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SpiceJet Chairman and Managing Director Ajay Singh is convinced that UDAN — the regional connectivity scheme — is likely to take off in a far more convincing manner once IndiGo starts serving, SpiceJet and Air India consolidate their routes and Jet Airways begins to make its presence felt. But Singh thinks India as a country needs to look beyond its borders and try and develop as a hub for regional traffic. Edited excerpts from a conversation with Anjuli Bhargava:
How is UDAN progressing for SpiceJet?
Our first round routes were Mumbai to Porbandar and Kandla, Hyderabad to Puducherry, and Delhi to Jaipur and Jaisalmer — all of these have been making money in varying degrees. We didn’t ask for VGF (viability gap funding) for any of the first round routes. As part of round one, we will soon be starting Kanpur and Jalandhar from Delhi. Can you imagine that cities as big as these didn’t have any flights? Now we have taken 21 routes. Sikkim, Hubli, Darbhanga, Kishangarh — we have a strong line up in the second round as well. We have sought VGF in a couple of routes but not many.
When will we feel the effects of UDAN at a macro level?
The country is already feeling the effects of the scheme as I see it. Places like Kandla, Jaisalmer and Puducherry now have flights. You view it — like many others — from a Delhi and Mumbai mindset. That is may be why you are not feeling it as yet. The growth is in small cities. The second round will be really strong with IndiGo, Jet and SpiceJet there.
What worries me more is are we looking at the long-haul market and do we want to raise our ambitions? Do we or don’t we, at some point, need to start building or positioning India as a hub?
There needs to be a comprehensive policy around this and it has to be now — when your market is growing at the pace it is. Otherwise, we will have missed this bus forever. Do we want to keep shipping hubs to the Gulf and the Far East or do you want India to be that hub?
What kind of policy will help?
Make sure your flight turnarounds are cheaper than others. So, airlines are encouraged to come. You can give all sorts of concessions to make everyone choose to stop and land here.
Our ATF (aviation turbine fuel) is the most expensive in the world. What great gain are we getting from the tax on ATF? All states put together it may be around Rs30 billion a year. That’s nothing compared to what you could stand to gain if you attract airlines and develop into a global hub.
We have been telling them to include ATF in GST (goods and services tax). Give it input credit. Increase the GST tax a bit if need be. Clean up the mess and put us on a par with the rest of the world. You have allowed your airports to become amongst the most expensive in the world. Then how will we be a hub? You need to fix this. This is the moment. Either we seize it or we don’t. We have the opportunity to become an aviation superpower in the next decade or so.
We have been hearing this for several decades...
We are already the fifth-largest aviation market in traffic numbers. The number of aircraft we have on order, we will reach No.3 after US and China even if we do nothing.
If we build MROs (maintenance, repair and overhaul) with proper taxation, fix the airports, build some training facilities so you can export manpower, there’s no reason why we can’t aim for the top.
Trained manpower is at a huge premium — technicians, crew and pilots. European carriers are paying an arm and a leg for manpower. We have a huge opportunity of training and shipping people all over the world.
We have a great opportunity to manufacture aircraft here as well. At the very least, we must start thinking bigger.