DELHI- India’s youngest cabinet minister, 37-year-old Ram Mohan Naidu, pledges to reshape the civil aviation landscape dominated by IndiGo (6E) and Air India (AI).
Speaking at the ET India Ascends event, Naidu outlined his vision to break the current market duopoly and streamline entry barriers for new airlines.
Civil Aviation Minister on Duopoly
“We won’t encourage a duopoly,” Naidu declared, emphasizing his commitment to market diversification.
Air India Group has now completed the integration of Vistara and it now owns over 28% market share while IndiGo already has a 60-62 market share. Both combined own 90% of the market, making a duopoly.
Such a duopoly is great for airlines but is not a good thing for travelers.
The minister detailed three key strategic initiatives:
Financial Support Mechanisms:
- The ministry actively monitors airlines facing financial strain
- Policy assistance flows during global fuel price spikes and geopolitical conflicts
- Continuous dialogue is maintained between the government and carriers
- Viability gap funding supports unprofitable remote routes through the UDAN scheme
- State governments receive requests to reduce aviation fuel taxes
State-Level Collaboration:
- States recognize aviation’s role in economic growth and job creation
- Multiple states independently initiate airport construction
- Central government guides while states drive implementation
- The focus remains on benefiting both passengers and industry stakeholders
Price Control Strategy:
- Ministry tracks airfare patterns to prevent excessive pricing
- Direct intervention occurs during unusual price surges
- New policies encourage regional airline entry
- Supply-demand dynamics regulate ticket costs naturally
- The focus shifts to increasing air travel accessibility
The minister reinforced the government’s hands-on approach: “We maintain active involvement despite private sector operations. Our priority prevents airline bankruptcies during temporary market turbulence.”
Unprecedented Growth Under Modi Govt
India’s civil aviation sector has demonstrated remarkable expansion since 2014, transforming air travel accessibility and infrastructure nationwide. Airport count surged from 74 to 157, marking India’s addition of 83 airports surpassing global comparisons in this timeframe.
Key Growth Metrics:
- Daily passenger traffic doubled from 20 million to 40 million
- Current daily passenger count: 500,000, positioning India behind only the US
- Aircraft fleet expanded from 400 to 800+
- Additional 1,500 aircraft orders pending delivery
UDAN Scheme Impact:
- Enhanced connectivity to previously unserved regions
- Launched 600 routes nationwide
- 120 routes maintain full operational status
- Financial support ensures commercial viability
- Reduced costs enable tier-2 and tier-3 city residents’ air travel access
MRO Sector Development Initiative: Current Status:
- 95% of engine maintenance occurs overseas
- Domestic expertise development underway
Policy Reforms:
- Unified 5% GST implementation on MRO components
- Previous variable rates (5%, 12%, 18%+) eliminated
- MRO service warranty extended from three to five years
- Import timeframe for parts extended to one year
Economic Benefits:
- Creates domestic employment opportunities
- Retains skilled engineers within India
- Establishes a stable business environment
- Ensures operational flexibility for maintenance providers
My Take
I think Ram Mohan Naidu is one of the dynamic aviation ministers and so far his work is impressive. He is young and energetic and is action-driven, as seen during the canopy collapse at Delhi Airport.
But Aviation is a challenging sector and it should be free and open to all so that big players don’t dominate the market and certain routes and surging prices.
There is untapped potential in regional and tier 2 and 3 markets which will require more boost from the government to help it develop and should be sustainable for airlines.
Feature Image by Siddh Dhuri | MumbaiPlanes
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