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					Airport noise
Most property development has taken place with full understanding of this
factor
Sanat Kaul
Posted online: 2010-06-17 22:52:40+05:30

The Delhi High Court order of February 2010 to DGCA regarding aircraft noise
impacting the patients in the Indian Spinal Injuries Centre is the start of a new
set of issues for the aviation industry. It is interesting to note that noise, as a
subject, has been missing from Indian sensitivities. Loud blaring music played at
weddings, parties and religious institutions, unnecessary blowing of car horns and
railway trains passing habitation, blowing their shrill whistle are some issues that
have not yet been at the forefront of Indian sensitivities. In the western world,
noise pollution is as big a nuisance as water pollution and public sentiment on
noise is very strong.

Aviation noise has become a big issue in developed countries. Many cities around
the world close their airports at night so that the neighbourhood can sleep in
peace. However, one has not heard of the railways or motorways closing down
due to noise pollution.

The movement against noise pollution is a neighbourhood protest movement and
has local political sensitivities. Many airports have gone under ‘night curfew’
because of such protests. The International Civil Aviation Organisation, taking this
into account, has looked into various aspects of the problem and has managed,
over the years, to ensure that aircraft engines become much quieter and landing
procedures at airports be improved to cause the least amount of noise impact on
the neighbourhood. However, whenever it came to the issue of making air laws or
‘standards’ on noise issues, the industry hesitated. In fact, India has been the
leading country in this respect, but has always found the developed countries
blocking it. The issue is simple: If all the countries chose to, unilaterally, close
down their airports at night then it will be difficult to operate non-stop long-haul
flights, especially with new aircraft that can fly non-stop for 14-15 hours. It also
reduces the capacity of airports, aircraft and air routes, many of which are
already congested with increased air travel.

It is also true that most airports in the world are old and were constructed
outside the cities. It is the cities that have grown around the airports.

This is also true of India. Palam in Delhi and Santa Cruz in Mumbai were outside
city limits when they came up. Property developers and investors saw the
opportunity for price escalation near the airport. Hence, most property
development has taken place with full understanding that noise will be a factor.
However, having purchased the property, owners form associations and NGOs
protest against the noise.

Aircraft noise has come down over the years due to reduction in engine noise,
while the number of aircraft landings and take-offs has gone up. To resolve the
issue of noise, some airports have also undertaken to provide noise reducing
windows in the neighbourhood, from their own fund, besides changing procedures
for landing and take-off.
The closing down of airports at night (night curfew) has implications for other
countries. The US and the European Union have fought bitterly over this issue.
The EU had objected to US aircraft with old noisy engines (mainly cargo) landing
at night in Europe. When the US offered to put ‘hush kits’ or silencers, the EU still
did not budge. It was finally resolved in ICAO by a compromise solution.

In the current case in Delhi, the spinal injuries hospital has gone to court seeking
the courts’ intervention. They claim that aircraft noise is having an adverse
impact on their patients as the hospital is located near the flight path. It is not
clear why they chose to put up a hospital in the first place at the said location,
when they were aware of the noise emanating from the airport. The high court in
its judgement has stated that “some immediate measures be taken so that the
residents should not suffer”.

There is no easy way out of this problem. However, it is clear that those who
have property or reside in an area impacted by aircraft noise have done so
voluntarily, since the airport has been in existence much longer. It is also difficult
to claim that they did not know that flight movements will increase, as we all
know that growth in civil aviation is a reflection of economic growth and we
should have anticipated it.

While I would not recommend a closing of airstrip or night curfew, DGCA should
order that only aircraft with new engines, which produce less noise, are allowed
to land at night.

The author is chairman of the International Foundation of Aviation,
Aerospace and Development (India Chapter) sanat_kaul@hotmail.com
                                  Debate
             What beleaguers air safety in India?
              Economic Times, 10th June, 2010




SANAT KAUL| CHAIRMAN                  IFAAD*            (INDIA           CHAPTER)
DGCA        lacks     both      financial    and      technical      independence
IS SAFETY OF OUR CIVIL AVIATION SET-UP IN good hands? Is the safety
apparatus adequate? These are some of the questions in the mind of the public
after the Mangalore crash and the reports of ‘near-misses’ happening on a daily
basis. After Mangalore crash, there have been a series of near misses such as a
tyre burst in Delhi, a goaround at Patna airstrip and sudden descent over Muscat
while           the        pilot        took          a         toilet        break.
   These are signs that our safety apparatus is under stress. While we cheered
and gloated over the growth in civil aviation, new aircrafts and new or refurbished
airports, little attention was paid to safety surveillance. Alongwith growth of
aviation, it is essential to ehance the safety systems. In India the reverse
happened. We gloated over growth and forgot the safety. As a result, we did not
even fill up essential safety posts. With posts lying vacant over a year, they
attracted the across-the-board ban on filling vacant posts when permanent
economy cuts were imposed by the finance ministry. In 2006, International Civil
Aviation Organization rated India poorly in its safety audit. Finally, it was the
threat of a downgrade from category-II country to category-I by Federal Aviation
Authority (FAA) of US that led to a prime ministerial intervention and creation of
posts.
   We need to clarify where the buck stops and who are the stakeholders. At one
end is the Director General of Civil Aviation (DGCA), the safety regulator. The
second is the Airports Authority of India (AAI), which has the statutory charge of
air traffic management and are, therefore, the sole service provider for air traffic
management. Third is the ministry of civil aviation. Both the DGCA and the AAI
are subordinate to the ministry. The only difference is that AAI is an independent
authority with its own finances and its chairman and executive directors are
appointed by the Public Enterprises Selection Board. DGCA, is, unfortunately, an
attached office of the ministry with very little financial and non-financial powers.
The budget of the DGCA is a part of the ministry’s budget, and therein lies the
problem.
   The lack of independent status almost cripples the DGCA. Unlike in other
countries such as the US where the FAA comes under the Department
of Transport but is independent by tradition and statute, DGCA appointments are
an internal matter for the government. This puts DGCA at a disadvantage. All
essential matters have to be referred to the ministry. All accident reports have to
be approved by the ministry. He cannot create even a post of peon.
   It is high time that DGCA was made into an independent authority with
financial independence and with power to create technical posts and fill them up.
Without such independence, issues of surveillance over safety oversight in
aviation will remain a pipe dream. Further, the issue of accident investigation
(including near-misses) should be with an independent statutory authority similar
to National Transport Safety Board of the US, an autonomous body for all
transport modes including the railway and roads, and kept independent of the
government.
  *International Foundation of Aviation, Aerospace and Development




V            THULASIDAS| FORMER                  CMD,             AIR         INDIA
Safety      concerns      are    overplayed,      flying     is    safe    in  India
THE MANGALORE AIR CRASH HAS THROWN up questions regarding air safety in
India. It is but natural that a tragedy of this proportion will invite public and
media attention to the negative aspects of Indian aviation. It is, however,
unnatural, and typically Indian, to imagine all possible horrors and see an
accident          in        every         flight        that         takes        off.
    Is aviation in India worse than rail or road transport in terms of accidents and
fatalities? Scan any newspaper almost any day, and you will read about crashes,
on either the roads or rail lines. Are those deaths less painful or less important?
    Let            us           concentrate            on             all         the
negatives in an attempt to improve air safety in India. But, this need not be done
by imagining near misses all over Indian skies. Is it that, even if true, these
happen                        only                      in                     India?
    A quick internet search shows that in 2009 and 2010, till now, there were six
accidents in the USA/US aircraft, three each in Indonesia and Iran and two each
in India and Dubai/Dubai aircraft and one each in 14 other countries. The Air
India Express crash is the third highest in terms of fatalities, after 228 deaths in
the Air France crash in the Atlantic and 168 deaths in the Caspian Airlines crash
in Iran. There were 52 deaths in the case of US. It is pure luck that the
passengers of the US Airways flight that ditched in the Hudson river did not
drown.
    The Air France crash of June 1, 2009 does not make France an unsafe country
for air travel. If frequent accidents and fatalities happen, that certainly casts
doubts on safety standards in a country. The last fatal crash of a commercial
airline in India was the Alliance Air crash in July 2000 in Patna.
    The reason for any accident needs to be understood before we start the blame
game. Investigation in to the Mangalore crash will bring out the reason. The
earlier it is done, the better. It is important, thereafter, that the agencies
concerned, government, Director General of Civil Aviation (DGCA), airline and
airport take corrective action, promptly and transparently. This alone will send a
reassuring          message        to         the        travelling       community.
    Knee-jerk reactions from any quarters, prompted by frenzy on TV channels or
prophets of doom, should not dictate policy or corrective action. For example, the
environmental lobby baying for blood for the construction of the second runway in
Mangalore or the lobbies demanding ouster of all foreign pilots wholesale or the
impression sought to be created that a table-top runway is essentially unsafe, are
all to be taken with a pinch of salt. The regulator in India, the DGCA, has been in
the forefront of enforcing safety standards. True, India can do with better
technology, more sophisticated equipment and more skilled manpower. After all,
Indian aviation grew too fast, perhaps, in the last 5-6 years, and the regulator
also needs to grow. But, let us not send wrong signals to the international
community that Indian aviation is not safe; it is safer than that in most other
countries. It is safer than other modes of transport in India.
                          NOBODY IN THE CONTROL TOWER

For some time, India hasn't filled aviation safety posts

WHILE it would be improper to hazard a guess for the reason for the recent air
crash in Mangalore on May 22, and we should wait for the inquiry report, it is
time to review the capacity and quality of our air safety surveillance. This major
airline crash took place about 10 years after the Patna crash of what was then
Indian Airlines. During this time our record has been relatively accident-free.
However, with a major growth in air traffic during this period, there have been
informal reports of many "near-misses"; such incidents generally go unrecorded.
The last such took place in Mumbai on May 27.

The International Civil Aviation Organisation has the responsibility for
international surveillance of each country's safety practices, as well as the
mandate to harmonise them. It also does a safety audit of all its member
countries (practically every UN member). The audit programme was started on
January 1, 1999 and has since audited all countries. Its report on India in 2006
was hardly good. Out of the eight "critical element" categories, it gave India 9 out
of 10 marks in licensing and certification; 8 in specific operating regulations; 7 in
surveillance obligations; and 6 each in primary aviation legislation and technical
guidance                                  and                                  tools.
However, it gave only 5 out of 10 for resolution of safety concerns; 4 out of 10
for the state civil aviation system and its safety oversight function; and an
abysmal 2 out of 10 for technical personnel qualification and training.

While the report could be considered below average, especially with regards to
technical personnel, it was the US's Federal Aviation Authority which first took up
cudgels with India's civil aviation ministry in 2008-09 when it threat ened to
downgrade India from Category 1 to 2 in their system; they categorise countries
based          on        their        safety        surveillance      parameters.
With a large number of vacant safety-related posts in spite of a huge increase in
traffic, the condition of India's safety surveillance system was unacceptable to
them.

It is unfortunate that things were allowed to deteriorate in India so much. Finally
it was prime ministerial intervention which put our house in order; he ordered the
revival of lapsed posts which had not been routinely filled up, and the creation of
new safety-related posts. A very large number of technical posts have since been
created but it is difficult to fill them up -due to an unattractive salary package and
an excruciatingly painful and slow recruitment process followed by the Union
Public Service Commission.

Neglecting safety issues in the face of increasing air traffic invites trouble. Adding
to this is the highly competitive environment in which airlines are working. If we
look at the financial position of airlines in general we can see that they have
deteriorated over the years. From the 9/11 incident to the financial crisis, with
swine flu and H1N1 in between, world air traffic has had something of a roller-
coaster                                                                           ride.
In India, the impact of all this has been felt on both the domestic and
international fronts. Most of India's airlines are in the red.

While airlines might say that safety is as much a concern of theirs as that of
passengers and government, cutting corners in times of deep financial crisis
cannot be ruled out. In this connection a recent proposal by the DGCA to monitor
finances     from     a     safety    perspective     is    a    welcome      move.
According to this draft proposal, there is a need to carry out the "evaluation of air
carrier's management of significant changes to identify airlines in distress either
due to financial issues or operational issues, so as to ensure that safety oversight
functions are not affected and also to pin-point changes in the operating
environment conditions, which significantly alter the balance between resources
and operations." It is heartening to see that the DGCA has taken note of the
precarious finances of the airline industry where many of them are unable to pay
even fuel or airport charges. It has, therefore, called for an "examination of any
condition that may indicate a significant deterioration in the operator's financial
condition." In some cases in recent times aircraft on lease by our airlines have
been recalled by their owners for nonpayment of lease charges. Under these
circumstances, the DGCA's draft proposal is very welcome.

The writer is chairman, The International Foundation of Aviation, Aerospace and
Development. He is based in Delhi express@expressindia.com A very large
number of technical posts have since been created but it is difficult to fill them up,
due to an unattractive salary package and the excruciatingly painful UPSC process.
What’s in the air

Sanat Kaul
Posted online: May 21, 2010 at 1939 hrs

The airline industry is no longer a non-priority industry.

Its importance in transportation is being felt more and more as India achieves
increasing economic progress. The need for good and stable air connectivity for
business travel (including tourism, which is the world’s biggest business) and
cargo (by value) is being felt the world over.

However, unlike the other modes of transport, the airline industry has been
totally deregulated—leading to some tendencies that are a little unsettling.

Unlike the railways, which is still fully owned by the government and monopolistic
in nature, the airline industry was opened up in 1990. Here, neither the entry of
new players nor fleet expansion by existing players is a major issue. The aviation
ministry, perhaps, still maintains a committee to regulate purchase of aircraft by
airlines but it has a liberal approach in this process.

The issue that comes up now is whether there is a need to have a regulator for
airlines, so that the ups and downs of the industry can be regulated. The free
pricing of tickets has been a major boon for passengers who plan ahead. The low-
cost carrier model of the industry has also led to great advantages for passengers.
Hence a boom in travel for the unfortunately termed ‘cattle class’ passengers. But
the flip side of all these developments is also something to be considered.

The first issue is whether we should allow the expansion of our domestic fleets as
well as international flights without a full physical backup of ground facilities like
airport landing and parking slots or even terminal buildings. The aviation growth
in India has been haphazard, to say the least. The mismatch between ground and
traffic facilities and the growth of aircraft in the Indian skies has created distorted
economies and wasteful expenditure—including unnecessary fuel burn and
emissions, both at the ground level and in the sky.

It is also unfortunate that there has been no scientific analysis of the growth of
air traffic at various levels of GDP and free float ticket prices, even as fleets have
expanded in the country. Such studies can reveal that under the existing band of
fuel and other charges, what would be the likely passenger offload by airlines. In
fact, a scenario can be built to show how aviation can boom alongside lowering of
tariffs. They can also give us some idea about the demand from smaller towns for
regional air services and their affordability. They can also help in managing the
sales tax rates that are impacting the airline industry. There are, of course,
instances in which the benefits of lowered sales taxes have translated into
increased sales to consumers, as well as increased tax revenue collections.

The Naresh Chandra report, A Road Map for Civil Aviation Sector, of November
2003 suggested the creation of an Essential Air Services Fund (EASF). Such a
fund would help meet the objective of preserving essential but uneconomic
services. This brings up the discussion of what can be termed as an ‘essential air
service’. It may be pointed out that in the days of the erstwhile Indian Airlines,
there used to be greater air connectivity in India than there is today.
Unfortunately, profitability of routes has now taken precedence over the
‘essential’ requirement and this needs correction. Indian Airlines cross-subsidised
routes in old days. This was replaced by Route Dispersal Guidelines after
liberalisation, but the impact of these guidelines has been limited.

EASF, if well endowed, can be a better replacement for the existing Route
Dispersal Guidelines. It could work on similar principles as the Universal Service
Obligation Fund of the telecom ministry, which has the objective of extending
telecom services to rural areas. The Naresh Chandra report has also suggested
that a fund of this sort should be outside the Consolidated Fund of India, with the
government replacing taxes and fees such as IATT, FTT and PST with a single ad
valorem sector-specific fee. Such subsidy schemes in different forms work in
Australia, the US and Canada—all of them large countries with remote unviable
locations.

In conclusion, there is a need for greater monitoring of an increasingly
competitive airline business domestically, which is seeing an indiscriminate
introduction of aircraft while fleet utilisation remains poor and predatory pricing
continues.

Simultaneously, there is the need for extending air services to smaller towns to
provide them with essential air connectivity until such routes becomes viable. A
complete study on this subject is called for, which might lead to the creation of
another regulator for the airline sector.

The author is chairman of the International Foundation of Aviation, Aerospace and
Development

sanat_kaul@hotmail.com
Nuclear liability lessons from aviation
Unlike in the case of aircraft accidents, minimum compensation per death has not
been prescribed either in the international context or in the domestic bill

Sanat Kaul
Posted online: May 07, 2010 at 0233 hrs


The present controversy in India over nuclear liability needs to draw some
comparison and conclusions from the aviation liability that is an 81-year-old
worldwide system. The limiting of liability has been done keeping in mind a
balance between operator’s liability and promoting investment in nuclear power.
The same principle has been followed in aviation since 1929 with the Warsaw
Convention and its subsequent amendments and protocols leading to the new
refined Montreal Convention, 1999, which has over time raised the strict liability
limits. In aviation, the payment of liability has been put fully on the airline (the
operator) and the upper limit has been fixed not as per incident but as per
individual (passenger) death or injury in an accident. It is currently SDR 100,000
or about Rs 60 lakh, raised over time from around $6,300 in 1929.


On nuclear liability, there are three main international instruments. They are the
Paris Convention on third party liability in the field of nuclear energy of 1960, the
Vienna Convention on third party liability in the field of nuclear energy of 1963
and the Protocol of 1997. The main convention for our analysis is the Vienna
Convention as amended in 1997 and adopted by 80 nations. The main features of
this Convention and the 1997


Protocol are that operators of nuclear power plants are liable for damage caused
by them regardless of fault. Second, the potential cross-boundary consequences
of a nuclear accident require an international nuclear liability regime. National
laws, therefore, would be subservient to international convention. Liability is
limited both by international convention and national legislation. So, liability falls
exclusively on operators of the nuclear installation and is absolute. Jurisdiction of
courts is limited to the country of accident.


