Civil Aviation minister Ajit Singh has very categorically stated that there is no question of the government
bailing out Kingfisher Airlines
"The government will not and cannot bail out Kingfisher or any other private airline though we would not want any airline to close down too."
He was speaking to journalists at the India Aviation 2012 in Hyderabad. The government, he says, will not bail out private companies or ask banks to lend to them.
Later, E K Bharat Bhushan, Director General of Civil Aviation indicated that the regulator has been watching the developments at Kingfisher and said: "We have been reporting to the government on a daily basis."
According to him, it was a matter of concern that the airline did not stick to the recovery plan it had submitted to the regulator last month. "The situation is of grave concern to the public and the government and we will be submitting a report on Kingfisher in a couple of days."
The minister however did say that he feels the problems in the Indian aviation sector
are essentially temporary and prospects are bright in the long term as the economy is growing and there is a growing middle class in the country that has taken to flying.
He said the country is expected to continue to register domestic passenger growth at 9 to 10 per cent and by 2020 be among the world's top three markets, with about 420 million passengers being handled by the Indian airport system as against 140 million handled in 2010. "Indian airspace will see nearly 3.2 million aircraft movements including over-flying."
To deal with the current situation, he said the government has taken measures like allowing FDI and allowing airlines to cut operational costs by allowing them to import aviation fuel. He said, "we are allowing 100 per cent FDI in Greenfield airports under the automatic route to facilitate world-class airports in the country.
An appropriate economic regulatory framework for future airports is also being worked out to attract investment and ensure their viability." Also, he said, "to bridge the shortage of skilled personnel in the aviation sector, we propose to set up a full-fledged aviation university.
The project will ensure a steady supply of trained pilots and other skilled personnel in aviation sector." That is not all. He says, his ministry is formulating an Air Cargo Promotion Policy, "which will be brought forward for consultation."
Nevertheless, referring to the global markets, he said, the global economy faced rough weather in 2011 and the aviation industry also felt the tremors. "As per estimates, cargo markets worldwide contracted by 0.7 per cent. Growth in demand lagged behind the increase in capacity for both passenger and cargo segments putting downward pressure on load and yields."
Finally, as he put it: "the skies are not expected to clear any time soon and 2012 could prove to be equally challenging."