Air transporttation fot foreign trade

1. 6.6 Pawan Hans
6.7 AirportsAuthority of India (AAI)
6.8 DirectorateGeneralof CivilAviation
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UNIT 6 APRT
6.0 Objectives
6.1. Introduction
6.2 SignificanceofAir Transport
6.3 History of Air Transport in India
6.4 Air India
6.9 OtherAu~iliaryOrganisations
6.9.1 Bureau of Civil Aviation Secun'ty
6.9.2 lndira Gandhi Rashtriya Uran Akademy (IGRUA)
6.9.3 Hotel Corporation of India (HCI)
6.10 India'sExport-ImportTradeby Air
6,IO.1 Analysis by Airports
6.10.2 Export Cargo Mix
6.10.3 Constraints of Air Cargo
. , 6.10.4 Air Cargo 'Tariff
6.11 Privatisation
6.12 Problems and Prospects '
6,12,1 Crlsla of Safoty
6,12,2 Polloy Pranrawork a~idPro~ranirnoafor tho Nlnth Plnn
613 LetUuSurnUg
614 Key Words
6.15 Answersto Check Your Progress
6.16 Terminal Questions I
6.0 OBJECTIVES
I
After studying this !nit you should be able to:
explainthe importaqce of air'transport
trace the history of 4ir transport in India
describethe working of AIR India, Indian Airlines and Airport Authority of India
explain the role of oths auxiliary organisations relatedto air transport in India
0'provide details of Indias import and export trade by air
evaluatthe steps taken towards prixatisation of air transport in India
I
desribethe problems and prospects of air transport in India and progamrnes for the Ninth
Plan. ' .
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6.1 INTRODUCTION
Air transport has a significant role to play in a vast country such as ~ndia'withmajor
industrial and commercial centres spread all over the country. It offerssavingin time that
cannot be matched by surface transport bver long distances. This advantage of speed
certainlyhelps id cutting down the transit time in thehinterland movement of export cargo.
'The share of airborne trade to total foreign trade of India during the year 1998-99was about
32%. In India, the Ministry of Civil Aviation has been entrusted with the responsibilityof
'developing the air servicesand the related infrastructure. In this unit you will lean about
how civil aviation is organised in India, how far the various airlines and Airport Authority of

2. International Transport India have succeededin providing the necessary air transport and infrastmcture facilities,
System what has been the amountof airborne trade (both exports and imporut) of India, and what
are the problems and the plans for the future.
6.2 SIGNIFICANCE OF AIR TRANSPORT
In the internationalmovement of goods, the role of Air Transport is well-organised.
Amongst the differentmodes of transport viz., sea, rail and road, the air transport has the
advantage of (i)taking leasttime for carriage, and (ii)handling high valued orperishable
gdods.The disadvantagesare (i) comparatively high transportation cost, and (ii)
unsuitability for transportation ofbulk commodities. Thus the relative economy in the
carriageof merchandisein the international trade by air, vis-a-vis other available,modes of
transport is conditioned by the factors such as unit value of commodities, need or
adherence to delivery schedule, nature of commodity (perishablelnon-perishable),location
ofpartner countriesporn in relation to in-country originating centre etc.
Air transport, the youngest member of the transportation system, has made rapid strides
duringthe last three and a half decades. Today, about 20-25 per cent of the total world trade
in value terms moves by this mode of transport, The unprecedented growth of air cargo
industry in these years has been due to the acceptance of concepts like 'Just in Time
I
Shipments(JIT)' and 'total distribution cost', the world over. 1
I
The improvementin air technology and introduction of containerisation in air cargo,
coupled with the technological advancements in production processes of a variety of
I
products have enlarged the list of items for export by air. Currently, not only perishables and
highly valuables,but many products like machinery parts, electrica~electronicequipment,
textiles and ready-made garments, leather garments and travel goods, toys, hand-tools etc.,
moveby air transport.
It may be noted that the total quantity of cargo moved in overseas trade of India increased
from 1,033lakhkg.In 1981-82to 6,591lakhkg, in 1998-99.And airborne trade (both exports
and imports taken together) ill value terms accounts for almost one-third of the coui1try's
total foreigntrade.
6.3 HISTORY OF AIR TRANSPORT IN INDIA I
W e real progress in Indian civi1,aviationstarted in 1920when the Government of India
constructedafew aerodromes. The Civil Aviation Department was setup in 1927and
number of flying clubs were founded. ~ h &progress, however, was very slow. It was durihg
and after the Second World War that a considerable pragress was achieved, More
aeroplaneswere purchysed,new services were started and 'their frequency increased. In
1946,the Govemmmt of India laid down in avaiation's policy and thus began the
encouragement and development of ifitern91@l) ,external transport services through a .
i
I
limitednumber of sound andreliable privatcj,ho@ercial concerns with necessary
Governmenthelp.In 1946,theFovement sdtdpthe AirTransport Licensing Board which
gave 11licences. , . I
In 1950,theAirTransportEnquiry Committee,known as Rajadhyaksha Committee, was
appointed.The Committeerecommended the intergration of all companies so as to remove'
cut throat competitionand secure scientific and zonal dis'trib~itioniof work. But, somehow, ;
the private companiesdid not respond and so {heGovernment had to'tiaFonalise civil
aviation. It was felt that
a) nationalisationwould raise operational efficiency;
b) it wouldresult inbetter organisabnof civil avaiation and would enable the'Govemment
to get trained technicians, pilots eh., and,
c) it would reduce duplicating the services and wastage of flying hours and thus would
reduce costs and losses.
In 1953,the Air CorporationActbqs passed by the Parliament under which the Indian Air
Lines Corporationwas to n&internal services and Air. . India Internatioqal was to run
externalservices. .'
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6 --.-+:.:il aviation is structuredinto three distinct functionai entibes-regulator/, operational
and infrastructural. The operational entities are: Indian Airlines (IA),AllianceAir
(subsidiaryof IA) and private scheduled airlines and air taxies whichprovide domestic air
services and Air India (AI) whch provides international services. Indian Airlines also covers
some neighbouring countries. Pawan Hans Limited was incorporated in 1985to acquire and
operate helicopters in the country. It has been renamed as Pawan Hans Helicopters Limited.
It provides air support services to Oil Sector in their offshore operations and connect
remote and inaccessible areas. The infrastructural facilities arc ~~rovidedby Airports
Authority of India which came into being on 1stApril, 1995as a result of the merger of
National Airports Authority (NAA) and International Aports Authority of India (IAAI). It
is responsible for the management of all airports (domestic and international) and civil
enclaves atthe defence airfields. The Indira Gandhi Rashtriya Uran Academy (IGRUA) is
the premiere flying institute responsible for provision of flyingtraining for award of
CommercialPilots Licence and Commercial HelicoptersPilots Licence.Hotel Coiporation of
India, a Subsidiary of Air India Limited is responsible for providing inflight catering and
operating hotels in the vicinity of aiiports for catering to the transit passengers. The
Directorateof Civil Avialion (DGCA) is the regulatory body responsible forregulation of air
transport services tolfroi~~/witliinIndia, registration of civil air crafts in India, formdation of
standards of airworthiness and grant of certificates of air worthiness to civil aircrafts
registered in India.