The 1997 Protocol puts a lower limit on operators’ liability in each nuclear incident
of not less than SDR 300 million (approx $400 million or Rs 2,000 crore). Member
states may put a higher minimum cap. The Indian Civil Liability for Nuclear
Damage Bill 2009 fixes maximum liability for a nuclear incident at Rs 500 crore
for the operator and the government beyond it, but up to SDR 300 million (about
Rs 2,000 crore). In the Indian case, the only possible operator under the Atomic
Energy Act, 1962 is the Nuclear Power Corporation, a public sector corporation.


Comparing nuclear liability to aviation liability, it becomes clear that aviation
liability provisions are much better for victims. First, the concept of absolute
individual (passenger) liability is missing in nuclear conventions and our Bill. It
has been replaced by incident, which means that in the unfortunate case of a
nuclear disaster there would be no minimum liability of the operator mandated for
payment against each death. This is unlike aviation protocols where individual
compensation is currently SDR 100,000 (Rs 60 lakh), which sets a benchmark for
cases of injury. Of course, in aviation the limit of number of persons is restricted
to number of passengers and also third parties on the ground. In cases of nuclear
incidents, the number of affected persons will depend upon the intensity of the
accident and the spread of radioactivity (the case of Chernobyl where radiation
got spread by wind is still vivid in our minds).


Under the Indian Bill, a claims commissioner will be appointed and will determine
the amount of the claim. But the operator’s total liability will not exceed Rs 500
crore and the government’s will not exceed SDR 300 million, irrespective of the
number of deaths and injuries. In aviation, there is no upper limit on total liability
and airlines are expected to have adequate insurance cover. The Indian Bill
(2009) also provides that the central government may, by notification, increase
or decrease liability of the operator but not to less than Rs 100 crore. The
implication of this provision, especially regarding decreasing the liability, is
unclear.


In order to meet states’ liability, International Atomic Energy Agency adopted a
Convention    on   Supplementary      Compensation     (CSC)    in   1997    to   meet
compensation beyond SDR 300 million. An international fund is to be created
using contributions from contracting parties collectively on the basis of installed
capacity and UN rate of assessment. For CSC to gain force, at least 5 nuclear
installation states, with a combined capacity of 400 GWth, need to ratify. So far,
4 states with a combined capacity of 350 GWth have ratified it. To bring CSC into
force, one among France, Japan, Russia or Korea needs to ratify. A combination
of India, China and the UK would also suffice. With this, the operator’s liability will
shift beyond SDR 300 million to the CSC fund and the states and taxpayers will
be exempt from this liability. In the US, under the Price-Anderson Act, an
insurance facility has been created with operators’ contribution (which also
insures the equipment suppliers). Therefore, the US is not interested in CSC.


In conclusion, while a nuclear accident is likely to wreak greater damage than an
aircraft accident, the liability regime is more restricted. No minimum amount of
compensation per death has been prescribed, either in the international context
or in the domestic Bill. Unless this is changed, the plight of the Bhopal Gas
tragedy victims will continue to haunt us.


The author is chairman of the International Foundation for Aviation and
Development and former representative to ICAO
Forecast: still cloudy
Iceland’s volcanic ash has cost the aviation industry more than the 9/11 attacks.
The industry really needs to be better prepared to bounce back from catastrophic
events. A civilization fund of its own would help

Sanat Kaul
Posted online: Apr 22, 2010 at 2208 hrs

I can think of only two industries that have provided the greatest stimulus to
globalisation. One is the Internet and the other is aviation. Aviation has shrunk
distances in a physical sense, while the Internet has done the same in virtual
reality. However, the aviation industry, and especially the airlines sector, remains
highly vulnerable to misuse, disaster and catastrophic events. Aircraft are used
by hijackers for protests and blackmail purposes. They have also been used as a
weapon when crashed into buildings. Airlines are impacted by health issues like
Swine flu, and the latest addition in their woes is the volcanic ash coming from
Iceland and disrupting the whole of Western Europe and in turn disrupting the
rest of the world.

While no clear estimate is available, according to guesstimates the impact of the
six-day stoppage of flights in Europe has cost the aviation industry over $1 billion.
Post the 9/11 attacks in New York in 2001, the entire US airspace was blocked for
civil flights for 3 days and the damage to the industry was not as much as we are
seeing now.

Aviation has become the chief means of transport in today’s world. It carries over
1.5 billion international passengers annually and 40% of the world’s cargo in
value terms. Domestic flights count for as much, if not more. There is
tremendous growth potential in this sector when the world economy is doing well,
but there is a deep decline when the world economy goes down. The recent world
recession in 2007-09 caused many airlines to go bankrupt and most went into the
red.

An industry so critical to globalisation is still so vulnerable. In 1929, when the
airline industry was just emerging, an international conference was held in
Warsaw to provide support to this industry. While at that time there was nothing
like the fear of security that we feel today, issues of safety and liability due to
accidents were of concern. The Warsaw Convention capped the liability of airlines
to give them protection and allow them the growth the world economy needed 81
years later. While the industry has become a major player in the world economy,
we are again in the same predicament of how to save this industry from the
vagaries of nature and unscrupulous elements.

In the current scenario of volcanic ash from the Icelandic eruption, International
Air Transport Association (IATA) criticised Europe’s decision to close airspace
based on theoretical modelling of the ash cloud. “This means that governments
have not taken their responsibility to make clear decisions based on facts. Instead,
it has been the air navigation service providers who announced that they would
not provide service. And these decisions have been taken without adequately
consulting the airlines. This is not an acceptable system, particularly when the
consequences for safety and the economy are so large,” said Giovanni Bisignani,
director general of IATA.
Bisignani also added that safety is a top priority and airlines will not fly if it is not
safe.

After consulting with IATA’s member airlines that normally operate in the affected
airspace, he said they report missed opportunities to fly safely because the
European system results in blanket closures of airspace. “I challenge
governments to agree on ways to flexibly reopen airspace. Risk assessments
should be able to help us reopen certain corridors, if not entire airspaces,” said
Bisignani.

In order to provide assistance to the European governments in assessing risk,
airlines have conducted successful test flights in several European countries. The
airlines are equally bothered about safety since any accident will result in major
court cases. However, the outcomes of their experiments have not shown any
irregularities or safety issues. Airlines are also exploring various other operational
measures to maintain safe operations. These include day flights, restrictions to
specific flight corridors, special climb and descent procedures and more frequent
detailed baroscopic engine inspections to detect damage.

The scale of airspace closures currently seen in Europe is unprecedented. “We
have seen volcanic activity in many parts of the world but rarely has it resulted in
airspace closures—and never at this scale. When Mount St Helens erupted in the
US in 1980, we did not see large-scale disruptions, because the decision to open
or close airspace was risk managed with no compromise on safety,” said Bisignani,
who urged Eurocontrol to establish a volcano contingency centre capable of
making coordinated decisions.

All said and done, we need a publicly acceptable solution to global issues faced by
the aviation industry every now and then. In the recent global financial crisis, it
was ultimately a government bailout that saved the situation. The banks and the
world economy are now coming back into some shape. At the time of 9/11, it was
the International Civil Aviation Organisation (ICAO) that took the initiative, called
all its member states and introduced new regulations for security audits and gave
assurance to the insurance industry to return to the aviation sector. Similarly,
there is a need for ICAO and service associations like IATA and Airports Council
International (ACI) to get together and find ways to provide a method of bringing
stability to the aviation industry, ensuring that the high volatility that endangers
the industry is not allowed to continue. While we cannot rule out another
catastrophic event that could potentially impact the aviation industry, it is the
preparedness of the industry to absorb and bounce back that is important. This
could be in many forms, but one that is most acceptable is for the industry to
have its own stabilisation fund in order to meet a future eventuality.

The author is the chairman of the International Foundation of Aviation,
Aerospace and Development (India chapter). He can be contacted at
sanat_kaul@hotmail.com
Can a foreign COO save Air India?

Sanat Kaul
Posted online: Apr 13, 2010 at 2132 hrs

For the first time, Air India has appointed a chief operating officer (COO)—in
addition to the chairman and managing director (CMD)—who is not from erstwhile
Air India or Indian Airlines and is in fact a foreigner. Gastav Baldauf, former
executive VP Austrian Airlines (flight operations) and also former VP Jet Airways,
was selected out of 160 applicants. He will take over the executive function of
running the airline.

To me, the policy of appointing an outsider is good because it is expected that a
foreigner would have no bias towards either of the two entities or the ministry.
He would, therefore, be completely neutral in relation to the ruptured personnel
policies of the merged entity. However, the Cabin Crew Association of Air India
has taken a strong objection to his appointment, especially because he used to
work for Jet Airways. The association has insinuated that this is a “deliberate
design to kill the carrier so it can be swallowed by some cash-rich airline in a
friendly takeover”. One cannot totally ignore this allegation. It would be
preferable if the new COO had no erstwhile links to any Indian airline to avoid a
bias. The merger is now three years old and the airline, instead of picking up, is
showing signs of terminal illness. Only an experienced and detached person can
deliver the surgical operation necessary, especially in view of the damaging
report by the Committee on Public Undertaking (COPU) in the Parliament.

COPU has gone through many sittings; called to the table all the main
functionaries of the National Aviation Company of India (Nacil), the new merged
entity, and the ministry of civil aviation; taken their oral and written evidence;
and has given a very detailed report. It is COPU’s conclusion that the root cause
of the malaise affecting Nacil is the very merger that brought this entity into
being. COPU considers the merger “flawed at its very inception” and also a
“whimsical decision”.

The committee has come out very strongly against the ministry of civil aviation,
stating that the ministry has shown little initiative in monitoring the merger
process. It has accused the ministry of an “utter lack of sincerity”. COPU also
recommends that all the loss attributable to the merger of Air India and Indian
Airlines should be ‘recouped’ by the government, since the decision to merge was
a policy decision spearheaded by the ministry in charge. Further, it has stated
that the failure to resolve issues pertaining to the integration of human resources
reflects poorly on the performance of managers of the merger process. It
recommends turning Nacil into a holding company under which two separate
wings—erstwhile Air India and Indian Airlines—will function, each headed by a
managing director reporting to the chairman of Nacil.

COPU’s recommendations cannot be brushed aside easily. In this scenario, if the
recommendations of COPU are accepted, the role of the COO needs to be
considered in its wider perspective. Can the COO be common to both entities?
Can he direct the synergies of the companies and report to the two managing
directors, or can he work for Nacil and the two companies? A lot of work would be
required of the COO in coordinating the activities of the two companies, if a
decision is taken to demerge them under Nacil.

During the presentation of evidence to COPU, the CMD of Nacil admitted that
there is lack of corporate work culture in the company. The new COO, who has
come from Austrian Airlines where the work culture is considered good, can
introduce new work ethics, best practices and greater accountability. It may be
restated that Air India in its early years was considered one of the top airlines of
the world. But due to many factors—including deterioration of work culture—it
came down in public perception and lost its market share. It is this public
perception that the new COO has to revive as he builds up a team.

Nacil has placed orders for 111 new aircraft of different makes and sizes with a
sovereign guarantee, of which about half have already arrived. There is a feeling
that such a large order is no longer viable for a fledgling airline like the merged
Air India. In fact, Air India has started cutting down on uneconomic routes and it
is giving away its traditional passengers to other airlines, some foreign and some
Indian. There has also been an argument that the ministry of civil aviation gave
away too many bilateral air service rights in the international sector, which Air
India could not take advantage of because of its small, old fleet and poor work
culture, allowing other airlines to reap the benefits.

Be that as it may, Air India, with its new fleet, has the opportunity to win back its
passengers, if it puts its act together. Not only that, with the opening of new
terminals in Delhi, both domestic and international carriers will be in one building
for the first time. There will be scope to create not only domestic but also an
international hub at this airport. Air India has the unique opportunity to make the
best of this situation for which aggressive marketing is required, an option
available to the new COO. Meanwhile, it has been reported in the press that Jet
and Sahara have increased their international flights, adding new destinations,
and Jet has also leased out three of its Boeing 777 to Thai Airways so that their
idle aircraft capacity starts earning. This leaves the new COO with little time to
segue in and he must act straightaway.

Within the merged entity, there is the potential for huge savings and earnings by
improving and offshoring its non-flying business. For example, the engineering
works on both the erstwhile entities can be made into subsidiaries and tied up
with strategic partners to bring in the required economies and efficiencies. Some
work, it appears, has been done on the ground handling side, but it is still
tentative.

The COO should be given a free hand and back-seat driving should be totally
stopped.

—The author is chairman of the International Foundation for Aviation, Aerospace
and Development. He was also formerly a director on the Board of Air India.

sanat_kaul@hotmail.com
A regulator for our runways

Sanat Kaul
Posted online: Mar 17, 2010 at 2146 hrs

Indian aviation is now maturing and becoming larger in size. In order to provide it
with an institutional framework, a committee was formed to produce a roadmap
for the civil aviation sector. This committee headed by Naresh Chandra, former
Cabinet secretary, gave its report on

November 30, 2003. It provided for an institutional framework for growth and
suggested continued institutional intervention in the following areas: (i) safety
regulation, (ii) limited economic regulation, (iii) essential but uneconomic air
services, (iv) management of bilaterals and (v) aviation security. The report was
accepted by the government. So far, the Airport Economic Regulatory Authority
(AERA) has been established to oversee the airports and look into various airport
charges, including navigation charges.

On the issue of safety, the committee looked into the deficiencies of the office of
Directorate General of Civil Aviation (DGCA). It suggested that there should be a
specialised regulator overseeing safety issues, separate from the economic
regulator. It further stated that DGCA remains well-suited for this function,
however, it fell short of recommending a proper framework for DGCA, which will
not only give it the independence but also the financial ability to overcome the
security deficiencies that are making the Indian safety a nightmarish issue.

The Directors General of Civil Aviation Conference called by the International Civil
Aviation Organisation (ICAO) on a global strategy for aviation safety, held in
Montreal in March 2006, called upon States to establish, where necessary and as
soon as possible, an autonomous Civil Aviation Authority that is empowered and
adequately funded to provide effective safety oversight. It was further felt that
the absence of an autonomous Civil Aviation Authority in certain States was a
serious obstacle to implementing safety oversight.

While many States like Australia, the UK and Canada already have autonomous
civil aviation organisations with independent financial base, many States in the
developing world, with the support of financial institutions and donors, are at
various stages in the planning and implementation of institutional reforms aimed
at creating an autonomous Civil Aviation Authority empowered to regulate both
technical and economic aspects of the civil aviation industry. In India, the DGCA
is a subordinate office of the Ministry of Civil Aviation both administratively and
from the financial angle.

ICAO conducts safety audits of all its member countries. The US also conducts
safety audit for countries that want their aircraft to land in the US. In both these
cases, India’s record was dismal and the US Federal Aviation Authority (FAA) had
even threatened to downgrade India’s categorisation from category I to category
II on account of poor safety oversight. It was with great persuasion and
intervention of the ministry of civil aviation and DGCA that the situation was
saved and FAA agreed not to downgrade. However, a very large number of posts
need to be created and filled up. Special financial sanctions were sought and
given at the PM’s level for this purpose to get out of this embarrassment. But the
issue that continues to bother is that as the aviation sector in India is still a
growing business, there is a need for continuous upgradation of the safety
oversight mechanism, including creation of posts under DGCA.

Under the existing regime, all charges and fees levied by DGCA on aerodromes,
various fees for licences, examination, etc, go into the Consolidated Fund of India
and it becomes extremely difficult for DGCA to create safety-related posts
commensurate with the growth in air traffic. Once DGCA is converted into an
autonomous authority it will have the finances as well as the power to create
posts as and when necessary. The authority will have its own funds and a board
to manage it on the lines of the existing Airports Authority of India.

In view of the systemic fault in the government machinery —that prevents
natural creation of posts along with growth of the industry—the only way out is to
convert the existing DGCA into an authority by a legislative process so that DGCA
becomes financially and administratively independent, and retains the revenues
that come by way of various fees and charges.

It may, however, be pointed out that accident investigation, which today falls
within the mandate of DGCA, should be taken out of DGCA and may be made into
an independent authority on the lines of the US National Transport Safety Board.
The Indian Railways already have a commission on railway safety that
investigates all railway accidents. Interestingly, it does not come under the
administrative jurisdiction of the Railway Board but under the ministry of civil
aviation. The ministry of civil aviation, on the other hand, does not have any such
arrangement. It is required that we set up an integrated, comprehensive Accident
Investigation Board, which could perhaps cover a range of air, railways, road and
water transport accidents.

The author is chairman of International Foundation for Aviation and Aerospace
Development.    He    was     earlier   India’s  Representative    to    ICAO
sanat_kaul@hotmail.com
                         Chicago Convention Revisited
           Review of Chicago Convention and Bilateralism in Air Services


                                                                 Dr. Sanat Kaul
                                                                      Chairman
                 International Foundation for Aviation & Aerospace Development



Chicago Convention 19441 is the basis of the present regime of civil aviation system.
It also created International Civil Aviation Organization and its detailed articles are
mentioned in it.

1.      Achievements: -

     Starting with 44 contracting countries in 1944, there are now 198, only two short
     of the UN membership who have ratified the Chicago Convention 1944.The
     Convention provides for the formation of International Civil Aviation
     Organization (ICAO) and gives it a legal form with detailed articles.

     Along with the main Convention two more Agreements were negotiate also in
     Chicago in 1944: International Air Transit Agreement and International Air
     Transport Agreement.

     The Chicago Convention has withstood the test of time and has seen only three
     major amendments in its 66 years of existence.
     ICAO has faced many crisis, the last one being the use of civil aircraft as a
     weapon of mass destruction on 9th November 2001 at New York. This led to a
     major revamp of the Standards and Recommended Practices (SARPs) and
     introduction of Audits.

     It has also seen mammoth growth of air traffic and managed to keep up the
     regulations. Air transport has now become the preferred means of travel and has
     ‘shrunk’ the world


The Chicago Convention of 1944
Article 1 affirms the ““complete and exclusive sovereignty” of every State over ““the
airspace above its territory” while” ”Article 6 prohibits scheduled international
flights over the territory of a State, ““except with the special permission or other
authorization of that State, and in accordance with the terms of such permission or
authorization”” Hence, scheduled international flights through or into foreign
airspace is prohibited unless authorized by the State whose air territory is penetrated.
This could be by a specific permission or an agreement .Normally States enter into
bilateral agreements for scheduled flights between countries



Aircraft Nationality:
Article 17 of the Chicago Convention provides that, ““Aircraft shall have the
nationality of the State in which they are registered”.”

