, Government may give sops / tax benefits to private airlines, if they operate flights here.
Q.Discuss the need for reform in ATF tax structure 100 words.
- Airlines spend ~50% of the revenues on Aviation turbine fuel (ATF).
- State Governments levy VAT on ATF.
- Rates vary across states- lowest is Andhra Pradesh (1%), while some states charge ~30-35%.
- India’s ATF taxes are among the highest in World.
- Wilful defaulter Totally Awesome Vijay Mallya has repeatedly blamed high ATF tax for losses in Kingfisher.
- Topic in news because Union has urged the State governments to rationalize their respective ATF taxes to a uniform level.
- State Governments yet to respond. West Bengal, Chhattisgarh and Jharkhand most likely to oppose this move.