Severalsignificant developnlents took place in the field of civilgviation during the EighthPlan
period. With the repeal of the Air Corporation Act 1953 in 1994, the monopoly of Indian
Airlines, Air India and Vayudoot over scheduled air transport services ended. Consequently,
6privateoperators who were hitherto operating as airtaxis were grantedthe statusof schedulcd
airlines. During Eighth Plan, 7 scheduled operators and 19 air taxi operators had been given
pem~itsfor operation of domestic air transport services in India. AirIndia Limited and Indian
Airlines Limited were registered as companies under the Companies Act, 1956'and the
undertakings of Air India Coiporatioi~andIndian Airlines Corporation weretransfei~edto the
respectivenew companies w.e.f. 1.3.1994.Vayudoot Limited wasmerged withIndian Airlines
Limitedw.e.f.25tllMay, 1993.
Against an outlay of Rs 3,998 crore a sumof Rs. 7,334.11crore was spent during the Eighth
Plan. The bulk of the outlay (98.8%) was finaced from internal and extra budgetary resources
(EIBR). Theplan of Air India, IndianAirlines,PawanHans andHotelCorporation of India
was entirelyfinanced from their IEBR.
Air Transpor'
At present, there are two scheduled private airlines which provide regular domestic air
services along with Indian Airlines. In addition, there are 41non-scheduled operators
providing air-taxilnon-scheduled air transport services. Private operators cater to nearly
41.4% of the domestic air traffic. A new policy on domesticair transport service was '
approved in April, 1997according to which barriers to entry and exitto this sector have
been removed and choice of aircraft has been completely left to the operator.
,.C
CheckYour Progress A
1 State the two main advantages of air transport.
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.'......................................................*..........................+.........+...........................t.....t....t.......................
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2 State the two significant developmentsthat tookplace inthe field of civil aviation in India,'
, .
s............... ..........................*................*...............................................+..............+.............*.................... .
3 , Fill in theblanks.
........................................0 At present almost per cent ofthe totalworld trade in value
terms inoves by air transport.
ii) The shareof airborne trade to total foreign trade of hdia during 1998-99was
................................ ...,....per cent.
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3. . .
I
.........................................Intcrnatisnal Trnnsport I) Thecivilaviation is structuredinto distinctentities.
:; ) ', t l2 111
iv) PawanHang~ ~ l i ~ ~ ~ t ~ ~ ~Limitedprovidesair .........................................Sel~icesto oil
,,,tor and .........................................remoteand inaccessibleareas.
V) ThemergerofNm alldIAAIresulted in theformationof.........................................
6.4 AIR INDIA .
Air India has come a longway since its establishmentas a statutory corporation in 1953.
n e internationalpassenger trafic tolfromIndiahas showna gwoth of4.8 p.a. during 1987-
94.Thegrowth rate for foreigncarriershas been 6.3% pa. whereas that of Indian carriersit
hasbeen only 1.74%. As a result, the shareof traffic for Indian carrier (A1and IA) in the
internationalpassenger traffichas showna steadydeclinefrom40% in 1988 to$^%in 1994.
Table 6.1 indicatesthe growthin fleet strengthand trafficcarriedby Air Indiai
~ a b e6.1: FleetStrength and Traffio-Alr India
___D
Year Fleet Strength Revenue Passengers
Tonne-Kms. Carried
(Lnkh) (Lakh)
TItafleet ot'Air ladin atthoendoftho SovanthPbn(198940) oonslntadof21 aimb
~omprliingtenW47~20Q18,b A 310nlronft,two$747 oombbinand fh,A 3W=B4.In
fiddition,ItWIoneB74YP onwet law forlhbhbrogedlonmd on@IL-62Mfor
paaaenger opera ti en^ onIndindlJUSSRroute. One IL.76 is also urcd in addition to helphior
capacity.The growthrate in t e r n of traffic has bedn around 3per cent per annum during
the Seventhplan period.
During theEighthPlan(1992-97)Air India wasexpectedto have a traflic growth ata rate of
144per cent. In termsof targets, thecapacityavailable at the end of the Eighth Plan was to
be 3061.6milliontonnekms. and anticipatedcapacityutilisationof 1983.3millionrevenue
tonnekms.Whilethecapacityincreasedby 26.9% to2,504.3 milliontome h.,the traffic
registeredagrowthof 30.5%intheEighthPlan,the capacityutilisation innased to 1,499.4
milliontonnehnsby 1996-97.Itsmarketshareinthe internationaltrafice, however, declined
to alevelof20%in 1993which slightlyimprovedto 21.9%in 1996.DuringNinth Planperiod
the internationalpassengertraffic isexpected to grow at 7% pea.Air I ~ d i ahas planned for
an averageannualgrowth rate of 13.3%with its sharein international traffic to increasefrom
21.97in 1996to27.1%by theend ofNinthPlan. Atpresent, itownsa fleet gf 26 aircrafts
consistingofsixB-747-20, twoB-747-300(Combi),seven8-747-400, threeA 300-84 and
eightA310-300aircrafts.During 1998-99,itcarried3.17millionpassengTnaa against3.06
millionin 1997-98anditsrevenueintoline@.was 1520million.
As for the fmancialperformanceofAir India during theEighth Plan, it recorded profits
bring the firstthreeyearsbut incurred lossesduring 1995-96and 1996-97.Even the first
twoyearsofNinth Plan i.e., 1997-98and 1998-99it incurredlossesto the tune of Rs. 181
croresandRs. 174croresrespectively. Thiswa6 despitea 7.8 per cent increase in its
'
operatingrevenue.DuringApril-September, 1999,thecompanyhasincurred anestimated
'
lossofRa. 5.3 crorewhich iseignificantlyloweras comparedto aloss of Rs. 127.4 crore
duringthe correspondingpeHod of 1998-99last year. Tht loess can be attributed to factors
like increasein expenditureon accaunt of interestend depreciation on new aircraft,
reductioninyield due to increaeedcompetitionand cost of operations, increase in wagebill,
other staffcosts and landing, handling and navigationalcharges, and depreciation inthe
value of rupee etc.
Thekey to improvement in the financialperfomlance lies in maxiniisingyields and inlproving
the net margins. To achieve this objective, Air India should intensify the marqetingefforts,
improve its product and on-time performance. In the Ninth Plan, as a apart of turn around
strategy, route rationalisation and redeployment of capacitywould be a dynamic fu~lctionso
thatAir India would be able to respond proactively to varintio~lsin market demand.
Indian Airlines Corporation (IAC)came into existencein June, 1953when eight scheduled
airtrallsporl companies were nationalised. Being themajor aircarrierof the country, it
provihs air services on the domestic routes and operates 57 stations in the country and 17
statigosin the neighbouring 14coungies. The long-term annual growth rate in domestic
passenger traffic from 1960-61to 1987-88has been around 10%.However,during theperiod
1988-93,the growth rate was erratic and negative on an overallbasis. As a result of the
steps taken for liberalising the economy, coupledwith improved industrialrelations in
Indian Airlines and availability of additional capacitywit11private operators on domestic
,routes, the domestic passenger traffic has started growing significantly since 1993-94,and
thegrowthrate improvedto 19.8%and 10.1%in 1993-94and 1994-95respectively.
Thegrowthin the fleet strength and traffic carriedby Indian Airlines since 1960-61is give11
inTable 6.2.