Article 18 provides that aircraft may not be registered in more than one State.
Article 31 and 32 require registering States to provide such aircraft with a certificate
of airworthiness, and issue certificates of competency and licenses for pilots and flight
crew.

However, airline nationality is nowhere addressed in the main Chicago Convention2.
Multilateral and Bilateral Air Transport Agreements Section 5 of the Transit greement,
and Section 6 of the Transport Agreement, provide: ““Each contracting State reserves
the right to withhold or revoke a certificate or permit to an air transport enterprise of
another State in any case where it is not satisfied that substantial ownership and
effective control are not vested in nationals of a contracting State . . . ..””This issue
has become a major requirement for bilateral agreements and a major deterrent to
cross border ownership of Airlines. This trend has continued in the modern open skies
agreements. Like their predecessors, modern ““Open Skies”” bilaterals also require
““substantial ownership and effective control”” be vested in the nationals of the State
designating the airline, and that failure to meet this requirement would entitle either
nation to revoke, suspend or limit the operations of the offending airline.


Role of the Council: -

   The Council is a legislative body of 36 elected countries. It makes international
   Air Law after due diligence and a process based on consensus. The council has
   also grown in size from 21 to 36 over the years3.

   Making of Standards and Recommended Practices (SARPs) which form as
   Annexures to the Chicago Convention is its core mandatory functioning.

   It makes them from very technical issues of navigation to security and facilitation
   issues including passport types.

   An elected Air Navigation Commission also ably assists it in its decision making
   process4.

Settling Disputes: -
    ICAO Council’s mandatory role in settling disputes between contracting states has
    been a mixed bag. Many disputes are settled informally in an amicable manner
    and don’t get noticed.

   Some of the more prominent disputes settled by the Council under Article 84 and
   85 of the Chicago Convention are:
Dispute between India and Pakistan: -

In 1952 India complained to ICAO regarding restricting passage of aircrafts over
Pakistan to Afghanistan. Because of ICAOs intervention a friendly settlement was
reached.

     In 1971 India banned over flights of Pakistani aircrafts because an Indian aircraft
     was forced to land at Lahore airport and subsequently destroyed. Pakistan filed a
     complaint with the ICAO Council. India went on appeal to ICJ on the issue of
     Jurisdiction.

Dispute between US and Cuba: -

     Dispute between US and Cuba over flights by Cuban planes over US territory was
     amicably settled by the Council of ICAO.

Dispute between US and EU: -

     Dispute between US and the EU over Emissions was also resolved by the
     President of ICAO on behalf of the Council.

Safety and Security Audit: -

     To add greater teeth to its functioning it has introduced Safety and Security Audit
     for each contracting country which makes implementation more effective and
     allows a watchdog function to ICAO5.

     Safety audit has been made public so all countries are aware of each others strong
     and weak points. This has had a major impact on defaulting states as there was no
     other provision for enforcement of its SARPs.

     Security audits are still confidential.

Sovereignty and Chicago Convention: -

     Article1 of the Convention clearly recognizes exclusive sovereignty of a state over
     its airspace. This along with International Air Transport Agreement of 1944 has
     led to the concept of bilateralism in air services between countries. International
     Air Services Transit Agreement of 1944, however, provides in section 3 that non-
     stop flyover and stoppage for non-tariff purposes shall be on non-discriminatory
     basis.

     Exclusive sovereignty has led to the right of each state to go in for bilateral
     agreement with another state on basis of mutual advantage. Mutual advantage is
     without any rules and is based on perceived advantage of each side. National
     airlines generally participate in the inter-governmental agreements and try and get
     as much commercial advantage as possible.

2.       Shortfalls of Chicago Convention:
Result of Bilateralism: -

   Bilateralism has led to a cobweb of Agreements which are not always in public
   domain. This has led to an uneven growth of civil aviation. In fact, many states
   followed over-restricted policies mainly on the pressure of their national airline
   not understanding the harm it is causing to their own growth. Aviation is a major
   driver of growth in the last few decades. Even in cargo sector about 40% of cargo
   in value terms travels by air. Trade and Tourism are directly dependent upon
   efficient air services. With improved technology in aircrafts including longer
   endurance, point to point service is leading to a major growth both in international
   trade and tourism. Those countries that realize this and have liberalized their skies
   have benefitted from it.

   Bilateralism also led to many deviations and unnecessary conflicts. The traditional
   philosophy of bilateralism was based on actual demand between two countries and
   did not cater for beyond or earlier points.This is being corrected by accepting and
   allowing airlines 5th and 6th freedoms.


Rise of Regionalism: -

   As a result of insufficiencies of bilateralism in the growing international travel and
   globalization whose major engine was the civil aviation, US insisted in many
   cases limited open skies which became better known as the Bermuda type
   agreements.

   Bermuda type agreements allowed unlimited flights between two or more
   international destinations.

    The next stage was to go for regional limited open sky between groups of
   countries

   Recent Multilateral Efforts Towards Liberalization
   2001 – “APEC Agreement (“Kona Accord”) included optional provisions waiving
   ownership requirements and substituted effective control, incorporation and
   principal place of business requirements.
   2002 – OECD model all cargo template


OWNERSHIP BY FOREIGN AIRLINES IN AIRLINES OF ANOTHER
COUNTRY

 Section 5 of the Transit Agreement, and Section 6 of the Transport Agreement,
provide: ‘Each contracting State reserves the right to withhold or revoke a certificate
or permit to an air transport enterprise of another State in any case where it is not
satisfied that substantial ownership and effective control are vested in nationals of a
contracting State. Like their predecessors, modern“ Open Skies” bilaterals continue to
require “substantial ownership and effective control” be vested in the nationals of the
State designating the airline, and that failure to meet this requirement would entitle
either nation to revoke, suspend or limit the operations of the offending airline.
Nationality rules are discretionary and may be waived. Foreign ownership restrictions
are not unique to aviation, and exist in broadcasting, telecommunications, electric and
nuclear power production, shipping and banking. The U.S. has waived the nationality
requirements for airlines registered in states that met FAA Category I safety/security
requirements, and that have concluded an “Open Skies” bilateral with the U.S. When
Iberia Airlines gained control of Aerolinas Argentinas, the, U.S. did not object to the
fact that Spanish citizens owned and control the Argentine carrier after Argentina
opened the bilateral to expand traffic rights for U.S. carriers. Conversely, when
British Airways sought to gain effective control of USAir, the U.S. stalled until the
issue of Heathrow access under Bermuda II was resolved6. Hence, the presence of an
ownership and control restriction can be an effective lever to pry loose concessions
that would be unattainable absent formal renunciation of the bilateral in the most
liberal country, the US to qualify as a U.S. flag carrier; U.S. citizens must hold at least
75% of the voting equity. (EU wants this relaxed).


Recent Multilateral Efforts Toward Liberalization

2001 - “APEC Agreement (Kona Accord”) included optional provisions waiving
ownership requirements, and substituted effective control tot and principal place of
business requirements.
2002 - OECD model all cargo template: Irrespective of the nationality of the airlines
majority owner, the carrier would incorporate itself in a certain country, and operate
under its regulatory control. EU is a newly emerging institution which is taking away
the sovereignty of its member states in many respects. A common sky policy and the
right to participate by EU in all bilateral negotiations of its member states are their
main trend in aviation sector.

2002 - EU Court of Justice decision: under the “Right of Establishment provisions of
Community Law, no member State may conclude a bilateral air transport agreement
that excludes any “Community carrier from operating on the traffic rights provided
under the bilateral.

2003 - ICAO Fifth Worldwide Air Transport Conference drafted a model clause for
insertion into bilaterals that focused on an airlines principal place of business and
“effective regulatory control. Permanent residence was an optional requirement.
Australia and New Zealand have created a common aviation area.


Arguments in Favour of Preserving the Status Quo:

As in the maritime trade, elimination of the foreign ownership restrictions would
enable the creation of ““flags of convenience” 7” in international aviation, with
owners of airlines shopping for countries with the least burdensome labour laws,
safety and environmental requirements;

It could compromise national security, given reliance on the civilian commercial
airline fleet for needed lift capacity in time of international conflict, such as the US
Civil Reserve Air Fleet [CRAF] program; It would eliminate competition in the city-
pair markets dominated by the acquired and acquiring airline;

Because national airlines also sit along with country delegations in bilateral air service
negotiations and if a foreign airline has effective control over a national airline it may
sit as an advisor on both sides of the negotiating table. This would undermine the
integrity of bilateral air transport negotiations in the following manner:

It would enable a carrier from a nation with less desirable bilateral relationships to
take advantage of a third nation’s more liberal bilateral relationships; and

It would reduce bargaining leverage against a carrier whose government had not
conceded comparable bilateral opportunities to those being exercised under the
bilateral whose rights the foreign carrier was operating.

Has Chicago Convention over lived its utility? Does it need an overhaul? The answer
is Yes and No. There is no doubt that Chicago Convention has been very crucial to
the growth of a nascent airline industry. Along with IATA, the International Airline
Association it has seen to the tremendous growth in civil aviation leading to
integration of world both for business and pleasure. It has overseen the tremendous
task of regulating this growth in a harmonious way from all parts of the world,
bringing in order in both safety and security of travel so much so that air travel is,
perhaps the safest mode of travel. In doing so International Civil Aviation
Organization has brought in detailed legislation both by way of Standards and
Recommended Practices and 18 detailed Annexes to air law. Further, its guidelines in
all area of aviation from technical radio waves to facilitation by improved passport.

      Two major shortcomings in Chicago Convention was the concept of bilateral air
service agreements based on sovereignty of air space of a nation and the need to have
an airline substantially owned and effectively controlled by the nationals of a State. In
this context it may be stated that most Airlines the world over, except for the US
stated as public sector airlines funded by the state. In India it was like US but after
independence all private airlines were nationalised8. While growth of this industry has
been phenomenal, except for a few airlines like the Singapore or Emirates, many had
difficult financial times and got sold off into private sector. The nature of Airline
industry worldwide went through a change with the perennial overcapacity problems
of airlines leading to frequent losses. Financial aspects of airline industry became
fragile. On top of this was added the concept of “Substantial Ownership and effective
Control” This has led to a strange and peculiar situation in the airline industry which
is global in nature but is unable to merge and acquire each other which happens in
other industries. The airlines started to adopt new measures and mechanisms to bye
pass this problem. This was done through new concept of code sharing, joint ventures,
profit sharing and finally to global alliances.

    The inadequacies of Chicago Convention provided innovative methods. It may
however, be stated that the Chicago Convention does stated in its Preamble: -

       “Therefore the undersigned governments had agreed on certain principles and
arrangements in order that International Civil Aviation may be developed in a safe
and orderly manner and that the International Air Transport Services may be
established on basis of equality of opportunity and operated soundly and
economically”. While the Preamble does provide for operating air transport services
soundly and economically, there has been no major thinking on this issue. In fact,
IATA had originally come up as a cartel to fix price of ticket, but with US objection
in subsequent years this was dropped and airlines went in for cut-throat competition
leading to many airlines going insolvent. This issue has not been tackled by ICAO but
looking into the recent worldwide recession it could be taken up. While anti-
competition laws have become very assertive, excessive growth of airline fleets
leading to financial difficulties has not been considered by ICAO so far.
.
3.      Issues for the future

World Trade Organization and ICAO: -

     With the coming into being of WTO the Chicago Convention requires a fresh look.
     This is so because WTO covers Trade in Services also and aviation as a service
     falls well within its domain.

     While Chicago Convention laid emphasis on Sovereignty and bilateralism, WTO
     believes in trade and services without discrimination.

Main Features of WTO: -

     Most Favored Nation: WTO wants a country to treat all other countries equally in
     trade of goods and services. This is the concept of Most Favored Nation. It implies
     that a country should not normally discriminate between trading partners. In terms
     of civil aviation in bilateral agreements it should follow a more transparent and
     non-discriminatory policy between all countries.

     This is negates the concept of bilateral agreements on air services under the
     Chicago convention where no two bilateral agreement may have anything in
     common.

a)      National Treatment: -

     Another principle of WTO is National Treatment: treating foreigners and locals
     equally. This concept is not present under Chicago Convention and therefore,
     national airlines tend to enjoy advantages.

     Reverse is also possible i.e. Chicago Convention provides for Aviation fuel and
     some other imports free of taxes to foreign aircrafts. In India while foreign airlines
     enjoy such tax free advantages, our airlines going abroad don’t and therefore
     suffer disadvantage.


b)      Level Playing Field: -

     Bilateralism is also based on the principle of level playing field. Both sides must
     get equal mutual advantage. However relative weight of the economic size of the
     country and the size of its fleet are two important variables amongst others.
   However, in bilateral negotiations it’s the bargaining capacity of each side is of
   great advantage as there is no appeal once agreement is signed.

WTO And Chicago Convention: -

   The philosophical difference between Chicago Convention and WTO are
   immense. However, developed aviation powers realize that a protected regime of
   air services does more harm than good to an economy. Further, protecting national
   airlines against foreign airlines can be detrimental to an economy.

   In practice liberal bilateralism leading to open sky or even regional open sky is
   gaining greater recognition.

   To this extent there is a natural movement from restricted bilateral agreement to
   regional open sky is becoming more acceptable.

   The philosophical differences between Chicago Convention and WTO are,
   therefore, narrowing down on their own.

National Airlines, Ownership and Control of Airlines

The clear demarcation drawn up in 1944 between nationality of an aircraft and of
airline company is becoming blurred. Cross/ Joint ownership is making the concept of
‘substantial ownership and effective control’ difficult to implement. New definitions
are being propounded. The need of the hour is to recognize that Airline industry is a
very capital intensive and competitive industry. The concept of Flag Carriers must be
replaced by the concept of airline as any other industry. However, there are two issues
in this. The first one is the issue of big fish eating the small one. This will mean that if
airlines are allowed to cross purchase each other there would be mergers, acquisition
and consolidation. This will lead to many countries not having their own airline. This
in turn could lead to two problems. First, of poor service to a country dependent upon
an airline based abroad. Second, it could lead to some issues of internal security as
national airlines are considered as a strategic asset to be used in an emergency. India
deployed its civil fleet for emergency troop movement in Kashmir in 1947 and again
for rescue of Indians stranded in Kuwait during Gulf War I which also a landmark and
appeared in the Guinness Book of Records. In case of emergency most countries keep
a provision of compulsory requisition of civil fleet. If there is no civil airline and a
fleet of civil planes registered in some other country then this aspect becomes a great
liability. The second issue is that the extent to which we can allow an airline
registered in a country to have foreign ownership. Also domestic air travel normally
does not allow foreign airline ownership. The present requirement is that an airline
should be substantially owned and effectively controlled. However with more
globalization and the need for airlines to enhance its capital base by way of equity
infusion which may not be readily available within the country, need to get equity
from abroad is keenly felt. The moment equity held by foreign parties goes over 50%
it does not remain ‘substantially owned and effectively control’. If a foreign airline
owns a substantial portion of equity then other issues of competition and cartelization
also comes up at times. The concept of ‘substantially owned and effectively
controlled’ is being substituted in bilateral agreements by ‘principle place of
businesses to over come the above issue.
   While the US does not allow more than 49% foreign voting equity in a US
registered airline, the European Union has gone a step ahead and has allowed cross
ownership within the European Union and has called all airlines registered in the EU
as ‘Community Carriers’. Under this definition all airlines registered in EU member
countries are treated as if they were part of one country where cross ownership is
allowed.


Aviation Security: -

   Each sovereign nation is responsible to provide security of all types within its
   boundaries. However with the changing nature of security which spreads across
   countries largely due to civil aviation, security cannot be treated as a sovereign
   function. The history on aircraft hijacking shows this and its culmination is the
   incident of the use of aircrafts as missiles in New York on 11th Sept 2001.Since
   11th September 2001 incident there has been a major shift in the world wide inter
   dependent security scenario but security still remains a sovereign function with
   ICAO providing an overall umbrella of regulation. Post 9/11 ICAO has managed
   an Audit of National Aviation Security on a voluntary basis of all members, but it
   is inadequate and insufficient. A global approach to security is the need of the day
   and there is a need for interoperability of security personnel. The Universal
   Security Audit Programme (USAP) was launched by ICAO in 2002 in a six year
   cycle to provide high standards of security, quality control, training and
   certification of auditors.

   Chicago convention provides standards and Recommendations for only
   international aviation and domestic aviation security is left to the country
   concerned. This contention cannot be accepted. The incident of 9/11 amply proves
   that a weak domestic security set up was used by international terrorists to achieve
   their aims.


ICAOs voluntary security audits are now practically compulsory. However a
voluntary agreement is drawn up before audit and the audit report is not made public
or shown in full to member countries.

        Civil Aviation can no longer afford the luxury of allowing international
security to remain a sovereign function with international audit and domestic security
be kept outside the sphere.

        With such intense globalization in air travel with domestic and international
interconnectivity increasing, it is necessary to integrate the two securities under
overall supervision of ICAO. It may be pointed out that the attack on Twin Towers of
New York on 11 September 2001 by hijacking of civil aircrafts was all done in
domestic flights of US and no international flight was involved
Globalization with Aviation Security: -

   With massive increase in international air travel which could not have been
   dreamt of in 1944 along with seamless integration of domestic and international
   travel the issues of aviation security become global concern. No state can now
   claim that domestic aviation can remain a domestic concern.

   While ICAO is seized of the issue, it is felt that a greater degree of integration of
   the two securities is needed to make international travel safe. Answer lies in
   amendment of the Chicago Convention to allow ICAO to inspect domestic
   security also.

Environment and Chicago Convention: -

    ICAO has been working hard to bring about a consensus on issues of emissions
   and noise. Aviation sector by its very nature crosses national boundaries. Aircraft
   emissions cannot be confined to sovereign air space. Aircraft flying over 30,000ft
   or above cross international boundaries seamlessly but could be subject to the
   laws of the country they are overflying as emissions coming out of the aircraft at
   that height impact the region and not just the sovereign air space.

   Emission standards vary between countries but are difficult to implement in
   aircrafts unlike automobiles. Sovereignty comes in conflict with international
   norms. ICAO needs to provide standards which can be checked and implemented.

