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Public Sector Management in Civil Aviation : New Directions

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Going by the staggering figures of passengers, a well crafted and lucrative passengers friendly policy will certainly do magic for the civil aviation sector in India which was badly hit due to the pandemic.

With the initial report of private players being roped in the responsibility of management of Air-India, the issue of Public Sector Management has once again come to the forefront. It is indicative of the readiness of powerful Indian State to share stage with private players or withdraw completely from the ‘management’ of the crucial civil aviation sector.

As the reforms process in India has already reached the ‘third generation’ stage, it has been imperative for the Government of India to chart out new directions for management of public sector.

In recent times, the civil aviation sector has established itself as one of the fast growing sectors in India.

Going by the statistics, the Indian Civil Aviation, at present, stands at around $900 million and is anticipated to grow to $4.33 billion by 2025 increasing at a CAGR [Compound Annual Growth Rate ] of about 14-15%. According to an estimate, by 2034, India would become one of the largest civil aviation market in the world.

As few private groups have emerged as the front runner as per initial report, it is pertinent to look at the logistics angle of the civil aviation sector in India. The first crucial indicator is the number of aircrafts of Indian scheduled operators in 2020.

Indigo has the highest 261 number of aircrafts; the Air-India has got 127 number of aircrafts with another 25 aircrafts owned by Air India Express; the Spice Jet has 119 number of aircrafts and the Vistara has 41 aircrafts.

The other important criteria has been the market share of airlines across India interms of passengers carried in 2020. The Indigo handled 48.2% of total passengers; the Spicejet carried 15.6%; the Air-India handled 10.8% with another 0.1% passengers handled by air India Express; the Air-Asia handled 6.7% and the Vistara handled 5.8% of total passengers in 2020.

Going by the above two important criteria, the debate between the efficiency of State and the market in civil aviation management gets highlighted.

As per the political- economy theories as the State does not have the requisite efficiency in handling the civil aviation management, it needs to relegate itself to the backseat and allow the private players or market actors to play a bigger role.

However, keeping in mind the potential volatile and disruptive nature of market, the State needs to play a vigilant role.

The role must be proactively confined to ensuring an robust platform for the market and ensuring protection of passengers’ interest with clear legal terms and policy frameworks. And, it should not necessarily be an interventionist role yet a strict supervisory role.

Excessive control and interventions of market players by the State also lead to the feeling of getting strangulated by the State which will be disastrous for the booming civil aviation sector.

The other important issue that is extremely ticklish to handle will be the efficiency management of airports across the country. In recent times, the civil aviation sector has seen the inclusion of new airports in nooks and corners of India.

The UDAN scheme has helped in proliferation of airports and initiated a new beginning interms of domestic passengers preferring the air-travel. Now, this is the most important point which has emerged as the prime factor responsible for a boom in civil aviation indutsry.

A pleasant air-travel with world class facility at airports and in-flight experience can dramatically change the civil aviation sector in India. Both State and Market must understand this new trend in civil aviation sector.

In the financial year 2021, there have been 153 functional airports out of total 400 airports. And these functional airports handled 115 million domestic passengers and 10million international passengers.

Going by the staggering figures of passengers, a well crafted and lucrative passengers friendly policy will certainly do magic for the civil aviation sector in India which was badly hit due to the pandemic. However, it as shown great resilience.

The Public Sector Management in Indian civil aviation sector has shown the way how the State should act strategically. Though, it is certainly very early to make a projection, yet the pragmatic political-economy policy arrangements offers a bright silver lining.

Sky is certainly the limit in the potential of the civil aviation sector with strategic public policy.

The author is an academic and can be reached at drsujitpruseth@gmail.com.

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