Table 6.2 :Fleet Strength and TI-ark-11idis Airlines
- Revenue Passengers
Year Fleet Strength TonneKm. Carried
(lakh) (lakh)
IA fleetat the end of the Seventh Plan (1989-90)consisted of 11Airbus A-300,24 Boeing-
747,14 A-320,3 HS-748 and 4F-27.During 1989-90,15A-320's were acquired ofwhichone
was lost in an accident in February 1990,The SeventhPlan had anticipated a growthrate of
8per centper annum in traffic for the lndian Airlines.The actualgtowth rate, however, has
been around 5 per cent per annum. Indian Airlines has projected domesticpassenger
growthrates of 8per cent per annumin Eighth plan with 1989-90asthebase year. In terms
of targets;,Indian Airlines would have capacity equivalent to 1916 million.A viable tonne
kms and ttraffic of 1361million Revenue tonnelans. by the end of theEighthPlan (1992-97).
But, it achieved anegative growthrate of (-) 1.9% and (-)8.4%in capacityand traffic
respectively in the Eighth Plan. This is largely becauseIndian Airlines could not utilize its
fleetand other facilities optimally clue to the exodus ofpilots and engineers after tlle
opening up of the sector to the private ol~erators.?'he fleet of Ii~clir!nAirlines at the end of
theEighthPlan consistedof 10A-300,30 A-320,12 B-737 and 3Donnier 628tiiscrafls.All
theB-737 ilil.craftsare bring opotntedby its wl~ollyow~icds~il)sitlii~ry,rlliiliice Airlines.
ASfor the financial performance of Indian Airlines, it incurrcd losses tlxoughout the period
of EightsPlan. The airline which was making profits till the end of 1980s,startedmaking
lossessince 1989-90.From 1989-90to 1996-97itincurred lossesof overRs.1,000crore
including a sumdfRs. 775 crore in the Eighth Plan. Tocope with the general recessionin the
economy, sluggish market conditions and stagnation in the overallair travel inarket during
the year, innovative and aggressive market strategies were inhaledby the company to
maintain and improve itsrevenues andmarket share.As a result, during the year 1998-99,
the operatingprofitincreased to Rs, 294 crore ascompared to Rs. 259crorein 1997-98.The
company has achieved the profit despite the coiitini~edeconomic downturn and additional
capacity intluclitru b ~tlic- ~ . r t l t ~ ~ l ( qit;. 111 . - : 1 ,,I ,?::nr?t,r?n I r i l 11~.L-<II!Ic~in,i declitle,in
Air Transport ,

4. International Transport
system
occupancylevel and downwardpressureson yieldsas compared to 1997-98.During 1999-
2000, thecompanyearnedapost taxprofitof&. 45.27,a 245 per cent increase compared
withRs.13.12crorein 1998-99crore.As forthemarketshareofIndianAirlines inthe
domesticpassenger traffic, it is presently hovering around 65%. The domestic traffic d u h g
the Ninth Plan period isprojected to grow at the rate of 12.5%per annum. The Indian
Airlineshas targetted a market shareof around 55-60% in the Ninth Plan so that by the end
of the Ninth Plan its domestic traffic couldincrease to around 15million passengers. In
order that IndianAirlines continueto play arole distinctfrom the private airlines and
achieve its targets, it is neceqary to take suitable fiancial and or.ganisationa1measures to
make it a viable and vibrant enterprises.
PawanHandwhichwas incorporated in 1985acquired48 helicopters,consisting of 27
Dauphin and 21 Westland helicopters. of these, 6 Dauphin helicopters were transferred to
StateGovernmentofUttar Pradesh,Madhya Pradesh,Bihar and Gujarat. Four helicopters
were lostin accidentsin 1988-89andthe Corporationhad a fleet of 3 helicopters consisting
of20Dauphinhelicopters,three Bell206L4, two Bell407,twoRobinson R-44 andthreeMi
172helicopters.
ThePrimaryusers ofhelicoptersare ONGC,NTPC, etc. Consideringthe high operational
cost and foreign exchangeoutgo in maintenance and operations, it is necessary that the
helicoptersservicesareprimarilyrestrictedto oilexploration sector. Tlieprovision of
maintenance facilities have been accorded priority overacquisition of additional
helicopters.The thrustin the Eighth Plan had been on enhanced maintenance capability,
manpower developmentand coordinationof the growth of Pawan Hans with its special
markets.
The financial position of Pawan I-Ians is quite sound as it has enjoyed nlonopoly in the
market segmentbeing cateredto by it. However,with the entry of private operators, it will
haveto gear up to meet the challenge.
Thetotalrevenueflying hoursofPawanHans Helicopters Limited during 1988-99were
18,563comparedto 17,673during 1997-98.Therevenue earnings and not profits during
1998-99wereRS.'~16croreand Rs.62crorecomapredtoRs.111crore and&. 62crore
respectivelyin 1997-98.TheflyinghoursinApril-September,1999were 9,367 and reyenue
andnetprofitinthe sameperiod were Rs. 58 crore and Rs. 29 crorerespectively.
However, with the increased competition owing to the entry of private operators, Pawan
Hans HelicoptersLimitedwould need to strengthen its customer base and look for new
areas. TheCompanyis exploring new areas for providing helicopter services such as police,
para military forces, geophysical surveys, adventure sports and tourists chapters. It also
hopes to become a maintenancecentre for light helicoptersfor other smaller operators.
6.7 AIRPORTS AUTHORITY OF INDIA (AAI)
To startwith, infrastructuralfacilitieswereprovided by Natiorial Airporls Authority of India
(NAI) and International Airports Authority of India. The NAA provided services such as
airtrafficcontrolnavigationalcommunication,rescue,runway, apron and terminal at all
domesticairports.TheIAAIcameintobeing inFebruary, 1972to manage, operate and
developthe fouretemational airportsatBombay, Kolkata,Delhi and Madras.
Thiruvananthapurambecamean internationalairport inApril, 1991.During the SeventhPlan
period, new internationalterminal complexesatBombay and Delhi and domestic have done
well both in respect ofphysical aswellPlan has been on optimisation of capacity utilisation,
creationof necessary additional capacitiesthrough modular constniction and improving the
quality of servicesto passengers..
During 1995,thesetwoAirportsAuthorities(NAAand1 4 1 ) were amalgamated and a .
commonauthoritycalledAirportsAuthority ofInclia (AAI)was formed. It is responsiblefor
providingsafe and efficientairtraffic servicesfor cfiiictia*econtrol ofairspace. Tlie
Authoritymanagesatotal of 120airports(including28 civil air~erminalsat Defence
Airfields).Totaltraffichandledby A N is givenin Takle 6.3.
L a '
The ,AirportAuthorityof India was ableto attain its goal of upgradation ofinfrastructure
and modernisatonof communication facilities. In order to keep pace with the growthof
internationaltrade and forpromotion of exports, theairport infrastructurewas uptraded in
t e r n of storage space, better handling capacities and development of cargo complexes
particularlyinDelhi and Mumbai airports. Investmentswere also made at the hinterland
airports,having potential for exports as well as tourism such as Agra,jaipur, Ahmedabad,
Varanasi,Lucknow,Thiruvananthapuram. Substantialinvestmentweremade for the
development of air strips and upgradation of communicationfacilitiesand other
infrastructureinremote areas like North-East, J&K, Andaman & Nicobar islands asprivate
investment was unlikely on account of the remoteness of the areas and adverse economic
factors.Twelve airports were identified for being developedas model airportsand
renovation/constructionof new terminal complexes, extension of runways, upgradationof
communication facilities and otherpassenger related facilitieswere undertaken on a priority
basis.