   Noise is yet another issue which needs regulation. Airport noise and noise due to
   overflying at low heights, especially near airports has led to local protest leading
   to night curfews at many airports in developing country. Such unilateral decisions
   by a municipality or city are not conducive to orderly growth of aviation. If all
   airports around the world close down at night then international air transport will
   become very difficult to manage, especially getting landing slots at airports.ICAO
   needs to come out with Standards and Recommended Practices on this issue.


Unilateral Taxation on Emissions: -

   The tendency to over-reach and have more stringent standards than ICAO also has
   its pitfalls as EU is attempting. Airline industry is perhaps one of the highest taxed
   industry in the world. On top of it there are moves to have an emission tax on a
   global level put on it which will make it more difficult to survive.

   Health: -

   International health issues of pandemics have proved that aviation can have major
   impact on health issues. SARs, H1N1 etc. have made the spread of virus truly
   global and cannot be considered localized.
   Conclusion: -

   The role of Chicago Convention in orderly growth of civil aviation has indeed
   been tremendous since the last 66 years of aviation. ICAO was set by the
   Convention and it has been greatly successful in providing international air laws
   to the world. But with the growth came the issues of bilateralism in air traffic
   which has a highly protectionist tendency and also issues of ownership which
   dissuades cross country ownership and control. Airline industry is not treated on
   par with rest of the industry due to strategic and protectionist reasons which need
   to be overcome by suitable amendments.



Notes:

   1.     Convention on International Civil Aviation signed at Chicago on 7th
          December, 1944.

   2.     Chicago Convention mentions only aircraft nationality which will be based
          on its place of registration. However, Air Transport Agreement of 1944
          mentions in Section 6 Air Transport Enterprise and brings in the concept
          of ‘substantially owned and effectively controlled by the nationals of the
          State where it is registered’. However, this agreement has been ratified by
          eleven countries only.

   3.     The last increase in the Council Membership took place in 2003. Elections
          of the Council are held every three years.

   4.     The Membership in Air Navigation Commission was last increased to 19
          members.

   5.     Universal Safety Oversight Audits Policy by ICAO on a voluntary basis
          was introduced in 1999 and Universal Security Audits Policy in 2002. It
          may be noted that security audits were introduced only after 9/11 incident.

   6.     Arranging airport landing slots are generally not part of bilateral
          negotiations. But in bilateral negotiations all extraneous issues can come
          up as discussions are based on mutual advantage.

   7.     “Flag of Convenience” concept prevalent in shipping can play havoc in
          Civil Aviation especially in context of safety and security. Small and poor
          states may encourage foreign airlines to setup Head Quarters of an airline
          entity which may be controlled by unscrupulous elements.

   8.     By Air Corporation Act of 1953 all airlines in India were nationalized and
          reorganized into two public sector airlines, Air India and Indian Airlines.
Readings: -

   1.     Capital and Market Access in International Aviation: Nationality
          Requirements and Cabotage Restrictions by Prof. Dr. Paul Stephen
          Dempsey, McGill University Institute of Air & Space Law.

   2.     New Regulatory framework for Civil Aviation in India by Rohan Shah,
          Sudeep Mahapatra, Sumana Nagendaran, Mahfooz, Nazki, Manshur Nazki
          in Emerging Trends in Air & Space Law, Uppal Publishing House, New
          Delhi.
    Print Story

Not so safe flights
Recent ILS and radar breakdowns in Delhi raise serious questions
about aviation safety in India
Sanat Kaul
Posted online: 2010-01-19 20:20:39+05:30

Aviation has come a long way over the last 60 years. Once considered the most
dangerous way to travel, it is now the safest mode of transportation, safer than
road, rail or shipping. How did aviation go from being the most dangerous to
being the safest in just 60 years? The answer is constant improvements in
technology and the concept of ‘failsafe’, which provides multiple backups,
theoretically eliminating the possibility of a technical glitch or breakdown. In fact,
most accidents today are due to human error, not technological failure. In
modern times, the failure of an Instrument Landing System (ILS) or a breakdown
in radar systems are virtually unheard of.

However, recent incidents in Delhi have raised questions about the state of our
aviation equipment. The media reported the January 9 failure of the ILS and the
January 14 radar failure with great concern. Security had been our principal
preoccupation ever since the IC184 hijacking in late 1999, but now safety is
replacing it.

The recent ILS failure was caused by a problem with the Runway Visual Range
(RVR) system, which provides visibility levels to pilots from three locations on the
runway. On January 9, the RVR was not functioning from the last location on the
runway, meaning that under low-visibility conditions pilots were unable to land
using the ILS. It was later discovered that the wire connecting the last instrument
had been cut off during work on the runway. Delhiites should be familiar with
such scenarios as underground cables are frequently cut off due to roadwork. But
we cannot treat our airports in the same callous way in which the PWD treats the
capital’s roads.

However, the most serious concern in the RVR failure is that the failsafe
mechanism did not work. Normally, the RVR’s wireless mode should have
functioned in lieu of the wire that had got cut off. The blame game now starts to
find out who is responsible—the Airports

Authority of India who maintains it, the Met department that maintains the RVR
system or the airport operator that maintains the runway.

Five days later, on January 14, there was another technological failure—a radar
malfunction. The radar software upgrade malfunctioned while uploading and
switched off. There was no backup for at least 45 minutes. Autocrat II, the
existing software of the surveillance radar, malfunctioned and its display unit
went blank at 5.44 pm. As a result, the ATC could not monitor the locations of the
aircraft in flight. The backup also failed. Luckily, the new software, Autocrat III,
was also running and was used. But since this software was not fed with the data,
it ran as the primary radar and therefore could not identify individual aircraft,
which appeared only as blips on the screen.
Both instances are rare in modern aviation. The issue is not only technical
malfunction of the main systems, but also the reliability of the backups that failed.
While the causes of these two particular failures will eventually be determined,
the greater issue is the maintenance and reliability of all our aviation equipment
and by extension the safety of passengers and flight crews. How is it that the
backups also failed? Is it because they were already down and had not been
repaired and were therefore unable to function at the critical time? How often is
the safety equipment tested? Is there an independent agency that conducts
safety audits to ensure our equipment is in top working condition? What are the
best practices around the world? These questions need answers. Aviation system
failures can have a deadly cost.

The author is chairman of the International Foundation for Aviation and
Development (India chapter). He was formerly India’s representative to ICAO
                                                      Article
   MAIL TODAY ePaper


Friday, January 01, 2010




ARE INDIAN AIRPORTS SAFE FROM THREAT?
by Dr Sanat Kaul
                    AVIATION security has been a major international issue since the
                    attack on the Twin Towers in New York on September 9, 2001.

                    The International Civil Aviation Organization ( ICAO) has revamped
                    the rules on security and introduced security audits for all countries.

               India has been a victim of attacks both in aviation and otherwise,
mainly because of its geographic location.

The hijack of flight IC814 in December 1999 led to overhauling of airport security by
deploying a uniform force — the CISF at all airports.

It is understood that when Parliament was attacked on December 13, 2001, the
attackers had also done a recce of the airport but had found it difficult to target
because of enhanced security.

Unlike a normal security threat which is localised, aviation security has national and
international dimensions.

Laxity at one airport can lead to an impact on another location.

There are many examples such as the IC814 flight at Kathmandu or Air India
Kanishka flight in Canada which impacted another country.

Indias airport security has, therefore, been sufficiently upgraded since 2000, bringing
it under a single command. This includes deployment of armed sky marshals in civil
clothes in a random manner to intervene in a conflict inside an aircraft.

However, terrorists are looking for loopholes and improving their use of technology.
The name of the game is to expect the unexpected. Airport technology upgradation is
a constant factor as the terrorists/ hijackers are also updating themselves.

The recent arrest of Umar Farouk Abdulmutallab is a case in point. This Nigerian
national was carrying an explosive substance known as PETN in his underwear. He
had planned to mix and make the explosive in the aircraft but was caught.
The 26/ 11 attack on Mumbai is another case in point where security lapse and lack of
interagency coordination is clear. Terrorists chose hotels and a railway station in
Mumbai as soft targets.

The Mumbai airport is perhaps still vulnerable with over 1 lakh unauthorised slums
within the security zone. All attempts to evict the slumdwellers have failed and now
shifting the airport to a new site seems to be the only alternative.

Terrorists tend to keep up with technology. The existing screening technology of metal
detectors is found to be inadequate in the face of new types of non- metallic
explosives. Puffer machines, which are in use in the US, are designed to detect
chemicals like the PETN. But the US is phasing them out and introducing the full-
body scanners.

They use imaging technology for high detection accuracy in both metallic and non-
metallic objects based on active millimetre- wave or backscatter Xray.

There is opposition to them as some consider them overobtrusive.

But the US has already introduced 300 such advanced machines and another 150 are
on their way. The cost of such machines, of course, is much higher. India should
consider introducing them.

India has also not been able to use dogs for detecting chemicals in an extensive way.
Foreign breeds like Labradors are not only expensive but also tire out fast.
Experiments using stray dogs have proved successful both in detection and
endurance.

While the best equipment can be bought, if it is not fully utilised and not kept in full
working order, nothing will help.

It is a question of training and retraining all the time. For aviation security, the ICAO
has made training modules available to governments. It is for the governments to
utilise them fully.

Coordination with other friendly countries, especially for exchange of information, is
a must. We have found our territorial waters vulnerable. How about our sovereign
airspace? With many abandoned, unprotected but usable airstrips all over the
country, a LTTE type attack is possible. The name of the game is to counter the
unexpected.

( Dr Sanat Kaul is the chairman of International Foundation for Aviation and
Development ( India Chapter) and was formerly Indias representative to the ICAO)
At sea over where to build Mumbai’s second airport?

Sanat Kaul
Posted online: Oct 16, 2009 at 2059 hrs

The Chhatrapati Shivaji airport at Mumbai will get saturated very soon even after
its renovations are complete. It has a single runway and will not be able to cope
with the growing Mumbai air traffic. The existing airport will reach saturation
point at 40 million passengers (the target for the renovated terminal) but Mumbai
airport’s passenger traffic is expected to grow to 90 million passengers in the
near future.

The proposal for a second airport for Mumbai has been stuck in various
government files for years. The Union Cabinet has approved a new international
airport at a location in Kopra-Panvel area in Navi Mumbai at an estimated project
cost of Rs 3,500-4,000 crore. The location is 35 kilometres from the existing
airport at Mumbai. The plot—1,560 hectares —was already acquired by CIDCO for
this purpose and more land could have been acquired.

The proposed airport was given ‘in-principle’ approval by the ministry of
environment but it seems that the final approval is not forthcoming because a
mangrove cluster will need to be cut down. With the Navi Mumbai project unlikely
to get environment clearance, the search for a new location for the proposed
airport is on.

Why not      think different, and think big? An offshore airport. Mumbai offers
excellent   location in the creeks near the Gateway of India, which are well-
protected    from the high seas. An offshore airport will also mark a technology
challenge   for India.

A number of new airports have already come up on the sea. Hong Kong’s Chep
Lap Kok and the Kansai International Airport near Osaka are the prime examples.
Japan took only five years from reclamation of land, including the breakwater, to
the first touchdown. Hong Kong took seven years.

Mumbai is used to land reclamation; the entire marine drive is built on reclaimed
land. A sea-based airport will also cut down the distance to South Mumbai and
will avoid the issues of land acquisition as well as the growing protests against
airport noise.

Hong Kong as a city had problems similar to Mumbai’s. In fact, the situation was
worse. The city had grown around the airport and the airport was finding it
difficult to meet the growing requirements of air traffic management. With
skyscrapers all around, there was an issue of air safety as well—aircrafts had to
navigate in peculiar ways to land. Honk Kong also had no potential for a second
parallel runway.

Like Mumbai, Hong Kong is also an island with very little land. So, the decision
was taken that a new Hong Kong airport will be built offshore, by creating an
island 16 miles out in the sea. Hong Kong’s new Chep Lap Kok airport started
construction in 1991 and by July 1998 it was completed, built on the artificial
island of Chek Lap Kok. It is considered to be one of the top ten construction
achievements of the 20th century. It has two parallel runways of 3,800 metres,
60 aircrafts movements an hour and 800 scheduled flights of both passengers
and cargo per day besides non-scheduled flights. It is one of the busiest airports
in the world.

The Kansai International Airport at Osaka Bay in Japan started construction in
1984 and the first runway was opened in September 1994. The second runway
was completed by 2007.The airport is well-connected to the mainland by road
and train.

While sea-based airports tend to be more expensive initially, they have the
advantage of avoiding land acquisition and other consequent social issues. Also,
the issue of airport noise, which is leading to shutting down of airports at night in
the West, will not arise in a sea-based airport that, therefore, will operate 24
hours a day.

India has reached a critical stage in its economic growth pattern —now, it needs a
few good engineering feats to prove itself. The Delhi Metro is certainly a case in
point. The Mumbai Bandra-Worli-

Nariman Point sea link may not qualify as a good example not only because it is
behind schedule but also because the link between Worli and Bandra has only
four lanes and not eight lanes as it should have had.

A sea-based airport at Mumbai is, therefore, not just a necessity but also an
image booster for Mumbai in its ambitions to become an international city. It will
showcase our capabilities to the world.

However, the economics of the airport will have to be carefully worked out. The
Noida Toll Bridge is a good model to follow. Based on a PPP model, it raised its
own equity and loan and serviced it. The concession terms ensure that the
concession period will be extended to guarantee a certain return on capital.

With respect to an offshore airport at Mumbai, revenue generation possibilities
are higher as besides shops it could provide space for hotels and even hospitals.
If we allow commercial development at the present airport land after the new one
is ready, then the new airport could pay off its loans quite easily. The Bandra-
Nariman Point sea link could also be connected to the proposed airport.

In summary, a carefully thought-out scheme for a new offshore airport in Mumbai
can be a great asset, as it will cut down travel time, avoid noise pollution issues,
avoid land acquisition issues and give a boost to our engineering skills.

The author is chairman, International Foundation for Aviation and
Development(India chapter) and India’s former representative, International Civil
Aviation Organisation




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Column : This is no way to manage AI

Sanat Kaul
Posted online: Oct 01, 2009 at 2023 hrs

Everyone seems happy—the government has promised a few thousand crores,
salary cuts will be ‘discussed’ and the Air India executive pilots’ strike is off. But
everyone knows that there’s a problem.

Consider, first, that it was executive pilots who went on mass leave. The
difference between regular pilots and executive pilots is that the latter are not
members of any union. Unionised pilots have been declared as ‘workmen’ by a
court order under Workmen’s compensation Act. But it was non-workmen
executive pilots who behaved like trade unionists. This is a serious problem for
any organisation.

Second, while the civil aviation minister is being seen as an ultimate source of a
solution, that’s not really the case. It’s not that the minister declared, rightly, that
he is not the minister for Air India. The substantive issue is that AI is managed at
one end by management that is “independent” and at the other end by the
Cabinet and the GoM (Group of Ministers Committee). The latter have taken all
decisions on major issues like purchase of aircraft or merger of Air India and
Indian Airlines. If AI is to revive, it’s these entities that have to deliver. Getting
them to do so is tough. For example, much press was devoted to the promise of
revamping AI’s board of directors. Celebrities were mentioned. But deadlines
have passed and the board remains unrevamped.

Management changes in AI are typically abrupt and seem to bear little relation to
achieving results. When AI chiefs are removed, the action is associated with
questions that have little to do with operational efficiency. The un-ceremonious
removal of a CMD recently set the rumour mills rolling, mostly because there
seems to have been no official rationale. Recall the suspension of the MD in early
2000 and his subsequent reinstatement. The current CMD has everybody’s
goodwill. But he is basically working in a place, not quite geared to top
management basics.

This leads us to the third issue: is public sector ownership the problem?
Singapore Airlines and Emirates are public sector but are among the top airlines
in the world. Also, remember all full service airlines (as opposed to low cost ones)
around the world are doing badly, whatever their ownership structure. AI’s
problem is that it is run like a government department. It is said of Singapore
Airlines that it will never delay a flight even for its own minister. Can we think of
that in India and for Air India?

For demonstration, look at the executive pilots’ issue again. If it appears that the
government has given in, can AI economise on salary and wage costs? Cuts are
not supposed to apply to just pilots but to all executives. If the AI management is
seen to be making compromises for pilots, how will it negotiate with the rest of
the staff? True, wage costs as a proportion of total costs in AI, at 18%, are lower
than in foreign airlines. But AI is in deep trouble and it needs economising
everywhere. Also, why doesn’t AI management think of utilising its pilots more
and, if contracts permit, lower the usage of foreign pilots?
The economising issue is especially vital because of the government offer of
providing help.

The government needs assurance that AI will manage its affairs better because it
is already committed heavily in AI’s finances—it has given sovereign guarantees
for about

Rs 50,000 crore for the 111 aircraft ordered. While Boeing has deferred delivery
of B787s, AI has not sought deferment of the balance deliveries. This is about
half of the order. If AI becomes insolvent, the liability will fall on the government.
Surely, this is something that should concentrate minds in the government?

What AI management needs to tell its employees is that AI has been a public
sector undertaking for the last 60 years and its employees have been the
advantage of job security as well as good salaries. In fact, salaries of AI
employees have generally been better than those of private airlines. When the
organisation is in a crisis, employees must now do their bit to help the
management. But can the management communicate this message convincingly?

And does it have the courage to act tough if required? The last major public
sector civil aviation strike took place in 2000 when air traffic controllers,
employed by the Airports Authority of India, went on strike. That strike was
successfully broken by use of Essential Services Maintenance Act. If employee
agitation becomes a serious problem in restructuring, AI management must
remember the usefulness of blunt weapons.

The writer is chairman, International Foundation for Aviation & Development, and
was formerly with the civil aviation ministry. He has also served on the board of
Air India
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Column : Pilot strike, bird strike

Sanat Kaul
Posted online: Sep 18, 2009 at 2106 hrs

Pilots of Jet Airways were not the first to engage in collective bargaining. Air India
Pilots had, in fact, developed the fine art of bargaining for their rights and
advantages a long time ago. Their agreements were at times peculiar with
benefits like quality of hotels or travel by limousines.They were also able to
control recruitment or internal training. They were declared by a court order as
‘Workmen’ and came under Workmen’s Compensation Act even though theirs
were one of the highest paid jobs in India before liberalisation.

