Civil Aviation breeds bureaucracy and corruption; is dying slowly, only foreign Airlines can survive! Let us see an example here!

Civil Aviation; lacks media and public scrutiny, transparency and breeds bureaucracy and corruption; is dying slowly, only foreign Airlines can survive! Let us see an example here!
Recently, GMR has decided to terminate the rental contract of Hangar space to small Maintenance Companies in IGI Airport New Delhi.

Civil Aviation Delhi Airport Murdering Free Competition in Civil Aviation to Forge Monopoly through State : An Example

The present plan of GMR is to establish a MRO (Maintenance, Repair and Overhaul) through a FBO (Fixed-base Operator) which will develop Infrastructure at IGI Airport and thereafter provide Maintenance support to the Operators. The FBO is expected to invest around INR 100 Crore for the project.

The GMR Chief Commercial Officer Mr P Panicker is confident that this project cannot be stopped and has full support of the GOI. Further, he is also sure that even litigation will not deter them and as such the State machinery would only support and expedite infrastructure projects. If designs of GMR fructify, the following is inevitable.

1. MRO established at IGI will have complete monopoly.

2. All smaller Maintenance agencies would have to close down their business.

3. All operators would have to get their machines serviced by GMR MRO only.

4. As there will be no competition AMC charges will be higher, as such directly increasing the operating cost of General aviation Companies.

5. In keeping with the trend of GMR, Annual Maintenance Contract charges would be increased periodically till it becomes unviable for an operator to remain in business. Thus most of the NSOP holders would have to close shop sooner or later.

6. Even with the charges, surpassing International rates, GMR, after investing public funds is unable to break-even in its present projects. Hence one could very emphatically forecast and predict that even this MRO project will only amass losses.

7. Moreover, the MRO which has been established at Shamshabad (Hyderabad International Airport) is a failed project as it is not making any profit.

Furthermore, when the GMR Chief Commercial Officer was informed that a few hundred technically qualified people would lose their jobs and livelihood, he commented that the same manpower could be employed by the new MRO. Thus GMR’s intention of smashing competition in the field of aviation was clear. It is an old case of ‘big fish eating the small fish’.

It is good to develop infrastructure, but it is also good to have competition. It is favourable to have better options for operators, but it is also important to have a level playing field for all the stake holders. GOI specified that the policies would be formulated for growth of Aviation Industry but the steps taken are encouraging monopolistic approach to business, which in the long run would be detrimental to growth.

gmr infra airport Murdering Free Competition in Civil Aviation to Forge Monopoly through State : An Example
With no options, the present Maintenance organisations would have to leave the safe and secure premises of IGI Airport Delhi for some smaller location / helipad / Airport elsewhere. Those new locales would have to be developed in a not so safe environment with not so expert technical assistance and manpower. Hence, would force operators to function from bases which are not as safe and secure as IGI Airport.

To conclude, one can safely say that, we were better-off before privatisation when AAI was managing affairs at IGI Airport. If similar financial support was given to AAI, even they would have created the infrastructure as it stands today. Presently, only the ‘Arrival’ and ‘Departure’ lounges have improved. Effectively it means only the pilots and passengers have benefited from the development. Sadly the infrastructure behind the scene, which is more important, where the actual maintenance activities are carried out, the facilities for the technical personnel, and the general aviation staff who manage the daily activities are in a dilapidated and in extremely sorry state.

Even the taxiways have dug up tracks which are carelessly filled giving a bumpy ride. The dispersal also has examples of patches which are no match to the so call “International Standard”. In an ‘Audit’ by an International Aviation Auditor from Singapore, the comment which sums it all, said, “can’t you find a cleaner place to maintain your aircraft which would be indeed better and safer?” This was in reference to the GA dispersal area.

AERA (Airport Economic Regulatory Authority) was established to particularly thwart such steps which would promote monopoly at the Airport. The OMDA signed between the GOI and the GMR permits the company to monopolise the aviation sector at large and frustrate growth in the long run.

Now the AAI is also taken clue from the private operators and they are hiking their rental rates in Juhu Airport by almost 500% from INR 2180 PSQM/Month to INR 11000 PSQM/Month. This has been done without warning, justification or any additional service. Needless to say, these actions of AAI and GMR will kill the Aviation Industry and further deepen the recession.

gmr infra work airport Murdering Free Competition in Civil Aviation to Forge Monopoly through State : An Example

Thus the following is suggested.

1. AAI should takeover IGI Airport as GMR is unable to manage the Airport in an economically viable manner. This would instil a sense of commitment in the other privatised airport management.

2. AAI being a GOI organisation would never have monopolistic designs of business like GMR. Provision of basic infrastructure for any business, is a State responsibility, and as such should remain with the GOI.

3. Only building and maintenance of the infrastructure should be outsourced. After construction, the facility should be handed over to GOI, and should remain with the State.

4. If the foregoing suggestions are not feasible, then only the Terminal building should be with a ‘Private Party’ and not ‘Everything.’

5. The MOCA should reign in the AAI and only permit increase in rental rates after due deliberation and in stages or at a steady predictable rate.
Lastly, in the interest of the aviation industry, better maintenance facilities due competition and consequently improved safety, this detrimental design of GMR and AAI should be nipped in the bud.

Who said the previous government was corrupt and bureaucratic and the new one will make an industry friendly environment?  There may be some difference between the two quantitatively but absolutely nothing qualitatively!!

By: KK Singh

Image Source: 1, 2, 3

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