Table6.3:Traffic Handled atAAIAirports
Year CargoHandled Passengers Handled
('000 tonnes) ( ~ a k h )
1 9 M I ' NA NA
1970-71 NA NA
1980-81 178.70 107.38
The Airport Authority of India has significantly improved its financialperformanceduring
the EighthPlan period. It earned aprofit after tax ofRs.208 crorein 1998-99conlpareilto
Rs. 196crore in 1997-98.The higher profit was mainly due to increaseinairport charges and
cargoincome.
TheAuthorityhas a Civil Aviation Training College atAllahabadfor impartingtraining on
various operationalareas likeAir Traffic Control, Radars,Communication,etc.The
authoridymaintains the National Institute ofAviation Managementtraining programmes
and refresher courses. In addition there is a Fire ServicesTraining Schoolat Narayanpur
nearKolkataand the Fire Training CentreatNew Delhifor impai-tiiigtraining and
conducting refresher courses on fire fighting rescue services.
During Ninth Plan period, the emphasis is on upgradition and expansionof new airports.
The capacity ofthe two major international airports of Mumbai and Delhi to handletraffic
wouldbe augmentted. In respect of thedomestic airport at Mumbai,Phase I11Terminal
Building is to be constructed during Ninth Plan period with the latestof state of the art
technology in the airport management, At Delhi, the new Terminalbuildingat the domestic
airportwill afterto additional 10millionpassengers.Communicationandnavigational
facilitieswould be improved in the interest ofsafety. Speedand efficiency would be
ensdied in passenger and cargo handling. Apart from the national camers, private agencies
would also be encouraged in the provisions of ground handling facilities.
6.8 DIRECTORATE GENERAL OF CIVILAVIATION .
Air Transport /
TheDirectorateGeneral of Civil Aviation(DGCA) isthe regulatroyorganisation for
earcing civil air regulations, It is responsible for: (1) regulatioilof airtransport servicesto/
fr6m andwithinIndia; (2)registration of civilakcraftin Iiidia; (3)formulationof standardsof
ainploWliness for civil aircraft reg9tered in India &d grant of certificateof airworthinessto
sufiaircraft; (4) licensing of pilok, aircraft maintenance engineersandflight engineers;
(5).&ensing of aerodromes in India; (6) investigation into air accidentsand incidents;
(7) bflementahn ofbilateral airservicesagreement with foreign countries;(8)hplemen-
tationb'fbilateral air services agreement with foreign countries; (9)rendering advice on
mattbfg relating to air transport; (10) processing of aviation legislation;(1I) supervisionof
trainhg activitiesof the flyinglgliding clubs in India; (12)developmentof lightaircraft,
klidersandwinches, and (13) type certificationofaircraft DGCAalsocoordinatesall
regulatoryfunctionswiththeInternational CivilAviation Organisation(ICAO).

5. International Transport
System
fiemain thrust during Eight11and Ninth Plans has been 011 stepping up regulatory control .,
kough re-organisation,expansion of existing disciplinesand development of human
resourcesby intensiveadvancedtraining, it would also replace overage trainer aircraftin
FlyingClubs.
I
6.9 OTHER AUXILIARY ORGANISATIONS I
ApartfromAAI there are afew otherorganisationswhich provide auxiliary servicesin
India.111eseare :(1)Bureau of CivilAviatioll Security(BCAS), (2) Indira GandhiRashtriya
UranAkademy (lGRUA), and (3)HotelCorporationof India (UCI). Let us discusstheirrole '
one by one.
6i9.1 Bureau of CivilAviationSecurity(BCAS)
TheBureau of CivilAviation Security(BCAS)is the nodalbody on all civil aviationsecurity
4matters.it is responsiblefor laying down the standards of the pre-embarkation securityand
antilabotage measures inrespect of civil flightsin India, and for monitoring their
enfonncernnt at the airports through periodicallsurpriseinspection and conduct of dummy
checks.It also impartstraining in aviation security on a regular basis.% has four regional
officesatMumbai,Delhi,Kolkata and Chemai which have a bomb detectionand disposal
squad each. TheBureau bas sniffer dog sqads at the Delhi, Mumbai Kolkata, Chennaiand
Srinagarairportsfor detectingexplosivesandexplosivematerials.
6.9.2 IndiraGandhiRashtriyaUranAkademy(IGRUA)
ThelGRUAwassetup in 1985taprovide trainingfor commercialpilots. The Akademy
locatedat Fursatganj,U.P. is equipped with modern and sophisticated trainer aircraft,flight
simulators,computerbased trainingsystem(CBT),ownATC and nlnway (recently
resurfaced),and audio-visualtraining aids for impartingeffective flying and ground
training.Flyingtrainingisconductedon TrinidadTB-20 single engine and King Air C-90A
twin-engineturboprop aircraft,fittedwithmoderninstrunlentsand avionics. Commercial
Pilots Licence course with multi-engine endorsementand Instruments Rating are conducted
on aregular basis.The Akademyhas trained 306Fixed Wing pilots and 20 Rotary Wing
pilotstillnow.Refreshertraining on Simulatorhas alsobeen impartedto 85 individuals.
TheAkademy, was initiallybeing fundedby the Government,Air India and IndianAirlines
formeetingitsrequirementtowards capitalexpenditure.However, sincethe major
beneficiariesof thepilots getting thetraining fromtheAkaderny are the two national ,
carriers, viz., Air India and IndianAirlines, it was decided that they should be requiredto
contribute towards the expenditure of theAkaderny.
With the entry of the private operators on the civil aviation scene, the national camers are
nomore the onlybeneficiariesof thetrainingimpartedby the Akademy. Therefore,
contributionswillalsobe raised fromtheprivate airlines.Efforts willbe made to makethe
Akademy self-sustainingby increasing the number of t~aineesand enhancing the fees
chargedfromthe trainees.
6.9.3'HotelCorporationofIndia(HCI)
TheHotel Corporationof India is wholly ownedby Air India. It operates a chain of hotels
located at~ornba~,Delhi, Srimgar andRajgarbesides flight catering units atBombay and
Delhi. Itsfinancialperformancehas not been satisfactory.After a gap of 11years,however,
it has tuned the comerand is earning profits since 1994-95.The compa~iyhopes to earn
profitsduringNinthPlanperiod. AirIndia will explorethepossibilities of dis-investmentin
thecompany duringNinth Planperiod.
6.10 INDI4'S EXPORT-IMPORT TRADE'BY AIR
As stated earlier, air transporthas made rapid strides during the last three and a half
,
Acades.A$of now, almost25 per rjent of the total world trade, in terns of value, moves
. air.India's airborne trade has alsowitnessed a similar trend. Thetotal value of airborne
trade (exportsandimportstakentogether)ofIndiahas imp~ovedfrom Rs.13,975CrOreSin
1988-89toRs.1,01,299croresin1998-99,and thepercptage share of airbomctrade totot$
foreigntrideincreasedfiom28.82%in1988-89to 31.88%in 1998-99. Table 6.4shoy&e
growth in share of foreign trade by air in total foreigntrade of India. Air Transport
Th9shareof exports by air to the total export forthe year 1998-99was about 33% while the
share of importsby air to total import during the year under review was 31%. The growthof
exportby air during the year 1998-99comparedto thepreceding yearwas about 24.2%
whereas a growth rate of about 12.63%is seen in the case of total export.