Unlike pilots, strikes by air traffic controllers, who incidentally are government
employees, have not been so successful. The last strike by ATCs in India in 1999-
2000 was successfully broken and they were brought under the ambit of Essential
Services Maintenance Act (Esma). Air force controllers were also brought in to
assist.

But the case of pilots is qualitatively different from controllers as pilots are
licensed separately for each type of aircraft and one pilot cannot switch from one
to another. And an air force pilot cannot fly a civil plane.

Wildcat strikes by airline unions have in some cases led to their decline. Jet is
today considered the best airline in India in quality of service and punctuality.
However, it takes very little to lose the benefit of public perception when pilots
suddenly strike. One major factor in Air India’s decline has been the erratic
behaviour of its pilots. Handling of pilots and their unions is a major HRD function.
Sudden sacking of pilots can result in a strong backlash. There are many
examples of the same world over and it cannot be wished away.

While the right to protest and strike is an inherent right, industrial action by
crucial players in the economy harms and disrupts the economy. At any rate, the
mass sick leave by 400 pilots was not justified. India is a trillion dollar, fast
growing economy, and such disruptions have economic repercussions. It is,
therefore, a moot point whether such a disruption can come under the Esma.

The author is chairman, International Foundation for Aviation & Development
(India Chapter) and India’s former representative to ICAO
Way out of aviation crisis: lower taxes, cheaper tickets

Sanat Kaul
Posted online: 2009-08-04 03:18:01+05:30

The Federation of Indian Airlines threatened to go on strike for one day on August
18; it made headlines and upset many, including the government. The strike is
off, and, yes, airlines are at fault, including for an attempt at cartel-like behaviour.
But the government is at fault too.

India’s aviation industry, flying around 40 million domestic passengers a year, is
still an infant industry when compared to railways which transports about 14
million passengers a day and bus transport which carries 90% of passengers,
mainly over short distances. As the economy grows and incomes increase, the
propensity to travel by air also grows. Air transport, no doubt, is a more efficient
form of long distance transport. For efficient economic growth, aviation
infrastructure including air connectivity at reasonable costs becomes as much a
necessity as railways or road transportation. This realisation came in the early
nineties when liberalisation of domestic airlines was carried out, followed by
liberalisation of bilateral air service agreements, to allow more domestic and
foreign airlines into the country. But air travel is still considered a luxury.

Central and state governments have found an easy way to enrich their coffers by
putting very high taxes on petroleum products via both sales tax and aviation
related charges. About two decades back, air travel was done mainly by
government officers or corporate executives who were not price sensitive as their
office paid for the bills. With economic growth, ordinary businessmen and people
from all walks of life needed to travel by air also but were price sensitive. The
sale price of aviation turbine fuel (ATF), sales tax on ATF, navigation and airport
charges kept air travel expensive. With the coming of low cost carriers (LCC), full
service carriers started to lose dominance. From about 30% of the market in
2007, they have reached 55% of air passenger traffic in Q1 of 2009, showing how
price sensitive this sector has become.

The global financial meltdown impacted the sector globally and Mumbai 26/11
impacted India’s inbound tourism in a big way.

Airlines the world over suffered, including domestic ones. They can recover only
with increasing air traffic and cost cuttings by use of better technologies like e-
ticketing and improved procedures. Airline seats are perishable like electricity.
Unfortunately, some domestic airlines felt that by cartelisation and increasing
prices, they would be able to increase their bottomline. This didn’t work We need
to relook at the government’s fiscal policy on the aviation sector. Boxes on the
right list sales tax on ATF across different states, varying from 4% in Andhra
Pradesh to 30% in Maharashtra. They also list comparative airport charges
between Singapore and Delhi. Further, they provide a comparison of ATF charges
at Singapore and Mumbai stations.

With the kind of price sensitivity we have experienced in the case of LCC vs full
service carriers, it appears that if taxes and charges are reduced and this is
reflected in reduced ticket prices, the loss to government revenue will perhaps be
more than compensated by increased traffic. Andhra Pradesh has already taken a
step forward towards reducing sales tax on ATF to 4%. If other states also join in,
especially the states with metro cities, this will have a major impact on passenger
traffic. Further, if we compare the tax on a railway ticket or bus ticket with the
tax on an air ticket, then the comparison becomes completely skewed.

—The writer is chairman, International Foundation for Aviation                and
Development(India chapter) and India’s former representative to ICAO
The wrong flight plan
Look at how fleet expansion was planned and how the merger with IA was
handled. Now, only strategic disinvestment will save it

Sanat Kaul
Posted online: Jun 17, 2009 at 2241 hrs

For the first time in its 57 years, Air India has sought an urgent financial bailout,
reportedly of Rs 14,000 crore, from the government. Apparently, the airline does
not have money to pay the June salaries to its 31,000 employees until July 15,
2009. What has gone wrong and what can be done to redeem the dismal
situation?

To say that airlines in the public sector cannot work efficiently is not correct.
Today some of the best run airlines are government owned.

Singapore Airlines and Emirates are two examples. It has also been a matter of
satisfaction that Air India has continued to do fairly well through the last 57 years,
despite no budgetary support except for the initial equity capital induction by the
government of just about Rs 154 crore. Air India purchased all its aircrafts and
constructed its buildings (including the famous Air India Building at Nariman Point,
Mumbai), hangers, hotels from its own resources or commercially borrowed funds.

In 2000, Air India was chosen for strategic disinvestment as part of the policy of
disinvestment of public sector undertakings. After due process, a proposal from
Tata co-jointly with Singapore Airlines, emerged as the best offer. However, even
before the financial bids could be opened, Singapore Airlines withdrew from its
partnership. Immediately thereafter, 9/11 took place and the divestment was
deferred.

After the aborted attempt to sell Air India in 2000-2001, the forces that wanted
to perpetuate Air India as a public sector took control. The decision was also
taken to carry out the much delayed fleet expansion by purchasing as many as
80 aircrafts for Air India and 40 aircrafts for Indian Airlines against international
loans of approximately Rs 50,000 crore. No thought was given to have a mix of
outright purchased and dry leased aircrafts that would have proved a prudent
fiscal decision today. Furthermore, the decision was taken without any
understanding of the fact that just a new fleet of aircrafts would not automatically
resurrect the severely ailing airline. The urgent need was to completely overhaul
the archaic public sector management system and simultaneously introduce
international best practices, to give Air India the ability to once again operate
robustly in this highly competitive and sensitive industry. It is a national shame
that our public sector airlines have been so badly managed. The recent shocking
sacking of CMD, Air India a few months after appointment is reminiscent of the
equally arbitrary suspension of MD, Air India in 2001-02 on charges that have yet
to be proved.

In view of the ongoing declining market share of the two airlines, rather than
disinvest, the government decided to merge the entities, so as to create critical
mass to better take on competition. Merged entities were incorporated as the
National Aviation Company of India (NACIL) on March 30, 2007.
The poor performance of NACIL in the last two years has resulted in a net loss of
over Rs 2,000 crore for fiscal 2008 and reportedly Rs 4,000 crore for fiscal 2009.
There has been an ongoing decline in passenger load factor and yield coupled
with a sharp increase in financial costs consequent to aircraft acquisition and an
increasing wage bill. Nor has NACIL been able to keep up with competition from
other Indian carriers as evident from the decline in its share of traffic. Reports
coming out of NACIL point to the unfortunate lack of proper preparation for the
integration of Air India and Indian Airlines in context to manpower and personnel.
A professional mechanism to ensure smooth integration of the HR quotient is
singular by its absence and serious internal rifts are reported. In short it has been
a badly managed merger that was apparently driven from the very top.

The policy of integration of these two airlines can best be described as
adventurous and misguided, since it has neither increased market share nor
improved the balance sheet. In fact, erstwhile Air India and Indian Airlines
continue to fly under different code numbers as a result of which NACIL has not
been accepted by Star Alliance. NACIL’s balance sheet remains in deep red.

Our entire public sector airlines ownership policy has been a dismal failure and
needs a total review. In fact, the best course for NACIL will be to immediately
begin preparations for a strategic disinvestment, once again. This should take
place as soon as the global economy improves and the aviation sector takes an
upturn. It must be pointed out that a general divestment of 10% equity under the
proposed IPO scheme is unlikely to solve the problem. Only a strategic
divestment with full management control passing into the hands of a proven
group will be the solution.

—The author, who has served on Air India’s board, is chairman International
Foundation for Aviation and Development. He was formerly with the Civil Aviation
Ministry and was also India’s Representative to International Civil Aviation
Organisation, Montreal
Column : How Maharaja lost his sense of Boeing

Sanat Kaul
Posted online: Jul 11, 2009 at 2210 hrs

While the Budget has not announced any relief for Air India, the civil aviation
minister has announced a top-level revamp to cure it of all its ills. He hopes that
by bringing in industry icons like Ratan Tata, Narayana Murthy and inventor-
strategist Sam Pritoda into the Air India board or by creating an advisory board, it
will be resurrected.

Air India has been grounded because of inaction and thoughtless action in the
recent past, like the merger of two loss-making public sector airlines over two
years ago without a proper follow-up, and the drowning of it in deep credit crunch
by purchasing a huge number of aircraft without looking at the financial capability
of the organisation. The legacy airline has also got meshed into a number of
complicated and counterproductive union agreements with their seven odd unions
over the years from which they have not been able to extricate themselves.

In 2000, a serious proposal to divest the airline to a strategic partner was
considered due to its poor performance, and efforts to achieve it nearly
succeeded. The selection of the Tata and Singapore Airlines joint proposal as a
strategic partner was also reached but at the last minute, Singapore Airlines
backed out and before the Tatas were able to locate another airline as a strategic
partner, 9/11 took place and all airlines of the world went into a tailspin. It has
been nine years since and the airline has not improved in its performance.

We are currently in a similar scenario when airlines around the world are in deep
distress and, therefore, strategic divestment at this stage may not be possible.
Further, due to liberal bilateral agreements given in the recent past, the
attractiveness of Air India has further declined.

A proposal to go in for 10% divestment through an IPO route seems ill-advised as
market value of Air India would be extremely low looking at its financials, and
would bring in little funds. Besides Air India needs to get out of the restrictive
environment of public sector. This is possible only when management is insulated
from the government, parliamentary interference and also the shackles of
government rules of procurement, personnel, tendering and employment
guarantee. This is not to say that all public sector companies in India are
inefficient. However, it is true that where the service industry is concerned, like
hotels and airlines, there is no doubt that private sector efficiency gets an upper
hand.

The merger of the two airlines over two years ago and its implementation leaves
a lot to be desired. A merger sounds good in theory but if it is not implemented
properly, it can become a liability. A critical aspect of merger of airlines involves
merger of their codes into one. Even after two years, this has not been achieved.
The merged entity still carries two separate codes of the erstwhile airlines and as
a result, it is not able to operationalise the Star Alliance membership which is
very much needed. There has also been no rationalisation of the organisational
setup. On the contrary, there are now more executive director level posts now
than there were in the pre-merger era. The synergies expected by the merger
have not materialised.

The purchase order of 111 new aircraft, 68 by Air India and 43 by Indian, prior to
merger brings in a huge liability. All calculations of revenue and earnings have
failed and there is no contingency provision. It is the good luck of the airline that
delivery of Boeing 787 Dreamliner has been deferred by the manufacturer.

However, the delivery schedule of Boeing 777 remains and needs rescheduling.
Financial tie-up for the same has been done as late as last month for a nearly $2
billion syndicated loan. The real profit in any legacy carrier is earned from
business and first class passengers. In Air India’s case, this has been a declining
trend because it has not been able to correct the public perception of the airline
in spite of its new fleet.

What is the way ahead? Besides Air India, the two other airlines of India—Jet and
Kingfisher—are also in the red. While government has no liability towards them
as they are privately owned,

Air India is a government liability with a baggage of over staffing, unsustainable
union agreements and public nostalgia for many Indians. It will, however, not be
fair to put the taxpayer’s money into it. But, perhaps, an off-Budget solution
could be found by handing over control to a professional group through
preference share route or providing special dispensation from rules governing
public sector. However, without getting out of 51% government ownership, there
will be insurmountable difficulties.

The author is chairman, International Foundation for Aviation and Development
(India chapter).He was formerly India representative to International Civil
Aviation Organisation and joint secretary in the ministry of civil aviation
Sanat Kaul
February 13, 2009
First Published: 21:41 IST(13/2/2009)
Last Updated: 21:42 IST(13/2/2009)

Hit those near-misses

Air Safety issues can be divided into three sections: near-misses, incidents and
accidents. Near-misses are cases where an accident is averted and generally goes
unreported. Incidents are those that take place but are of a minor nature. While
we are lucky we have not had many accidents in the last few years, the number
of incidents and near-misses has gone up. This is because our safety oversight
functions have been allowed to decay due to low priority given to safety.

Our aircraft rules contain provisions for notification, investigation and reporting of
incidents. But our legislation does not provide for a much needed independent
investigator of accidents as the Director General Civil Aviation (DGCA) is the
designated investigative authority for them. For very serious accidents aircraft
rules do confer upon the Civil Aviation Ministry to appoint an ad hoc entity, the
‘committee of inquiry or court of inquiry’. These, too, are assisted by DGCA
officials.

However, all reports have to be submitted for ministerial approval and are,
therefore, not independent. Meanwhile, incidents and near-misses have increased,
many going unreported.

The Civil Aviation Ministry supervises two major agencies: the DGCA and the
Airport Authority of India (AAI). Both are directly concerned with air
safety. While the DGCA is the licensor, regulator as well as the implementer of
safety, the AAI provides the entire air traffic service over the country, including a
vast oceanic air space. Both these institutions have not kept pace with the growth
of air traffic.

There are huge vacancies within the existing strength of technical staff with both
these organisations. In the DGCA, vacancy levels run as high as 50 per cent in
some of its directorates. In the AAI, the shortage of air traffic controllers is
becoming a major safety issues. As traffic movements increase, the need to have
more controllers is absolutely necessary.

Training has also been a causality because of shortage of critical manpower.
Recruitment of highly skilled technical staff on lower than market salaries through
an excruciating entry process — Union Public Service Commission (UPSC)
recruitments — is not only painful but self-defeating.

India’s air safety record has been traditionally good. The Federal Aviation
Authority (FAA) of the US conducts a survey of countries whose aircrafts come
into their country. They have categorised the countries into Category I and II with
Category I countries being those with whom they have no safety problems.
Category II are those countries they consider whose safety procedures are
inadequate. Category II countries have some restrictions placed on them. The
International Civil Aviation Organisation (ICAO) also conducts safety audits of all
member countries. The US has always rated India in its Category I while the
ICAO had given India a clean chit. However, of late, the FAA has issued a notice
to downgrade India to Category II and the ICAO’s 2007 safety audit report, too,
is reportedly full of reservations.

Media reports about near-misses may have their individual background, but they
are a symptom of a growing malaise. The sudden growth of air traffic in India has
been a great story and is a manifestation of India as a growing economy. But to
maintain it, there is a need for sustained growth in the safety apparatus with a
proper plan. Any shortfall in it can prove to be a disaster.

It will also put on hold future plans of our airlines to grow. Obsession with airlines
and their problems and policy changes to be made according to issues including
security is only a prescription to disaster. If India is downgraded to Category II by
the FAA, it will be a slap in the face of Indian aviation. It is high time we put our
house in order and safety be given the priority it deserves.

Sanat Kaul is former representative of India to ICAO and is current chairman,
International Foundation of Aviation and Development.
Column : A near miss too many

Sanat Kaul
Posted online: 2009-02-12 00:18:26+05:30

Even as the near mash-up between an Air India aircraft and a chopper belonging
to the President’s entourage is being investigated, the US Federal Aviation
Authority (FAA) has threatened to downgrade India to Category II, in context to
its aviation safety record. This is an assessment that can neither be denied nor
ignored.

The aviation industry has been boasting that India has not had any major
accidents in about a decade. However, there is no denying that near misses have
gone up alarmingly in recent times. Clearly, a disaster is waiting to happen.
Perhaps, as a fall out of the FAA notice and the public outcry, the ministry has put
together a plan of action in conformity with relevant Annexes to the 1944 Chicago
Convention for submission to the International Civil Aviation Authority and FAA.
But this will not suffice to demonstrate the government’s commitment to safety in
the air.

I feel that through the past years, the level of air safety has remained static at a
basic level, far from matching the exponential increase in the numbers of aircraft
flying in Indian skies. For worst-case ramifications of this chalta hai attitude,
consider the unfortunate mid-air collision over Charkhi Dadri between the
departing Saudia 747-100 with the inbound Kazakhstan Air Line Ilyushin 76,
about seven minutes after take off from the IGI Airport on November 12, 1996.
Killing 349 people, this crash was caused directly by a lack of shared language
skills (English) between the pilots and ATC, Delhi. The accident report led to
many improvements worldwide, as ICAO amended many standards.

But despite Charkhi-Dadri and the innumerable near misses that have gone
unreported, there has been no serious attempt to set things right in India. Not
only is there a marked reluctance to bring into force a legal regime to implement
the Chicago Convention and its Annexes, the number of vacancies in the safety
apparatus of Directorate General of Civil Aviation (DGCA) is glaring and there is
an acute shortage of Air Traffic Controllers (ATCs). The controllers have a difficult
job, requiring a high degree of training, accuracy, alertness and experience to
enable aircraft to land and takeoff safely. Why does India lack qualified ATCs? Is
lack of training or an absence of meaningful career advancement avenues to
blame? Has this translated into long working hours and resultant fatigue? Are
there other reasons?

DGCA, the licensor and regulator for civil aviation in India, is subordinate to the
civil aviation ministry. And therein lies the problem. A regulator that is
answerable to a ministry is often plagued by the inability to act independently
and take critical decisions.

The apparent conflict of interest between DGCA and the ministry has been widely
noted. For example, the preliminary accident investigation report of a recent
domestic air accident involving a private airline could not be released for long
months after submission to DGCA because ministerial approval was not
forthcoming.
Unlike India, developed countries have independent and autonomous air safety
regulators. But even the Naresh Chandra committee report titled the

Future of Civil Aviation in India has recommended continuance of the present
flawed system.

