Air Navigation Services, a cash cow for airport operator AAI, is likely to be hived off into a separate entity
The aviation sector is likely to see a major shake-up soon with Air Navigation Services (ANS), a critical source of revenue for airport operator Airports Authority of India (AAI), being made a separate entity following a recommendation by a government-appointed panel.
The two-member expert committee, comprising former Civil Aviation Secretary Ashok Chawla and former Directorate General of Civil Aviation Satinder Singh, submitted its report recommending autonomy for ANS to the ministry on Friday, sources said.
The recommendation, which is likely to be implemented as part of the ministry's reform agenda, will impact AAI in a big way as almost one-fifth of its revenue comes from ANS.
According to AAI's annual report for 2014-15, Rs 2,355 crore of its total revenue of Rs.9,284 crore came from ANS. This includes charges for route navigation facilities, terminal navigation and instrument landing. Moreover, an international flight pays a fee for Air Traffic Control (ATC) services, an arm of ANS, each time it uses India's airspace.
Aviation analysts say ANS needs specialised attention to manage growing air traffic, expected to rise further in years to come. "ANS should have been made independent of AAI long ago. The recommendations of the expert panel should be implemented. People at AAI, who have been running ANS, are not even qualified to do so. Making ANS a separate entity would give undivided, focussed attention to augmentation, upgradation and improvement of communication network surveillance and air traffic management, which is much needed," said civil aviation expert Captain Mohan Ranganathan.
He said that the AAI could suffer the same fate as Air India if it didn't take tough measures to manage its finances. "If ANS becomes a separate entity, AAI will have to get its act together."
Many of India's busiest airports, including Mumbai, Delhi and Bengaluru -- which generate about 60 per cent of AAI's revenue from airport operations -- are run by private operators. AAI's share is not even half the total revenue generated at these airports. There are also plans of leasing out more airports to private entrepreneurs.
The idea to make ANS a separate and independent unit was first mooted in 1970, but there was not much movement. Things might be different now with the government in the mood for reforms, ministry sources said
Civil Aviation Minister Ashok Gajapati Raju had announced soon after taking charge that he had plans to corporatise AAI and list it on the stock exchange — a move designed to take off only after hiving off ANS. Minister of State for Civil Aviation Jayant Sinha has also been been hinting at policy, organisational and infrastructural changes in the aviation sector in the backdrop of rising domestic air traffic.
While making its recommendation, the committee, which was set up in June, has placed reliance on guidelines laid down by the International Civil Aviation Organisation (ICAO) and on countries like Canada, Australia and New Zealand, where airport management and airspace management are handled by separate bodies.
"Various options such as whether the new entity should be an autonomous organisation or a corporate entity wholly owned by the government or a subsidiary of AAI were explored. But the committee concluded that giving an autonomous structure to ANS would fetch the best results," an official said.
An autonomous ANS would be able to take decisions swiftly, without, for instance, having to wait for approval from AAI or the ministry for purchasing equipment. The move would aid ANS in finding solutions to its staff crunch – there are only 3,000 ATCOs of the total sanctioned strength of 3,890 -- and shortage of advanced equipment as it will no longer be dependent.
The coffers
- Apart from ANS, AAI earns a major chunk of its revenue from airport operations and also earns some revenue from cargo operations. In 2014-2015, AAI earned Rs 2,449 crore and Rs 196 crore from airport operations and cargo, respectively.
- During January-August 2016, domestic air passenger traffic rose 23.14 per cent – from 52.36 million to 64.47 million.
- Air India is surviving on a Rs 30,000-crore government bailout package and had a debt of Rs 51,000 crore as on March 31, 2016,
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