, Table 6.4:Shareof Foreign Tradeby Air in Total Foreig~nTradeof India During
1988-89 TO1998-99
(Rupees Lakhs)
Yekr TotalExport Air-brone Percent- Total Air-borne Percent- Percent-
Including Re- Export age Import Import age ageshare of
Export including Share Share Air-borne
%Export Trade to
Total
Foreign
Trnde
6.10.1Analysis By Airports
Thebeginning of air cargo service in India was made in 1975with the setting up of firstAir
CargoTerminal atKolkata. Subsequently,suchAir Ciirp ~ e l m i n a l s / ~ o ~ ~ l e x e shavebeen
setup at the Gateway Airports of Delhi, Mumbai,'Chenn~iand Thiruvanantapuramand also
atinlandairportslike Jaipur,Varasasi,~mritsar,Ahmedabad,Bangalore,Madurai,
Hyderabadand Cochim. These aircargo complexe providerequisiteinfrastmcturalfacilities
- .,
for air cargo booking, pre-shipment inspection and certification,custom clearance, storate
etc., under oneroof with single window clearance for export by air. The cargohandled by all
airportsoflndia in 1989-90to 1998-99isgiven in Table6.5. The date giveninTable 6.5
clearly shows healthy growth rate in case of both export and imports.
Table 6.5:Cargo-Handled by Airports of India During 1988-89To1998-99
(Gross Weight in .OOOKg.)
Year Exports %Growth Import %Growth TotalVol. %Growth
ofTrade
1988-89 1972.18 14.4 696.49 -13.4 268.67 5.6
1989-90 2347.45 19.0 935-46 34.3 3282.91 23.0
1W91 2438.96 3.9 986.64 5.5 . 3425.64 4.3
1991-92 3419.50 40.2 1048.79 6.3 4468,29 30.43
1992-93 4626.26 35.2 1201.94 12.92 5828.20 '30,43
1993-94 5088.32 9.1 823.54 -31.84 5911.86 1.44
W94-95, 3082.67 -39.42 :918.43 13.95 4021.10 -31:98
1995-96 2825.18 -8.35 1109.75 18.25 . 3934.92
-2.14
199697 3035.84 7.46 1251.97 12,82 4287.81 8.97
1997-98 3401.36 12.4 1456.73 16.35 485809 13,30
'1998-95, 4142.68 21479 2016,% 38.46 6159.65 26.79 ,
Thequantum gfcargo hadled by the major airports is presented inTable 6.6. It can be seen
f~ this Tablethat duringthe year 1998-99,percentage shire of exportthrough Sahar
Airport wasmore than48%.Whereas the contribution of fivemajor ports viz., Sahar,
Meemmbakam,PI,Bangalore,DumDum together constitutedneraly 98%.Incase ofIGI'

6. (Palm)the contributionwas around 30%. In terms ofvolume of cargo handledfor exportby
these fivemajor ports the contributionof SaharAirportwas the highest followedmuch
behindby IGIduring 1998-99.These two airportscoveredmore than 78%of total export
cargo and about43% of the total import cargoIn trrn of value of cargo handled,these two
airportscoveredmore than 70% of the total exportsand about 64% of total imports cargo.
Table6.6 :GarmentsShareofAirports inAir-Cargo Handled in
Terms of Gross Weight in 1998-99
!
(Gross Weipht ill Lakh/Kvs.) 1u 0 - ,
Airports Exports %Share Imports % Share Total % Share
(Imp. &Exp.) Vol.
Sahar(S.Cruz) 2001.77 48.32 632.10 31.33 2633.88 42.76
I.G.1,(Palam) 1252.54 30.24 242.45 12.03 1495.00 24.27
Meenarnbakam 472.95 11.42 958.17 47.51 1431.11 23.23
(St.Th.Mt.)
DurnDurn 213.42 5.15 72.08 3.57 285.50 , 4.64
Bangalore 132.97 320 62.63 3.11 195.60 3.18
Cochin 4.95 0.12 7.16 035 12.11 020
Ahrnedabad 9.66 023 19.82 0.98 28.48 0.47
OlherPorts 54.42 132 22.55 1.12 76.97 125
6.10.2ExportCargoMix
The exportcargomixformovement byair fromIndiacomprisesperishables like freshfrutis
and vegatables,freshand chilledmeat, and garments,textiles, leather goods, handicrafts,
gemsandjewellery.'Of these, twoitemsnamely, readymadegarments and textilesand
perishables together accountfor 64% of the totalvalue of exportsby air. it is further
observedthatreadymadeandtextilesarethe main exportitemthrough IGI and
Meenambakamairports,while gems andjewellery, leathergood and natural silkyarn and
fabricsarethemain exportitemsthrough Saharand Cochin airports. Drugs, pharmaceuticals
and finechemicalsare themainitems exportedthrough Kolkata,Bangalore andHyderabad
airportsrespectively.Onthe otherhand,themainimportitem through Kolkata airportis
machineryexcept electricalsandelectronicandthrough Meenambakamairport is electronic
goods andthroughIGI, Ahrnedabad and Bangalore airportsis gold and silver. In case of
SaharandCohimAirports,the main items of imports are pearl and precious stones,and gold
and silverrespectively.
6.10.3 Constraintsof~ i rCargo
Despiteintroductionof Open SkyPolicy, theproblem of air cargo space continuesto remain
I
in respectof certain cargos and to certain destination.Procedural delays in cargo clearance
and inadequatehandling'facilities at some of the terminals are other hurdles in the smooth
movement of exports. Theshippersinvariablyfaceproblemsin timely shipment due to
mounting backlogs atterminals,especiallyduringpeakperiods (January to July).Main
reason forthis is the directionalimbalancein the exportand import cargoes at certain
terminals.
6.10.4AirCargoTariff
Air cargo tariffs containingthe rates, rules and procedures are published in the publication
calledTACT(TheAir CargoTariff). It isjointly issuedby the airlinesin three volumes;
VolumeI containingthe generalrules,regulationsandprocedures, andVolumes 11andm
containingthe freight rates. The rates have to be filed with and hproved by the respective
governmentswhosescheduledairlinesaremembersof IATA.
I
Freight chargesareusually for onekg, and fractions are rounded off to the next !4 kg. In
volumetricterms, onekg.is equalto 3'66cubicinches or 6,000 cubiccrns.Consignmentsof
volume weith !hkg arecharged at therateof 3,000 cubiccrns. International air cargorates
differfromairportto airportand donotincludesurfacetransport, andtrans-shipment charges+
The rate structuringdependson the amount of traffic,competition, types and quantitiesof
' pnrnmodities, valueof commoditvandspecialhandlingrequirementsinvolved.
1
Therearevaioustypes of freightrates suchas General CargoRates (GCR),Minimum
Charges,SpecificCommodityRates (SCR), ClassRates,FreightA11Kinds(FAK)Rates,
ContainerRates, Unit Devices (ULD),DeferredCargoRates,UnifiedCargoRates,Group
Rates and Charter Rates.
In every region of the world, all countries dependon the aviation industryto fuel their
economicgrowthand their financialstrength. In 1989the industryprovided at least 21.
millionjobs for the world's workforceand US$700 billion inannualgrossoutput.
Privatisation has pushed alongby laisez-faireeconomic doctrinesprevalent among many
governments and also because of the immediate need to cut public spending.
Many governments,while retaining state-~wnershipof the national airline,re-organisedit to
act as aprivate company and to operate in a commercialcompetitiveehvironment. European
airlines such as Air France and Lufthansa, though still majority state-owned,are
increasinglyrequired to operate to commercialratherthan public servicecriteria. Many
state-owned airlines have substantially reduced the level of government ownershipand are
allowingprivate investment.Arouiid 40 airlinesaroundthe world arecurrentlyup for
privatisation.