It is imperative that the government establishes an independent regulator of civil
aviation. As of now, we have doggedly refused to ratify the Montreal Convention
of 1999, and instead opted to continue with the antiquated international carrier
liability regime defined in the 1929 Warsaw Convention and its 1955 amendment,
which offers about Rs 4 lakh in case of death caused during international flights.

Could it be that airline owners/operators are loath to pay enhanced insurance
premiums if carrier liability is brought up to international standards? The
government must set up a statutory committee empowered to produce an
implementable roadmap for civil aviation security in India. One hopes that the
FAA notice may trigger such a healthy development.

The author is a former representative of India to International Civil Aviation
Organisation & chairman, International Foundation for Aviation &
Development
                      DOES INDIA NEED NATIONAL SPACE LAWS? 1


                                                                            Dr. Ranjana Kaul2




The need for national space legislation is seminal, especially because India is
increasingly looking to privatize and commercialize space assets, expand
capability in space exploration and scientific discovery, commercialize its
capability to build satellites and offer launch services from its facilities. In view of
this emerging development, the author is guided by the belief that national space
law ought to be to legislated for the purpose of creating clear and transparent
regulatory guidelines for domestic industry in order to accelerate investment and
to ensure the growth and development in this capital intensive - high return
strategic sector.

This paper will examine (i) the why & whereof of national space legislation in
context to international conventions of space law; (ii) whether countries really
need to have space laws; and (iii) whether India needs to enact space laws in
context to its current state practice and to its emerging domestic requirement in
the space sector. In conclusion are a few observations and recommendations as
to the possible future direction for a national space law regime in specific space
enabled sub sectors for India.

The why & whereof of national space legislation

The rationale for countries to establish national space legislation embedded in
treaty provisions contained in the corpus of international law of outer space is
well known. Yet it would be helpful to recall the specific provisions that require
such action by countries that have ratified the agreements. It is on the basis of
those well endorsed principles that this paper urges India to establish national
space legislation at the earliest, not just to fulfill treaty obligations but because
the state of development of space activities and space industry in the country
have reached a level makes a compelling case for legislative action. International
law on outer space is contained in five international instruments adopted under
the auspices of the United Nations (UN) through the General Assembly’s
Committee on Peaceful Uses of Outer Space (COPUOS). Duties imposed on
ratifying states are contained in specific treaty provisions as under:

1. 1967 Outer Space Treaty 3
i) State Parties to the Outer Space Treaty bear international responsibility for
national activities in outer space including the moon and other celestial bodies,

1
 This paper is an abridged and shortened paper based on the presentation entitled ‘National Space
Legislation: A blueprint for India’ presented by the author at the 3 rd Regional Space Conference on
Bringing Space Benefits to the Asia-Pacific Region, Bangalore 27-29 June, 2005
2
   B.A. (Bombay University); M.A., Ph .D. (University of Poona); LL.B. (University of Delhi); LL.M.
(Institute of Air and Space Law, McGill University, Montreal, Canada); Partner, Dua Associates,
(Advocates & Solicitors), New Delhi, India. ranjanakaul@duaassociates.com
3
  Treaty on principles governing the activities of States in the exploration and use of outer space,
including the moon and other celestial bodies’         Opened for signature at Moscow, London and
Washington, on 27 January,1967. Source : 610 UNTS 205
199 states have ratified and 27 have signed the treaty (hereinafter referred to as 1967 Outer Space
Treaty) [‘OST’]
whether such activities are carried out by governmental or non-governmental
entities (NGO) and for assuring that national activities are carried out in
conformity with the provisions set forth in the OST. 4 In other words a ratifying
State is bound to the principles of exploration and use of outer space for peaceful
purposes, international cooperation, no national appropriation and no
weaponization. Furthermore the State is bound to ensure that all that such
activities are duly authorized and carried out under its continuing supervision.

ii) The Outer Space Treaty imposes liability for damage by making a launching
state internationally liable for damage to another State Party, its own natural or
juridical person on earth, air and outer space, if its space object or component
causes damage5.


2. 1968 Rescue Agreement6

The Agreement on the rescue of astronauts, the return of astronauts and the
return of objects launched into outer space gives detailed resolution to the duty
imposed on State parties in terms of Article V of the OST 19677.


3. 1972 Liability Convention8

The liability provisions of the OST have been supplemented and expanded by the
1972 Liability Convention. Article I of the Liability Convention defines the term
“launching state” and Article II establishes absolute liability for damage caused on
the earth or to aircraft in flight. In other words, no proof of damage caused on
earth or to aircrafts in flight is required to be proffered by the claimant. However,
Article IV allows mitigation of liability on the basis of proof of gross negligence on
the part the claimant. On the other hand, Article III of the Convention establishes
fault-based liability for damage caused in outer space. Article VII exonerates the
launching state from liability in respect of nationals of launching state and
foreigners participating in launch. In the context of this Paper, the most
important point to note is that it is the State, and not a private person whose
space object has caused damage, that is directly held internationally liable.
Therefore, national legal system needs to be in place for the reimbursement of
the compensation to the State which has been required to pay to the victim(s) of
an accident by the space object of an NGO.


4. 1974 Registration Convention9


4
  ibid, Article VI
5
  ibid, Article VII
 5‘Agreement on the rescue of astronauts, the return of astronauts and the return of objects launched
into outer space’ opened for signature at Washington, London and Moscow on 22 April 1968 6 .
Source: 672 UNTS 119 (hereinafter referred to as 1968 Rescue Agreement). 82 countries have ratified
and 23 have signed the Agreement. [‘Rescue’]
7
   OST ibid supra note 2 at 2 Article V specifies that ‘ objects or component parts found beyond the
limits of the state party of the treaty on whose registry they carried shall be returned to that state party,
which shall, upon request, furnish identifying data prior to their return.”
8
  ‘Convention on the international liability for damage caused by space objects’ opened for signature
at London, Moscow and Washington on 29 March 1972, Source: 961 UNTS 187 (hereinafter referred
to as 1972 Liability Convention). 74 countries have ratified and 27 countries have signed the
convention. [‘Liability’]
9
  ‘Convention on registration of objects launched into outer space’. Adopted by the General Assembly
of the United nations, at New York, on 12 November 1974, Source: 1023 UNTS 15 (hereinafter
Under Article VIII of the OST, States are required to maintain a “Registry” of
space objects launched into outer space for the purpose of identification of space
objects. The article postulates that a “state party to the treaty on whose registry
an object launched into outer space is carried shall retain jurisdiction and control
over such object and personnel in outer space or on a celestial body.” The
Registration Convention further develops these provisions and under Article IV
imposes another duty on each state of registry to provide the UN Secretary-
general of the United nations the following information concerning each space
object carried on its registry: (a) name of launching State or States; (b) an
appropriate designator of the space object or its registration number; (c) date
and territory or location of launch; (d) basic orbital parameters (including nodal
period, inclination, apogee and perigee); and (e) general function of the space
object.

The registration of objects launched into outer space embellishes this duty in
order to facilitate the identification of the State which has the ‘jurisdiction’;
‘control’ and the ‘ownership’ of the space object or parts thereof that is alleged
to have caused third party damage as condition precedent to imposing ‘liability’
for such damage and seeking compensation for the same. Thus provisions of the
1967 OST and the 1968 Registration Convention imply a requirement for a
national regulatory mechanism or law to serve as the basis for establishing a
national registry for space objects.


5. 1979 Moon Agreement10

Although the Moon Agreement has come into force in 1984 after the 5 th
ratification, it remains the least space ratified. On 29 th June 2004 Belgium
became the latest entrant making up ten countries in all which have ratified the
Agreement.

Five countries, including India have signed the Agreement signaling their
intention undertake international duties and obligations in respect to their
activities on the Moon and other celestial bodies, but have formalized it by
ratification as yet. It is important to note that U.S.A., Russia, China and the
European Space Agency have not endorsed the Agreement in any manner. It is
also important to take note India’s position in light of the fact that a Moon Mission
Chandrayan is slated for 2008 11, particularly if it wishes to ensure legally smooth
exploration of the Moon. The Agreement supplements the provisions of the OST
an specifically (a) entitles State Parties to “the right to collect on and remove


referred to as 1972 Registration Convention). 37 countries have ratified and 4 have signed the
Convention.         [‘Registration’]
10
   ‘Agreement governing the activities of states on the moon and other celestial bodies’( hereinafter
after referred to as the 1979 Moon Agreement). Source: UN doc. A/RES/34/68 of 5 December 1979
 The Agreement has been ratified by 10 countries while 5 countries have signed the instrument. [Moon]


11
  Report in Hindustan Times dated 20th November 2004, Not pure lunacy, after all, quotes Mr. G.
Madhavan Chairman ISRO as saying that the Indian Space Research Organisation (Isro) has decided
to collaborate with other countries in exploring the moon and has offered to carry 10 kg of scientific
equipment from other space agencies around the world. Apart from the technological edge that these
hi-tech US and European instruments would bring to the mission, such an inclusive profile may deflect
some of the criticism facing the 2007-08 Indian moon mission. (accessed 20th November 2004)
from the moon samples of its minerals and other substances” and use “them for
scientific purposes”; 12 (b) declare the natural resources of the moon as the
‘common heritage of mankind’13 and prohibits any threat or use of force or any
other hostile act or threat of hostile act on the Moon.14

It needs no reiteration that the whole point of the duties and liabilities imposed
by the international treaties relating to outer space is to enable the concerned
States that suffer damage to claim compensation in terms of the procedure
enumerated in the treaties.
The recent decades have witnessed some crowding in outer space, particularly
the Low Earth Orbit and in some measure the Geostationary Orbit which carry
satellites that perform civilian functions from navigation and remote sensing to
telecommunications and broadcasting. The ceaseless efforts by COPUOS, OOSA
to encourage member states to adopt national space legislation have not met
with satisfactory results.

Is it really necessary for countries to have national space legislations?

The requirement to harmonize international treaty obligations is inherent in the
international treaties under review. Harmonization thus represents the essential
physical link, as it were, between a nation’s universally declared stand in the
international arena on outer space (or any other matter) and its national
application. In its spatial context harmonizing treaty obligations with national law
demonstrates the continuing resolve of a country to support the imperative need
for collective measures to manage international affairs in such a way as to ensure
that outer space does not become yet another battleground for nations.

Furthermore, in international law each State must fulfill all international
obligations in good faith, irrespective of whether or not it harmonizes those
obligations with its national law 15 . Harmonizing (implementing) international
conventions with national law provides a State an important rationale or basis to
legislate domestic law in manner requisite to national circumstances and needs,
while yet retaining at all times the right to amend, repeal and enact new laws.
This factor is to be especially emphasized. The apprehension of loosing control
over development and direction of space policy and activities is perhaps the single
most important reason why space programmes continue to be controlled by
government agencies in many countries that have taken neither initiative to
harmonize international space law conventions nor legislate specific national
space laws. This is particularly true of developing countries in the Asia-Pacific
region a few of which are universally recognized for spectacular achievements
and future potential of space development. Except Australia, Japan and South
Korea none of the other countries in the Asia-Pacific region have implemented
international conventions through national space laws. This is true of space faring
powers Indonesia, Pakistan, Singapore and Thailand that have space applications
programs without launch capability 16 . It is equally true of China 17 and India
which are space powers with indigenous commercial launch capability.



12
   ibid , supra note 9 at 4, Article 6(2)
13
   ibid, Article 11(1)
14
   ibid, Article 3 (2)
15
    The 1968 Vienna Convention on the Law of the treaties article 26: “Every treaty in force is binding
upon the parties to it and must be performed by them in good faith” www.un.org
16
    It is however interesting to note that Malaysia is not party to any space law convention. This fact
does not seem to preclude it as yet in any significant way from procuring commercial launch services
to use space enabled technology applications for telecommunications, television & broadcasting and
achieving accelerated economic development.
The point is of special relevance to China and India which have both made
spectacular advances and are now poised to establish a new order in global
competition. Perhaps the development of space capability programmes under
close government control without the intervention of specific national space
legislation was strategically necessary in the nascent years for these countries. It
is clearly evident that the strategy has worked to their best advantage. It is
learnt, however, that China is presently in the process of developing its national
space law.     India would do herself disservice in overlooking the fact that
accelerated civilian commercial applications of space technology will necessarily
require full participation of the private sector including greater transnational,
bilateral and multilateral interactions.     In such a scenario national space
legislation becomes imperative. Clarity, transparency and a user friendly legal
regime based on easily accessible information is cardinal if the country hopes to
reap lucrative returns from a national space economy.

Constitutions in countries with democratic forms of government usually require
specific national legislation to empower the government to withdraw money from
its national treasury in order to make payment to discharge liability to claimant
states 18 . This factor is especially relevant to countries marketing commercial
launch services which carry inherent financial liability, insurance and indemnity
dimensions. More so now than ever before as countries of the world become
increasingly engaged in the prolific use of space enabled technologies as a tools
for domestic development, growth and national security, whether they are space
powers or space faring powers. Inevitably, then, not only is national space
legislation imperative but it is also necessary that relevant national laws currently
in force be revisited to ensure that they respond to emerging space technology
applications issues.

In this context it is important to highlight a peculiar attribute of the international
space law treaties under review. Although international space treaties do not
impose sanctions if obligations arising out of them are not implemented in
national law, they may yet be considered, by their act or omission, in breach of
international law. The treaties provide for consultations through diplomatic
channels or through the Office of the Secretary General of the UN as the
preferred mechanism to resolve disputes, to invoke liability for damage and to
seek compensation. The application of this mechanism is, however, limited to the
resolution of a dispute or claim as between parties which have ratified the treaties.
It does not lend itself to national application. Thus the absence specific national
legislation does not absolve Member States from the responsibility to discharge
liability under the Liability Convention. A failure to do so for what so ever reason
would be a breach of the space treaties and general international law.

A review of status of harmonization of international space conventions and the
development of national space legislation by ratifying Member States yields two
diametrically opposite positions as between developed and developing countries.
Australia, Canada, UK, Sweden and Israel are countries with national space laws
in various forms. The United States and the Russian Federation (former Soviet



Also see: Ms. Fatimah Yusro Hashim: Faculty of Law, National University of Malaysia , ‘ Status 2003
Space Policy and Institutions in Malaysia’, wardatun@ukm.my


17
     China's Space Activities, The State Council Information Office, P.R.C., November, 2000 Beijing
18
     See infra note 27at 10 in respect to provisions under the Constitution of India.
Union), first to explore and use outer space and push for the conclusion of
international space law conventions under the auspices of the UN have
domestically harmonized the international conventions in vastly different ways.
An important point to note in this context is that American and Russian national
space laws have incorporated several, though not all, principles enshrined in OST
and other conventions without actually using the specific textual phraseology of
those treaties.

National space laws are the result of national space policies. Changes in policy
require corresponding modification in respective laws. For example, the United
States National Space Policy has been developed over many years. It continues
to evolve based on revised goals and objectives of the nation, budget constraints,
previous space policies, current programs, national and international law, and
treaty obligations. The policies are concretized by several specific national laws
that establish the necessary legal regime for achieving the objective of protecting
and furthering national interests and dominance in all matters concerning the
exploration and use of outer space19.



19
  United States has several national space policies that address specific areas of national space
endeavor. All the following policies and laws stated below can be accessed at www.hg.org/transp.html
and at www.spaceref.com and www.jaxa.jp/jda/library/space

Civil Space Policy 1978

National Policy on Commercial Use of Space 1984

The 2004 Revised U.S. Space Transportation Policy (USSTP)

2005 U.S. Space Transport Policy

DOD Space Policy defines space functions which include Space Support, Force Enhancement, Space
Control, and Force Application. The policy has its foundation in (i) DOD Directive 5100.1 which states
that “The Department of Defense shall maintain and employ armed forces to insure, by timely and
effective military action, the security of the United States...." The directive does not specifically
mention space but it does not exclude the use of space to further national security; & (ii) and NASA
Act 1958;

Army Space Policy 1985 states that the Army will exploit space in order to enhance the capabilities of
all Army elements at tactical, operational, and strategic levels of war;

Revised U.S. Space Transportation Policy (USSTP), 2004 recognizes the changing dynamics of
space transportation in directing the appropriate federal agencies to: "Purchase commercially available
U.S. space transportation products and services to the maximum extent possible; Provide a timely and
responsive regulatory environment for licensing commercial space launch and reentry activities; and
Encourage and facilitate the U.S. commercial space transportation industry to enhance the achievement
of national security and civil space transportation objectives, benefit the U.S. economy, and increase
the industry's international competitiveness."

Vision for Space Exploration 2004 announced by the President Bush states that the private sector
should have a more systematic role in space operations and exploration.

Next Generation Air Transportation System Integrated Plan 2004 to: Advance ability to leverage
the economic and public safety benefits of space exploration; Reward risk and creativity in reusable
rocket and vehicle development; Fortify the standing of the US as an international space power against
aggressive foreign competition; and Support the modernization of the National Airspace System.
Russia20 has harmonized the international conventions into a single omnibus law
suited to further its national interests including economic development, national
security and dominance in outer space. Law of the Russian Federation on Space
Activity 1993 21 is a comprehensive legislation which declares the promotion of
well being of the citizens of Russian Federation, the development of Russian

Directives issued by successive Presidential Administrations from President Eisenhower through
Presidents Kennedy, Nixon, Carter, Reagan, Bush, Clinton & the present Bush Administration;

Multilateral & bilateral treaties are as much part of law in the US as laws enacted by Congress
because even though the development of space policy is shaped by national interests, U.S. objectives
and policies are constrained by international law. Typically, but not exclusively, these obligations are
embodied in bilateral and multilateral treaties signed and ratified by the United States;

*Space Laws passed by Congress

The National Aeronautics and Space Act, 1958 was the embodiment of the first official national
space policy. This act articulates principles later codified in OST 1967, deals with IPR for inventions
in outer space and issuance of patents thereto, institutes awards for contribution, establishes legal
parameters for defense of malpractice& negligence suite, liability for insurance & indemnification
issues, and appropriation among other issues. NASA Act created the National Aeronautics and Space
Administration (NASA), to provide direction to and exercise control over all U.S. space activities
except those associated with the development of weapons systems, military operations, or the
defense of the United States.