TheIndianScene
In Inditt, is was inApril 1990that the governmenthad allowedprivate air taxi operatorson
non sch~di~led-routes/c~edflight with 30 seater capacitywhichwas laterrevised to 50
seaters. To meet the growing passenger demand,the domestic air transport industry was ,
demonopolised in 1994by repeal of the Air CorporationsAct, 1953and privateoperators
were allowed to run scheduled flights.
A new policy for private investment in the domestic air transport servicessector was
,announcedinApril, 1997allowing for 100per centNRTOCBequityand40per cent foreign
equityparticipationin domestic airlines.However,equityparticipationby foreignairlines,
directly or indirectly,has not been permitted. Under thenew policy, an airlineowned and
controlledby any Indian national would have the right of fiee entryand choiceof aircraft,or
indirectly, has not been permitted. Under the new policy, an airlineowned and controlledby
any Indiannational would have the right of free entry and choice of aircraft, type and size.
Although allprivate airlines are allowed growthin capacity,whichispre-determined on the
basis of trafficgrowth, ftrstpreference would be given to IndianAirlines. At the sametime,
total capacity of any private operator should not exceed 20 per cent of the aviation market.
Besides, the existing route dispersalguidelines wit11 respect to categoriesI, I1and 111
pertaining to trunk routes, feeder routes and social sectors will be applicable to private
airlines. In addition, the policy callsforstrengthening the role of IndianAirlinesas the
premier domesticcarrierwhichpre-emptscompetitionfromjoint veritures.
A separatecomprehensive policy on Airport infrastructurewas alsoformulatedin
December.The Goxrrnment has recognized theneed for theparticipationofprivate parties
(hcluding foreign ones) both for reasons of bridging the gap in resources as also to bring in
greater efficiency in management of airports. In the case of high-cost projects involving
internationalhubs, Government may seek internationalor bilateralcooperation, the actual
implementationof the project would be entrusted to consortia interested in turnkey
execution on.jointventure basis. Foreign equity participation in such ventures may be
permittedupto 74 per cent with automaticapprovals,and upto 100per centwith special
pennissions. Restructuring of some of the airports is to take place through long term leasing
route.
, 6
Aviationis highly capital intensive sector.'But, the conditionshave not been made
conducive for private operators. Of the seven scheduled private operators, Modiluft's
financial arrangement with Lufthansa soured and East West burnt itselfout because of its
connections with an underworld don, Those which remain,ed in the field concentrated and
over expanded on trunk routes, made inroads into ~ n d i ~ k i r l i n e smarket share on these
'
routes and, in the process, reduced the capacity of the national carrier to subsidisethe
operations on the other routes including those in backward and isolated areas. Led by over
,
Air Transport 4

7. International Transport enthusiasm,these new entrants operated without adequate trained personnel and
System experience,sustainedon the poached highly skilled manpower trained by the Indian
Airlines and benefittedby the route network developed by the national carrier during the
last four decades. However, unhealthy business practices and the tendency to offer more
frills to passengersbrought the financial crisis of some of the new entrants. Since most
aircraftin the private sector are taken on lease, the high lease cllarges and the ageing, fuel
guzzling aircraftleased out mostly by other developing countries add to the woes of the
private operatorsmost of whom lack tlle expertise to run an airline. Added to this, are the
Airports Authorityof India charges for landing,parking and navigation which increase
operatingcosts of the private air1ines:kght now, there are only two scheduled private
airlinesprovidingregular domestic air services and there are 41 non-schedule6 operators
aviationand air transportservicescateringto 41.4%of the domestic air traffic.
requirements durlng the Ninth Plan had indicated the expected passengers traffic during
1997-98tobe 16.02million. However, inview of the actual caniage for the previous year, d ~ e
figure had been scaled down to 13.2million. The slow growth of domesticair traffic is
attributed to the fact that IA did not expand its fleetas projected. On the contrary, it added
to capacity on its international routes with existing fleet. Secondly,only 10aircrafts were:
inductedby private airlines during 1996against 11withdrawn fromthe market by non-
operational airlines. Thirdly, there were restrictions onprivate operators on induction of
bigger aircraft due to infrastructgral constraints. It may be noted that smaller aircraftneed
higher load factor andhigher air fare to become economically viable.
Air Transport
i The LA slipped into the red after the grounding of A 320s following the Aurangabad air
I
crash. In 1996-97, it suffered a loss of Rs. 40.75 crore and it was onlyin 1997-98ithad a
I
turnaround and startedearning. Air India was aprofit eaming company till 1994-95.In 1995-
96,itsuffered a loss ofRs. 244.06 crores and in 1996-97,anotherRs.181crores in 1997-98
I andreported a loss of 174crores in 1998-99.Both carriers sufferedloss of revenue and
I imagedue to lack of full capacity utilisation, ageing fleet andintensive labourproblem. IA
I
hasa fleetof 53 and A126 aircraft. The two with their massive manpower and
,
multicipilicity of unions, have had to suffer huge losses in man hours and capacity
utilisation. Both have now gone in for 'productivity-linked' agreementswith different
unions. As a result, the pilots salaries have zoomed from Rs, 30,000 odd per month ot up to
Rs. 3 Lakh. This was a knee-jerk move by the management to stemthe large-scaleexodus of
IA pilots to private airlines in the domestic sector. IA fares have kept on increasing from
year to year. With privatisation, there was a move to merge A1and IA,but with their
I
manpowerof 22,000 and 35,000 respectively, synergy is stilla farawaydream.Though there
is under-utilisation of cargo space, no measures are being taken to promote cargo traffic
except sparing it from additional hike in rates and giving some concessions to selected
commodities.
Privateinvestorsare not interested in respollsibilitieswhich affect their profits adversely.
As Ulli Bauer of SH&E,a consultancy company which advises governments on airline
privatistion,notes that: 'State-ownedairlines are subject to considerable ecorlomic head
wind that private investorshope to elude. These handicaps range from having to serve
destinationsfor politicalinstead of cornmecialreasons to obligations in performing essential
air servicesor crosssubsidisingmoney losingmarkets'. Privatisation, in combination with
deregulation,detaches an airline from overall government economic or transport planning. B
shedsthe public serviceresponsibilities of an airline and its air services. It also effectively
getsrid of any form ofpublic accountabilityand democratic control.
All said and done, despite imposition of certain conditions to give a level playing field to
Indian Airlines, it is no longer the master of the Indian skies. It has lost 40 per cent of its
market share and a largecliurlkof its trained commanders since the enhy of private air
operatorsin Indian skies.
Expense ratios indicate the fuel and oil expensessnatched away a major part of operating
revenue followed by staff salaries, depreciation and maintenance expenses. Yield to cost
ratio, which is a good yardstic for comparing different air carriers is fairly satisfactory and it
corresponded to net profit to operating ratio. A wide variations is noticed between
profitability ratio and the ratio of net profit to capital employed which speaks of the growing
level of non-operating expenses. While the fixed assets turnover rate is very low, the
working capital turnover rate is high. Investment turnover rate stood fairly small, but
showed an upward trend which is due to the introduction and intensive use of modem
aircraft.
CheckYour Progress B
1 Name the organisationsother than AAI which help in regulation and smooth
functioning of air sewices in India
............................................................................................................................................................