Communications Satellite Act, 1962

International Maritime Satellite Telecommunications Act, 1978

The Commercial Space Act, 1984 gives the Department of Transportation the lead for commercial
launches of space vehicles. It gives them the right to monitor launch activities. It permits the Air
Force to provide launch support. It establishes licensing rules and requirements for insurance. The
2004 Amendment Act ( P.L. 108-492) consolidates all commercial space flight regulatory authority
under the FAA and simplifies the licensing process for new types of reusable suborbital rockets. In
codifying these reforms, the law declares that government space policies should embrace the goal of
"safely opening space to the American people and their private commercial, scientific, and cultural
enterprises." More significantly, the law would eventually let paying passengers fly on suborbital
launch vehicles at their own risk.

The Land Remote Sensing Commercialization Act, 1984 (replaced by the Land Remote Sensing
Policy Act, 1992) directed the commercialization of LANDSAT. It provides for the non-
discriminatory access of LANDSAT data and the licensing of other U.S. remote sensing systems. The
Commerce Department, which is responsible for the satellite system, manages it through the National
Oceanic and Atmospheric Administration (NOAA). NOAA has a contract with Earth Observation
Satellite Company (EOSAT) to manage LANDSAT as a private endeavor. NASA and DOD share
responsibility for the development and operation of the LANDSAT 7 and following LANDSAT
satellites. Launch Services Purchase Act of 1990

Land Remote Sensing Policy Act, 1992

US Patent Act 2003 (Patents in Space section)



20
     Russian Aviation and Space Agency at http://www.rosaviakosmos.ru/english/eindex.htm


21
     Law of the Russian Federation on Space Activity, 20 th August, 1993
Federation and ensuring its security, as well as solving global problems of
mankind as the goal and purpose for its space activity. The Act prescribes
national treatment for issues ranging from licensing, certification of space
technology, safety of space activity, funding of space activity, insurance,
responsibility, liability for damage, dispute resolution, protection of environment
and ecology, promotion and financial support to development of space sciences to
international cooperation. The Act incorporates the principle of international
responsibility for its activities in outer space as well some prohibitions listed in the
conventions ratified by Russia. The Russian space program 22 is run by the
Russian Space Agency (RKA) 23 which was established on February 25, 1992
directly under the supervision of the Russian Federation described in the Edict
‘About the structure of management of space activity in Russian Federation’
issued by President Boris Yeltsin on the same day. The RKA is now also vested
supervisory authority over the aviation sector 24 .         Thus the merged entity
Rosaviakosmos oversees both the civilian aviation and space sectors. Russian
military assets remain under the control of the Russian Military Space Forces
(VKS).

INDIA

Constitution of India & current state practice

The starting point for a discussion on the general philosophy which guides India in
the conduct of international relations and in the meticulous discharge of
international obligations is articulated in the Constitution of India.

Article 51 in the Constitution 25 directs the Executive to (promote) international
peace as India’s objective in the international sphere and provides the basis for
the domestic implementing international treaty obligations.


http://www.jaxa.jp/jda/library/space-law/chapter_4/4-1-2-7/4-1-2-71_e.html


22
  In the Soviet era the space program used to be run through a complex structure that involved several
different ministries, committees, and commissions. Between 1965 and 1991, the Ministry of General
Machine Building (MOM) designed and built spacecraft while the Strategic Missile Forces operated all
launch            vehicles          and            space          vehicles            for          the
government. http://www.rosaviakosmos.ru/english/eindex.htm


23
  The RKA operates its launchers from Plesetsk in northern Russia and Baikonur launch sites in
Kazakhstan. RKA also has cooperative agreements with ten other newly independent former Soviet
republics in terms of the 1991 Minsk Declaration to operate assets jointly.



24
  It may be noted that while NASA deals with both the space and aeronautical activities, the US
Federal Aviation Administration (FAA) is also charged with the responsibility of supervising the
development of necessary regulatory framework in respect to sub-orbital flights now recognized as the
next frontier for space transportation systems.


25
   Constitution of India: Part IV: Directive Principles of State Policy
“Article 51: Promotion of international peace.
1.       This Article embodies the object of India in the international sphere. But it does not lay down
         that international treaties or agreements entered into by India shall have the force of municipal
         law without appropriate legislation.
In addition to Article 51 two other Articles in the Constitution of India have a
direct bearing on the law making process in India relevant to the topic under
discussion:

(i)     Article 25326 confers power to Parliament to make laws for implementing
India’s international obligations arising from treaties, agreements, conventions or
decisions made at international conferences, associations or bodies. Thus it
provides competence to the legislature for enacting national space laws to fulfill
the Directive inherent in Article 51 in national interest ; and

(ii) Article 5327 empowers the President of India to exercise the executive power
of the Union of India in accordance with the Constitution. The Article also
empowers the President to delegate authority to the Vice President of India or to
Governors of States to exercise executive power on his behalf.

Thus the Government of India is competent to give effect to international treaty
obligations through the exercise of executive power by the President of India
directly or indirectly in terms of under Article 53 without invoking power of the
Legislature under Article 253 in order to fulfil the mandate of Article 51. At
present, this is the principle on which state practice is founded in respect to

     2.   In order to be binding on municipal Courts, legislation [see under Schedule VII, List
          I(14),post] would be required if a treaty –
             (a) provides for payment to a foreign power, which must be withdrawn from the
                 Consolidated Fund of India; or
             (b) affects the justiciable rights of a citizen
             (c) requires the taking of private property [Art.31(1), taking of life or liberty [Art.21], such
                 as extradition or imposition of a tax[Art.265], which under the Constitution can be done
                 only by legislation; or
             (d) modifies the laws of the State
     3.   Even an amendment of the Constitution would be required where the implementation of a
          treaty would involve cession of Indian territory to a foreign power but nothing is required here
          it merely involves the settlement of a boundary dispute not involving ‘cession’.
     4.   Outside the foregoing specified matters, legislation or constitutional amendment would not be
          required, and a treaty may be implemented by exercise of executive power under Article 53.
     5.   In the absence of contrary legislation, municipal Courts in India would respect rules of
          International law, but if there is any express legislation contrary to a rule of International law,
          Indian Courts are bound to give effect to the Indian law.
          Thus, Rules of International law as to immunity of a foreign state from being sued in India has
          been modified by the provisions of the Code of Civil Procedure, e.g. Section 86.
          But in interpreting a statute, the Court would so construe it, if possible, as will not violate any
          established principle of International law.”

26
   Ibid, supra: Part XI: Relations Between the Union and the States
 “Article 253: Legislation for giving effect to international agreements
Notwithstanding anything in the foregoing provisions of this Chapter, parliament has power to make
any law for the whole or any part of the territory of India for implementing any treaty, agreement or
convention with any other country or countries or any decision made at nay international conference,
association or other body.”
27
  Ibid, supra: Part V: The Union: Chapter I: The Executive: The President and Vice President
“ Article 53: The executive Power of the Union
  (1) The Executive power of the Union shall be vested in the President and shall be exercised by him
       directly or through officers subordinated to him in accordance with this Constitution.
  (2) ………
  (3) ……..”
international obligations arising out of the four international treaties on Outer
Space28 ratified by India.

To date no occasion has arisen when the responsibility and liability clauses have
been internationally invoked against India 29. That being said, it is not possible to
predict if there will be occasion in the future when the Liability Convention will be
invoked to claim compensation for damage caused to another Member State or
third party by an Indian space object on the surface of the earth, to aircraft in
flight or in outer space. As already stated the absence of specific domestic law to
facilitate discharge of liability in liquidated damages is not a defence in law and
cannot absolve international liability under the Liability Convention.

In this view of the matter, it becomes essential to understand rules established
by the four Exceptions that restrict the general application of Article 51 of the
Constitution. These rules have a direct bearing on the present state practice in
respect to international space law conventions and show the way for development
of Indian national space laws for the future. The Exceptions must be understood
in light of the fact that Article 51 does not lay down that international treaties or
agreements entered into by India have force of municipal law without appropriate
legislation. This position was conclusively decided by the Supreme Court of India
in Varghese v. Bank of Cochin30 and Civil Rights Committee v.Union of India 31.
Furthermore, although municipal courts in India do respect rules of international
law in the absence of contrary legislation, Indian Courts are bound to give effect
to the Indian law if there is an express legislation contrary to a rule of
international law, although in so doing they are directed to interpret law in such a
way, if possible, as will not violate any established principle of international law.
The below listed Exceptions to Article 51 describe specific conditions attendant to
international treaty obligations which can be discharged by the Government of
India only through specific national law binding on municipal courts. Thus specific
national law is necessary when an international treaty:

(1) Provides for payment to a foreign power, which must be withdrawn from the
Consolidated Fund of India32; or

(2) Affects the justiciable rights of a citizen33;

(3) Requires the taking of private property [Art.31(1), taking of life or liberty
[Art.21], such as extradition or imposition of a tax [Art.265], which under the
Constitution can be done only by legislation 34; or



28
  India has ratified the Outer Space Treaty, 1967, the Rescue Agreement, 1968, the Liability
Convention and the Registration Convention, 1974.    India has affixed signature to the Moon
Agreement 1979.
29
   Although in the late 1960s there was the incident when components of the US Skylab Satellite fell
within Indian territory.
30
   A 1980 S.C.470
31
   A 1983 Kant.85( Para 18)
32
   Issue decided by the Allahbad High Court in Moti Lal v. U.P., 1951 All.257 F.B
33
  Issue was decided by the Supreme Court of India in Maganbhai v.Union of India,A.1969 SC783
(789,807) and in Beubari Union, in re.,A 1960 SC 845


34
  Issue in reference to extradition was decided by the Supreme Court of India in Ali Akbar v.
U.A.R,A1966,S.C.230 (para 30)
(4) Modifies the laws of the State35.

India has a long and established precedent for implementing international
conventions through specific national laws when obligations fall within the
circumstances described the Exceptions to Article 51. Thus we find that of the
international conventions on outer space ratified by India, obligations arising out
of the 1972 Liability Convention falls the rule of Exception 1 while obligations
attendant to the 1968 Rescue Agreement fall within the purview of Exception 2,3
and 4. It needs no reiteration that principles of international law crucial to the
management of national activities in outer space encapsulated in the 1967 Outer
Space Treaty must necessarily find echo in national space laws.

The 1972 Diplomatic Relations (Vienna Convention) Act; 1960 Geneva
Conventions Act; and Section 364 A of the 1960 Indian Penal Code which give
effect to obligations arising out of the 1979 International Convention Against the
taking of Hostages are a few
examples of national laws that give effect to international obligations arising out
of corresponding international conventions within the purview of Exceptions 2, 3
and 4.

International Civil Aviation provides a close analogy when dealing with the issue
of whether or not to harmonize international treaties on outer space. As a
Member of the International Civil Aviation Organization36, India has implemented
several international civil aviation conventions 37 through domestic law where
attendant treaty obligations have been within the purview of Exceptions. Thus the
1975 Tokyo Convention Act (20 of 1975) gives effect to the 1963 Convention on
Offences and certain other Acts committed on Board Aircraft, Tokyo; the Anti-
Hijacking Act, 1982( 65 of 1982) gives effect to the 1973 Hague Convention for
the Suppression of Unlawful Seizure of Aircraft; the 1982 Suppression of Unlawful
Acts Against Safety of Civil Aviation Act (66 of 1982) gives effect to the1971
Montreal Convention for the Suppression of Unlawful Acts against the Safety of
Civil Aviation and the 1988 Montreal Protocol for the Suppression of Unlawful Acts
of Violence at Airports serving International Civil Aviation. These examples all fall
within the purview of Exceptions 2, 3 and 4.

The 1968 Rescue Agreement is clearly within the definitions of Exceptions 2, 3
and 4. The Agreement calls upon Member States to protect the right of and for
prompt, safe return of astronauts and space objects in the event of accident,
distress and unintended landing in territory under the jurisdiction of a Contracting
State or on High Seas38. The rescue and safe, prompt return of astronauts and
space objects to a Contracting State demonstrating ownership has two aspects.

35
  Issue has been decided by the Supreme Court of India in State of W.B. v Jugal, A 1969 SC
1171(para 6)
36
  Refer to ‘Preamble’ of Convention on international civil aviation, signed at Chicago on 7 th December
1944, ICAO Doc.7300/6(1980) [Chicago 1944]
The International Civil Aviation Organization, Montreal, Canada is a specialized agency of the United
Nations mandated by the Chicago Convention 1944 to ensure the future development of international
civil aviation in a safe and orderly manner to help create and preserve friendship and understanding
among nations and peoples of the world, to promote cooperation among nations, to obviate its abuse
which could be a threat to global security and ensure that international air transport services may be
established on the basis of equality of opportunity.
37
     India has not yet ratified the Montreal Convention 1999
38
     Rescue, supra note 5 at 2: Articles I and II
The first involves the protection of justiciable right of Indian citizens in event of
damage caused to their person and property by foreign personnel (astronauts) or
foreign property (space object or parts thereof). The second aspect involves the
safe and prompt return of foreign nationals and property involved in unintended
landing in the territory of India or if discovered on High Seas by Indian nationals.
This can be accomplished only through specific treatment in domestic law which:

(i) gives Indian nationals actionable rights in event of damage sustained under
the said circumstances ; and

 (ii)  creates special classification for such foreign personnel and property
(astronauts & space objects) to remove them from the purview of criminal law in
force in India (Exception 3 and 4).

However, it is the legal requirement established by Exception 1 that is especially
important. The postulate of Exception 1 requires Parliament to enact specific law
to give effect to an international treaty obligation which provides for payment to a
foreign power from the Consolidated Fund of India 39 is settled law. Thus in the
absence of specific national law for the purpose the Government of India cannot
fulfill international obligations arising from the Liability Convention 1972 thus be
in breach of international law should such ocassion arise.

India has already established a precedent for implementing international
conventions that carry financial implications. The Warsaw Convention, 1929 (as
amended by the Hague Protocol 1955) which determines liability for damage
caused in the course of international civil aviation provides a good example. In
consequence to ratification of the Warsaw Convention 40 as amended by the
Hague Protocol 1955 41 , Parliament enacted the 1972 Carriage by Air Act 42 to
empower public sector airlines flying international routes 43 to discharge liability
to give effect to the treaty obligation.

In this context a comparison of ‘liability’ for damage caused under Warsaw
Convention44 in respect to international civil aviation and the Liability Convention
in respect to outer space is useful.


39
     Issue was decided by the Allahbad High Court in Moti Lal v. U.P., 1951 All.257 F.B.
40
  Convention for the Unification of certain Rules Relating to International Carriage by Air signed at
Warsaw on 12 October 1929, Source: English Translation: Schedule to the United kingdom Carriage
by Air Act,1932; 22 & 23 Geo.5,ch.36, refer to the Preamble (hereinafter referred to as the Warsaw
Convention)[Warsaw]
41
 ,Protocol to Amend the Convention for the Unification of certain Rules Relating to International
Carriage by Air at Warsaw on 12 October 1929 done at the Hague, 28 October 1955. Source: ICAO
Doc.7632 ( hereinafter referred to as Hague 1955) [Hague]
42
   Carraige by Air Act, 1972 (69 of 1972) [repealed the Act of 1934]:
43
   Air India and Indian Airlines are government held airlines. Recently domestic airlines have also
been granted permission to fly international routes and will consequently be bound by international
liability clause in the Carriage by Air Act 1972. www.airindia.com, www.indianairlines.com
44
   In context to liability in international civil aviation it may be noted that the Warsaw Sytem has been
replaced by the 1999 Montreal Convention with effect from November 2004 in respect to countries
which have ratified it. An important feature of the 1999 Montreal Convention is that it has enhanced
the pecuniary limit for absolute liability to 100,000 SRDs. India which has has not yet ratified the new
Convention continues to discharge international liability arising from the 1929 Warsaw Convention , as
amended by the 1955 Hague Protocol for damage caused in the course of international civil avation in
terms of the 1972 Carraige by Air Act www.icao.int.ca
The most important difference is that while Warsaw Convention fixes liability for
damage on the airline carrier whereas the Liability Convention fixes liability on
the launching state for activities in outer space of its nationals and its own
agencies. The Warsaw and Liability Conventions establish two types of liability:
absolute liability and fault based liability. (i) Air carriers are held absolutely liable
under certain conditions in respect to damage caused to passengers 45 and
goods 46 and for delay 47 in international civil aviation, while a launching state is
liable for damage caused on earth and to aircraft in flight by space objects and
parts thereof48. The absolute liability of aircraft carriers or launching state can be
mitigated on proof of due care by the carrier and contributory negligence by the
claimant49. In respect to the compensation which can be claimed in liquidated
damages, Warsaw Convention prescribes a fixed financial ceiling 50 while the
Liability Convention leaves it open to contracting parties to arrive at a mutual
settlement as to its quantum. (ii) Fault based liability is imposed for damage
caused on evidence of willful misconduct by the air carrier 51 in course of
international civil aviation52 and for damage caused by a space object or its parts
in outer space in terms of the Liability Convention.

The cardinal difference between the international civil aviation convention and the
international convention on outer space is that the latter leaves it to the parties
concerned to reach a mutual settlement on the quantum of compensation to be
paid to the claimant. This is a practical approach which gives comfort level to
Member States since imposing specific quantum of liability in liquidated damages
would spell doom to nascent        industry in outer space particularly in the
developing world.

As far as India is concerned, the tentative opening of the space enabled service
sector, particularly licensing of private entities to satellite systems needs specific
national law to be enacted urgently since it is the Government which bears
responsibility and liability for activities of its nationals in outer space.     It is
important for India to consider this point especially since the Antarix Corporation
is now actively marketing launch services. The liability attached to a ‘launching
state’ is well known. Discharging that liability will impose a charge on the
Consolidated Fund of India. Presently the Government of India does not have
competence to discharge liability as a launching state. This is a real concern and
must be dealt sooner rather than later.

A discussion on any aspect of activities in outer space can proceed only in context
to the basic framework of international space law embodied in the 1967 Outer
Space Treaty considered fundamental for activities in outer space. Initiated by
U.S., the United Kingdom and the former Soviet Union and ratified by 119
countries, the OST mandates that Member States shall bear international



45
     Warsaw, supra note 42 at 14: Article 17
46
   ibid: Article 18
47
   ibid, : Article 19
48
   Liability supra note 8 at 3. Article VII: There are exceptions to this rule wherein no liability is fixed
on the launching state.
49
   Warsaw, supra note 42 at 14: Articles 20, 21
50
   ibid, Article 22. It was later enhanced by Hague Protocol 1955, supra 42 at 13: Article XI
51
   ibid, Article 25
52
   Hague, supra note 43 at 14: Article XIII.
The Hague Protocol 1955 removed the ceiling imposed by Warsaw in respect to fault based liability.
responsibility and liability for damage to another State Party or to a third party
and to the environment, in the course of duly authorized and supervised national
activities in outer space, in air and on the earth 53 which shall not include the
placing in orbit around the Earth any objects carrying nuclear weapons or any
other kinds of weapons of mass destruction.