2 What are the facilitiesprovided by air cargocomplexes for handling the export cargo?
While A1and IA are getting their act together and slowly waking up to the competition in
the skies, time isrunning out. Already five airlines (Lufthansa, United Airlines,Air Canada,
Thaiand ScandinavianAir Service)have formed a commercial StarAlliance.BritishAirways
has gone in for a complete image change and has had a tie-up with United Airlines and
Qanta's. The way to enhance the market is by forming alliances and moving away from
bilaterals to multilaterals.Air India has also formed an alliance with Air France, whichwas in
the red till recently. However, its negotiations with British Airways,Air Canada and
Singapore Airlines didnot take off.
........................................................................................................
3 Statewhichof the followingstatements are True or False.
i) Readymade garmeiltsand textiles and perishables taken together account for 64%
of the total value of export cargo.
ii) Hotel CorporationofIndia has beenpromoted by Welcome Group of Hotels.
iii) Thekeyto improvingthe financialperformanceof Air India lies inmaximising
yields and increasingthe profit margins.
iv) The Indian Airlineshas targeted a markei share of about 70% in the Ninth Plan.
6.12.1 Crisis of Safety'
In the last few years a string of aviation disasters had led to an unprecedented crisis of
public confidence inhviation safety. For the first time there have been mass refusal by
passengers to board individual flights because of concerns about safety. Moreover, the
public andthe media are making a direct link between deregulation and safety.The airline
industry argues vigorously that safety is never compromised by commercial considerations.
The reality of course is that safety involves significantoperational costs, including the
thoroughness and efficiency of maintcllance checks, the age of aircraft, the training level of
employees, the working hours and fatigue levels of both groundstaff and air crew.All of
thesecome de!,iierce pressure in a climate ofcompetition.
I
v) A new policy for private investmentin domestic air transport was a&ounced in
April 1997allowingfor 100%NRIIOCBequity.
vi) At present there are only two sheduled/private airlines providing regular domestic
airservice.
-,..
Not only have ggvernments failed to provide national aviation authorities with the extra
monitoring resources required, they have begun to lower the standards themselves. Those '
whZh set higher safety standards are seen as putting their airlines at asompetitive
disadvantage. I
1::
6.12 PROBLEMS AND PROSPECTS
The country's domestic and national carriers have not yet been able to take full advantage
of the open skiespolicyanda 12.5per centprojected annual growth in airtraffic .The
veport of the sub-gruop to assess the 'growth in passenecr and cargo traffic and capacity-I

8. ,nternrtionrl Transport
System
6.122 PolicyFrameworkandPrograrmes fortheNinth Plan - -
Duringfhc~ b t hplan (1997-2002). theobjectiveinrespect of the domestic air&nsport ,
operationwouldbe to provide adequate capacity, ensure healthy competitionbeween thd
privateand Ulc public sector as alsosafe andreliable operations.Several significant
'
developmentstook~lacein the fieldof civilaviationduring the EightPlan period. Withthe
repealof theAir Corporation~c$-%953m 1994,themonopoly of Indian Airlines, Air Indis
and Vayudoot over scheduled.$'fransportservice~d;Consequently,--. - - 6 private .
operators, who were hitherto operating as air taxis,were granted the status of scheduled I
airlines.DuringEighthPlan, 7 scheduledoperatorsand 19air taxi operators have been given
permits for operationof domesticair transport services in India. With the enactmentofthe
AirportsAuthority Act, 1994,thetwo airports authorities viz., the ~ntemation&~ir~orts'
Authority of India(IAAI)andtheNationalAirportsAuthorityW M ) were mergedw.e.f,
1.4.1995toformasingleunifiedbody,viz., theAirportsAuthorityofIndia (AAI). Vayvht
LimitedwasmergedwithIndianAirlinesLimitedw.e.f.25th May, 1993.Againsttheplanned
outlay ofRa. 3,998 wokeasumofRs.7,334.11crore(Provisional)was spent duringthe
EighthPlan.Thebulk df tho outlay(98.8%) was financedfromInternal andExtra Budgetary
Resources.(IEBR) Th,cplans ofAir India,Indian Airlines,PawanHans andHotel
CorporationofIndiawereentirely financedfmmtheir IEBR.
In the domestic aiihanrport operation, the objectivewould be to provide adequatecapacity,
ensure healthy competition between the private and the public sectors as also safe and
reli~bleoperations. To achievethis objective,the private sector would be encouraged to
, prdjide air service and atthe sametime, it would be ensuredthat only the technical and
financially soundplayers enter thefield. In this regard, transparent norms would be worked
out and regulatory mechanism strengfhrnedwith a view to promotihg a healthy competition
amongst the airlines andprotecting the interest of the users.
Thenational carrierstillplays animportantrole in theprovision of air services in the
country. Oneof thepolicy objectivesforthe developmentof civil aviation in the Ninth Plan
wouldbe to create a proper environment to enablethe national carrier to operate to full
capacity and bear the socialburden which it is required to carry and, in the process,
ensuring that the country gets adequate return for investmentmade in developing
infrastructute,intraininghigh1y;@lled manpower and in acquisition of the sophisticated I
and costly array of equipments'andinstruments.
The bulk of the cappdityof both th; IndianAirlines and the private operators is deployed
on trunkroutescarryingheavytraffic. The region routes,particularly, in isolatedand
backward areas are characterisedby shorthauloperation,un-economic load factor, high
cost of operation andlow revenue yield. The operationson these routes are usually
unviable. In order to ensure that the scheduledoperatorsprovide air services on these
routes, Route Dispersal ~iidelineswere issued. Under these guidelines, scEMe8
operatorsoperating on specifictnJnkroutes are required to deploy a part of their capacity
on regionalroutes including services on routes serving remote and backward area4 is borne
by the IndianAirlines.It is necessarythat the financial losses of providing air sewiieson
these routes are shared equitablyby all operators. it is equally important to ensure that
remote areasareprovidedwithreliableairservices.Tomeetthese objectives, a more
transparent and enforceablemechanismfor cross subsidising these routes from the surplus
generatedby operationon trunkroutes will be evolved.
htemational air services are governedby bilateralagreements,The general objective.of
India's bilateral civilaviationrelatioqswillbe toprovide adequate capacity to facilitate"~@Y
moniewtof intemationaltraffic'to/fro&~ndia.But indoingso, as balance will be struck
between the interestsof the national carriers on the onehand, and promotion of trade,
commerceand tourismandconvenienceofpassengerson the other. A more liberal '
. approachwilJbe adoptedwhilenegotiating tJieopening up of new routes, under-sewed
routes and routes providing connectionto neighbouring countries.
The future development/upgradation of airportsinthe country will be undertaken onhe
basis of the rolethey are expectedto play in handling the air traffic. Master Plans for the
developmentof intemational,nationalandregional hubs shall be prepared and
upgradation/modernisationtaken up accordingly,Privat: sector invegmenf &illbe ' '
encouragedinthe constructionofqewairportsfromgreenfieldlevel andlegal framework
willbe createdforptivateljoiqtparticiptttionin the airlinesand airport developmentp r o ~ e ~ ~
Facilitiesformaintenance of aircraftsof domesticlforeignairlineswill be developedand
training of foreing pilots will be encouraged so asto promote regionalcooperationand
etfiance foreign exchange earnings.
+
.
'-.
Air transport plays a significant role in movement of cargoby virtue of its advantageof
speed. As of now, about 25%of the total world trade moves by this mode oftranspdrt an&
the shareof airborne trade to total foreigntrade was 31.88%.
The civil aviation in India is structuredinto three distinct financialentities-operational,
infrastructural ahdregulatory. 1ndianPrirlines(IA) and a fewprivate airlinesprovide
domestic air services and Air India (AI)provides internationalservices.Apart fromthese
two, there is Pawan Hans Helicopters Limitedwhichprovideshelicopterservicesto oil
sectors and certain state government and publis sector undertaking(PSUs) and Nola
Eastern States. The infrastructural facilitiesareprovided by Airports Aothorityof India
(AAI).TheDirectorate of CivilAviation (DGCA)actsas theregulatoryhody for enforcing
civil airregulations. In addition, there are certain auxiliaryorganisationssuchasBureau of
CivilAviation Security(BCAS) which is responsibleforensuringadequate security
,
arrangements at theairports, India GandhiRashtriyaUranAcademy (IGRUA)whichprovide
training for commercial pilots, andHotel Corporationof Indiawhichoperatesachain of
hotels and also provide flight cateringservices.
Air transport in India has made rapid strides during the last three and a half decades. The
value of airbornetrade (exports andimportstakentogether) was ofthe order ofRs.1,01,299
croresin 1998-99.Airport-wise analysisshowsthat the twomajor airports,Sahar(Mumbai)
andIGI (Delhi), covered more than78%of thetotal exportcargo.andabout 43% of the told
importcargo.
;,.
The exportcargo&of movement by air fromIndiacomprisesperishables,textiies,
leather goods, handicraft, and gems andjewellery, cereals. Of these,two itemsnamely,
textiles andperishables taken together account for about 64%of the total valueof exports
by air. Inorder to help Indian exportersandmake their exportsmore competitive, the
Governmenthadintroducedin April, 1990an1OpenSkyPolicy' forcargo andpermitted
market forces to determine cargo'tariffswithIATA rates as the floorrates. Despite such
policies, the problem of aircargo still space continuesin respect of certaincargoes and
certain destinations.
The Government of India recognised the need fortheparticipationof privateparties in
domestic air transport and has taken up certainpolicy jnitiatives in this direction.These
include open skypolicy, preferential treatmentto farcihairlines Toradditionalpas-cumcargo
flights on terminal basis and favourableconsiderationto private operators and association -
of exporters toundertake cargo operations on their own,Apart from these, a new policy for
private investmentin the domestic air transportservicesectorwas announcedin April 1997.A
separatecomprehens'ivepolicy onAirportinfrastructurewas also,forrnulatedinDecember.
Somehow, thecountry's domestic andnaturalcarriershave not beenableto take full
advantage of the open sky policy and the projected annualgrowthin airtraffic.
Alr Transpo,fl
The slow growth in passenger and cargo trafficcah be attributed to a veriety of factors such
as non-expansion of fleet, agency fleet, intenselabourproblems,high cost of operations,
low revenue yield on regional routes, under utilisationof cargo space, securityproblems,
uneconomic load factor, procedural delaysin cargo clearance andinadequatehandling
facilities at some of the terminals, andother hurdlesin smoothmovementof exports.
Severalsignificant developmentstook place in the fieid of civil?viationduringthe Eighth
Plan period. The Ninth Plan provides for creating adequate capacity, encouraginghelthy
competition between the private sector and public sector as also safe and reliable
t operations. Oneof thepolicy objectivesof the developmentof civil aviationinNinth Plan
would bk to create proper invironpent20 enablenational carriers to operate to full capacity
and ensure adequate return on hyestment.
An effort also sill be madeto deveiop/upgrade the airports in the countryandprovide
necessaryfacilitiesfor maintenance of aircrafts;of domestic/foreignairlinesencouragingat
p e sametime, private investment insuch activities.

9. Internationml Transport
~ystcrn 6.14 KEY Worn$
fir Cargo Complex: Aircargoterminalprovidingrequisiteinfrastructuralfacilitiesforair
cargobooking, preshipment inspectionand certification,customclearance, storage,etc.,
under one roof.
Air Cargo Tariff :Air freightrates andthe rules and procedures for determination ofthese
rates.
GatewayAirports :InternationalairportslikeDelhi,Calcutta,Mumbai, Chennai and
Thiruvananthapuram.
Hinterland Airports: Inland airportslike Jaipur,Varanasi, Amritsar, Ahrnedabad, Bangalore,
Madurai,Hyderabad andCochin.
Investment Turnover: RatioofSalestoCapital employed.
Open Sky Polie :Policyallowingprovision of air servicesby private operators.
StatutoryCorporaton :Acorporation establishedby specialAct of Parliament.
rn
6.15 ANSWERS TO CHECK YOUR PROGRESS
A 3 (i)25 (ii)31.88 (iil) mee (iv) support, collnect (v) AAI
B 3 , (i)True (ii)False . (iii) True (iv) False (v) True (vi) True
Structulre
7.0 Objectives
7.J Introduction
72 Significance of OceanTransport
7.3 SalientFeaturesof CommercialShipping
7.4 Developmentof CommercialShipping
7.5 Operations and Constraintsof a Ship
7.5.1 Shear Forces and Bending Movement
7.5.2 Centre of Gravity
7.6 Types of Ships
7.7 Registration of Ships
7.7.1 The Mechanics of Registration
! I
7.7.2 Alteration and Termination of Registration
7.8 Classification of Ships
INAL.QUESTIONS 7.9 Structure of Shipping Services
1 Describethe role of air transportin movementof cargo in overseas trade of India.
2 Outline the structure of civilaviation in India and discuss the role of AAI and DGCA
in the fbnctioningof airservicesin India.
3 Describethe working of Air India andlndiaiiAirlines and state the impact of
allowingprivate operators on their functioning.
4 What are the problemsfacedby air transport in India and how far the policy
frameworkandprogrammesenvisagedfortheNinth Plan could help in ilnprovingthe
air services.
5 Analysethe role of major airportsin India in handling overseas cargo, and state the
constraintsfaced by them.
6 Writeexplanatorynotes on any threeof the following:
a) Significanceof airtransport
b) PawanHansHelicoptersLimited
. c) Air cargo tariff
d) IGRUA
e) BCAS .
7.9.1 Liner Shipping
7.9.2 Tramp Shipping
7.10 Glossary of Shipping Terms
7.11 LetUs SumUp
7.12 Key Words
7.13 Answers to Check Your Progress
7.14 TerminalQuestions
7.0 OBJECTIVES
'After studying this unit, you should be able to:
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@ explain the significance of shipping
@ outline salient features of commercialshipping
describe the operations and constraints of ship
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' explain the nature and uses of varioustypes of ships
.describe the importance and procedure of registration of a ship
explain the need and process of classificationof a ship with classification societies
distinguish between liner and tramp shipping
explain the various terms used in shipping.
7.1 INTRODUCTION
Among different modes of transport,namely, road, rail, air, andwaterused forphysical
movement of goods traffic,in internationaltrade, ocean or seatransportplays a proverbially
most important role. You know that road and rail transport, though very importantas a link
transport, are more suited for short distancesand used in cases where either the exporting
and importing countriesare having geographicalproximities or where use of sea transport is
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not possible. Similarly, use of air transport, though it has made rapid strides in recentyears,
suffersspace limitations and higher freight costs in case of most commodities.As against
,these,the ocean transport has the capability of canying a large array of items inthe same
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shipat comparatively cheaper freightrates, particularly over longer distances. You have
leantabout the nature and significance of air transport in internatiopl movement of goods,
In,thisunit you will learn about the importanceof ocean transp&, the features of
commercialshipping, the structure of shipping servicca'and)he glossary of shippingterms.
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