The Liability Convention sets a State-to-State liability and does not consider the
relationship between the State and private company for which the state is
responsible or/and liable. This aspect has to be considered by domestic law. The
1984 US Commercial Space Launch Act (as amended) and the 1998 Australian
Space Activities Act are pertinent in this regard. They do not jeopardize the
international responsibility and liability towards the victim but clarify the situation
and through the establishment of maximum probable loss simplify and greatly
support private activities.

A discussion on state liability for damage caused in outer space must reflect upon
the question of nuclear damage caused by space objects in outer space 54. The
U.N. General Assembly adopted the Principles Relevant to the Use of Nuclear
Power Sources in Outer Space Activities 55 in 1992 in terms of which activities
involving the use of nuclear power sources shall be carried out in accordance with
international law, including in particular the Charter of the United Nations and
1967 Outer Space Treaty. The Principles extend liability for nuclear damage
caused by space objects to launching states.

In context to quantum of compensation for nuclear damage, it would not be out
of place to make a reference to the 1963 Vienna Convention on Civil Liability for
Nuclear Damage, the 1997 Amending Protocol and the Convention on
Supplementary Compensation for Nuclear Damage even though these
instruments do not deal with nuclear damage caused in outer space. The Protocol
sets the possible limit of the operator's liability at not less than 300 million
Special Drawing Rights (SDR) (roughly equivalent to 400 million US dollars). The
Convention on Supplementary Compensation defines additional amounts to be
provided through contributions by States Parties on the basis of installed nuclear
capacity and UN rate of assessment.

In light of the above and in specific context to steps adopted through domestic
law to limit the compensation payout in case of “nuclear” 56 damage in outer space
the 1991 Price Anderson Act offers a disturbing precedent. In 1991, the U.S.
National Aeronautics and Space Administration (NASA) and the U.S. Department
of Energy entered into a Space Nuclear Power Agreement to cover its nuclear
space flights including plutonium-fueled space probe mission. In the event of


53
     Outer Space Treaty, supra 3 at 2 : Articles IV, VI,VII, IX
54
     ibid Articles VI and VII
Also see 1963Vienna Convention on Civil Liability for Nuclear Damage www.cdi.org
Before the action in September 1997, the international liability regime was embodied primarily in two
instruments, i.e. the Vienna Convention on Civil Liability for Nuclear Damage of 1963 and the Paris
Convention on Third Party Liability in the Field of Nuclear Energy of 1960 linked by the Joint Protocol
adopted in 1988. The Paris Convention was later built up by the 1963 Brussels Supplementary
Convention.
55
   Principles Relevant to the Use of Nuclear Power Sources in Outer Space Activities adopted by
United Nations General Assembly 1992 www.un.org/documents
56
   ibid: In this context it is useful to recall that Article IV prohibits deployment in the orbit around the
earth any objects carrying nuclear weapons or any kind of weapons of mass destruction, install such
weapons on celestial bodies or station such weapons in outer space in any manner.
nuclear damage caused by US space objects, the 1991 Price Anderson Act limits
liability of the Government to $8.9 billion for U.S. domestic damage and just
$100 million for damage to all foreign nations. Final Environmental Impact
Statement NASA, referring to the Cassini mission, gives us an idea of the extent
of damage that will result from a nuclear catastrophe in outer space. In that
Statement NASA has conceded that in the event of an inadvertent reentry into
the earth’s atmosphere, Cassini would break up. Plutonium would be released,
and that approximately 5 billion of the estimated 7 to 8 billion world population at
the time could receive 99 percent or more of the radiation exposure. With a 12%
failure rate already in the use by the U.S. (and also Russia) of nuclear power in
space, accidents--and disaster--are inevitable. Thus in the event that U.S. space
objects are the cause of a global nuclear catastrophe, the 1991 Price Anderson
Act will shield the extent of international liability of U.S. government in terms of
the quantum of liquidated damage which affected countries can claim as
compensation57.




Current regulation of the space sector in India

As noted above, India has neither implemented relevant international space
treaties nor legislated specific national space laws. We have described the
limitations of present state practice to give effect to treaty obligations through
exercise of executive power by the President of India in respect to the
international space law conventions which hold the government responsible and
liable. In terms of the 1967 Outer Space Treaty, the government of India bears
the onus of responsibility, authorization, continuing supervision and liability of all
space activities conducted by its own agencies and by domestic private entities. It
is also well known that India has a definite space programme to encourage
systematic and strong development of space capability and the application of
space science and technology for identified national objectives has evolved over
the last four decades. However, no document issued by the Space Commission,
the apex government body responsible for policy formulation, is available in
public domain which articulates a space policy for India. In fact, it is curious that
the only reference point to understanding India’s vision and objectives for the
exploration and use of outer space is found in the Citizen’s Charter of the
Department of Space issued by ISRO 58 an agency admittedly mandated to carry



Also see : Source: United Nations Office for Outer Space Affairs : Outer Space Scientific and
Technical Subcommittee: 42nd Session in Vienna ; Date Released: Monday, March 7, 2005
“Nuclear power sources : The Subcommittee continued its review of the use of nuclear power sources
in outer space. The Subcommittee, through its Working Group on the Use of Nuclear Power Sources in
Outer Space, agreed on the possibility of holding a joint technical workshop, during the 2006 session of
the Subcommittee, with the International Atomic Energy Agency on the objective, scope and general
attributes of a potential technical safety standard for nuclear power sources in outer space”.
www.unis.unvienna.org, (accessed on 10 May 2005)

57
  Karl Grossman: Statement made at the United Nations on October 15, 1998 Karl Grossman is a full
professor of journalism at the State University of New York / College at Old Westbury where he
teaches Investigative Reporting and Environmental Journalism. He is currently on the Advisory Board
of the Action Committee to Stop the Cassini Earth Flyby, kgrossman@hamptons.com.


58
   ISRO: Citizen’s Charter of Department of Space
The Citizen’s Charter issued by ISRO states that the indigenously developed Indian Space Programme
is directed towards the goal of self-reliant use of space technology for national development. The main
out research in conformity with the policy laid down by the Space Commission
and implemented by DOS. In fact all communication related to the space sector
is issued by ISRO and not the Department of Space.

A possible explanation for the absence of a space policy and corresponding
domestic laws could be that because activities in outer space were completely out
of private domain and conducted exclusively by government until 2000 it was not
felt necessary to articulate a space policy or develop national space laws. In fact
a plain reading of the Citizens Charter demonstrates clearly that the document
enumerates to commitment of the government to make benefits of space
technology for in various sectors but does not have any suggestion of the
intention to facilitate commercialization and private participation of private sector
in that effort.

The only articulation on private enterprise in outer space is in the New Telecom
Policy 1999 at paragraph 3.9 entitled ‘SATCOM Policy’ which is limited statement
announcing permission to users to avail transponder capacity from domestic and
foreign satellites for certain services in the Ku band frequency in consultation with
the Department of Space for application in the telecommunications and the
broadcasting sectors. 59 Guidelines and procedures were announced by ISRO in
2000 for implementing the SATCOM Policy and for establishing private satellite
systems.     The ISRO Guidelines and Procedures do not have force of law.
Meanwhile even though space has been ‘opened’ for commercial private
participation for the last five years the sector continues to be supervised through



thrusts of the programme are(a) Satellite communications for various applications; (b) Satellite remote
sensing for resources survey and management, environmental monitoring and meteorological services;
and (c) Development and operationalization of indigenous satellite and launch vehicles for providing
these space services.
Thus in the Citizens Charter the Department of Space has announced a programme to promote
development and application of space science and technology to assist in all-round development of the
nation in the following ways: (i) INSAT programme for telecommunications, broadcasting,
meteorology, developmental education, etc. (ii) Remote Sensing programme for application of satellite
imagery for various developmental purposes (iii) Development of spacecraft and associated
technologies for communications, resources survey and space sciences (iv) Research and Development
in Space Sciences and Technologies for sub-serving the end of applying them for national development
(iv) Launch Vehicle programme having indigenous capability for launching spacecraft.

Thus the DOS has pledged commitment to (i) Provide national space infrastructure for the
telecommunication needs of the country (ii) Provide satellite services required for weather forecasting,
monitoring, etc.(iii) Provide satellite imagery required for the developmental and security needs of the
country (iv) Provide satellite imagery and specific products and services required for the application of
space science and technology for developmental purposes to the Central Government, State
Governments, Quasi Governmental Organisations, NGOs and the private sectors (v) Proof of concept
demonstration of Space Applications (vi) Promote Research and Development in space sciences and
technology.

While implementing commitments DOS will (i) Provide required transponders and facilities out of its
own capacity as well as by hiring additional capacity, if need be (ii) Register Indian Satellite System
for public and private sectors (iii) Provide launch services to meet national requirements and
commercial needs from abroad (iv) Provide its products and services in a prompt and efficient manner
to all the users/clients.
www.isro.org
59
   New Telecom Policy 1999: can be accessed at www.dot.gov.in [NTP99]. See para.3.9 for
statement relating to the SATCOM Policy.
guidelines and procedures issued by ISRO from time to time and through
application of relevant normative laws in force 60

If commercialization and private participation in space activities is in fact a goal
serious goal then it will serve a useful purpose to recognize that
commercialization of space activities requires a clear and unambiguous space
policy (s) and corresponding law (s) as basic infrastructure for its growth and
acceleration. It is no longer sufficient to announce guidelines and procedures
which do not have force of law. Specifically, from the Indian perspective, it is
important to understand not only legislative requirements for national space law
for India in order to implement its international obligations within Indian legal
system, but create a corpus of domestic law in respect to: (i) the legal issues
related to launch services (space transportation systems); (ii) the legal issues
related to satellite telecommunications, including satellite broadcasting; (iii)
analyze issues related to earth observation services including data processing and
distribution; (iv) satellite navigational systems and (v) analyzes the intellectual
property rights (IPR) regime and transfer of technology. Typically these sector
specific laws (or even a single omnibus national space law) will have to prescribe
national treatment for issues including (i) Licensing; (ii) Certification of space
technology;(iii) Safety of space activity;(iv) Funding of space activity;(v)
Insurance;(vi) Responsibility; (vi) Liability for damage; (vii) Protection of IPR
consequent to space activity;(viii)Dispute resolution;(ix)Protection of environment
and ecology; (x)Promotion and financial support to development of space
sciences; and (xi) International cooperation.

The Citizens Charter which is out of date must be replaced by a space policy for
India articulated by the Space Commission of India. The goal and purpose of
India’s space activity including commitment “benefit to all mankind” and its own
citizens and to (i) Enhance the achievement of national security; (ii) Development
of a space economy and benefit to the Indian economy; (iii) Provide a timely and
responsive regulatory environment for licensing commercial space activity; (iv)
Encourage and facilitate Indian civil space transportation objectives and
commercial space transportation industry; (v) International cooperation; and (vi)
Increase the industry's international competitiveness.


Conclusion

In conclusion it is obvious that the rapid changes in the global space industry and
credible competition form other space powers, particularly the Asia-Pacific region,
must dictate India to look at the significant negative impact that may follow the
absence of national space law on the future of its space economy.

In respect to the space transportation service sector it is required that the
Government take appropriate steps in establishing a successful legal structure for
satellite financing taking into account the proper management of credit risk,
technology risk and political risk. The issues relating to the control and safety of
space assets, security of satellites or transponders, domestic authorization,
impact of satellite capacity agreements and dispute resolution mechanisms must
also be addressed. The laws of contract, transfer of property, stamp duty,
registration, copyright and patent among other relevant statutes must be
revisited to bring space related issues within their ambit. In respect to remote
sensing government must consider allowing the development of the sector as an



60
     For example Law of Contracts, Intellectual Property Rights etc.
industry. This will require de novo thinking of IRS data products distribution
policy currently in place both domestically and internationally.

New opportunities in space application industry including telecommunications,
broadcasting, remote sensing, launch services, satellite navigation industries on
the back of ever increasing market demand must be permitted to change the
Indian landscape as soon as possible. A new opportunity created by the
successful sub orbital flight by Burt Rattan’s SpaceShipOne aircraft must indicate
the enormous potential which suborbital transportation systems hold for cargo,
passengers, especially tourism. The U.S. has already passed legislation to bring
benefits of the sub orbital space sector to its citizen’s. The FAA has been
designated the regulator and has already framed guidelines in the matter. The
Space Commission must immediately explore the way in which aviation and space
can be converged to its advantage.

It must be pointed out that at present there is a lack of clarity in the
administrative set up on to the precise role of various government agencies
established to fulfill defined tasks in space development programmes. What are
the actual roles of the Space Commission, Department of Space and ISRO? Does
ISRO, in fact, carry out the functions of these organizations in addition to its
research mandate? Would it better serve the purpose stated in the Citizens
Charter if the Space Commission of India were to articulate a space policy for
India? Would it better serve to the development of a space economy if the
Department of Space were to implement the space policy by initiating steps to
structure appropriate legal regimes? As it stands the only information about
Indian Space Programme, its aims, objectives, achievements and administrative
directives thereto is available only from the ISRO and Antarix websites.

In the final analysis, India is a mature space power, therefore, the persistent
barrier created by the reluctance to be transparent, the lack of information in
public domain, the absence of an overall policy and specific sector- wise policies
and the lack of initiative to establish an appropriate legal regime to facilitate fuller
private participation and overall benefit by the government is as inexplicable as it
is difficult to understand. Over protection creates distortions that inhibit growth of
the domestic economy nor should it be the chosen response to international
competition. If the government has achieved 8.5% tele density at the end of
December 2004, 91.5% of the population remains under served. This is the
position after eleven years of ongoing reform process in telecommunications since
1994. India is a world leader in remote sensing imaging yet has captured only
about 8% of the global market share as a result of its current policy on
international distribution of IRD data products which are subject to U.S. law.
While artificial barriers discriminate against our own citizens from accessing the
same data.

India is making great strides in developing satellite navigation capability yet no
information is available whether guidelines exist in respect to sale in India of
handheld GPS devices. Private satellite systems are permitted to be established
but no legal regime exists to protect both the operator and the government when
liability is triggered in case of damage in any particular launch. Normative laws
presently applicable, especially IPR laws, have not been revisited to include the
‘space dimension’. The question must be asked as to the reason for the apparent
‘closed mind’ to organize this emerging sector appropriately? The question must
be asked whether this approach will prevent the emergence of a balanced and
regulated space economy ? Has an assessment been initiated on whether India
should have national law and in what way the absence of appropriate space law
impact on India’s current comparative advantage in this sector?
Finally for India to be truly in the forefront of the technology driven new
international economic order unfolding there is an urgent need to fully understand
the ‘space dimension’ of our existence as comprehensively as we do the
‘earth’ ’air’ and ‘sea’ dimensions. It is imperative to understand that ‘space’ must
not be construed as the realm only of experts concerned with science, technology,
defense and security of the nation but that space must be construed as the vital
realm for the masses, for the ordinary citizens whose lives will be enhanced and
enriched by its vast beneficial potential. The pursuance of this objective India
requires a requisite national space policy and the implementation of national
space legal regime.




                                   **********
AIRPORTS OFFER GOOD BUSINESS OPPORTUNITIES


                                                         Vivek Pattanayak


Introduction

With the commencement of aviation in the world, need for airport and air traffic
services became inevitable. In the early stages of aviation development, the airport
and air traffic services remained under the control of the State. In some of the
countries, even airlines were under the state control.. In Europe and USA , some of
the airports were owned by the municipal governments and by other local authorities.
This was the beginning of the concept of airport autonomy free from governmental
control whether national or provincial. Nevertheless, air traffic services remained
invariably under the State .With passage of time the airports with or without air
traffic services got corporatised and became autonomous for financial, economic,
political and administrative reasons. With the wind of privatization blowing strong
particularly after the demise of the socialist bloc, there was emergence of airports
which were under the private management.

Privatization

With corporatization and then with privatisation increasingly the issue of running the
airports commercially was raised. This also led to the concept of profit and loss. How
profitable the business of airport operation is? That was the question in the mind of
the private entrepreneurs. Increasingly, in the last two decades many airports have
sprung up in North America and Europe which are privately managed. The
corporatized airports whether in public and private management had to be run
commercially based on sound economic principle. The economic and financial
viability and profit and loss became the primary objectives of these entities. As long
as the airports remained under the government management and received budgetary
support, the question of profit and loss and commercial consideration never arose.

Now, the entrepreneurs and owners, however, had to ensure that the airports
remained profitable which gave reasonable financial return as they were answerable
to shareholders. At the same time the profit could not be the sole motive of aircraft
operation as there were many other stake-holders like passengers, airlines, traders,
businessmen and shop keepers in the terminal buildings, and over above there was
considerations like security, safety and efficiency of handling passengers, cargo,
baggage and mail.


In this context Airport Council International in an article Understanding Airport
Business has brought out that “airports are vital gateways for developing local
business, and as such key component of local, national and regional infrastructure. At
the same time, airports are much more than regulated public service providers. They
are complex commercial entities that must meet well-defined business objectives in
terms of day- to-day operations, financial performance and planning for future
growth. Although each airport has its local characteristics, all airports are subject to
the standards and recommended practices prescribed by the International Civil
Aviation Organization

Negotiations of traffic rights

For the airport to be profitable, it is necessary that it attracts more airlines,
passengers, cargo etc. Airports themselves did not have any role in matters like
exchange of traffic rights which determined the flow of airlines, when they were under
the Government control or otherwise. The exchange of traffic rights came solely
under the jurisdiction of the Ministries of Transport or Civil Aviation. In some States
like USA, and Canada Department of State and the Ministry of Foreign Affairs dealt
with the subject in association with Department of Transport and Civil Aviation.. In
some countries , the Directors General of Civil Aviation negotiated traffic rights.
While airlines were invariably consulted for grant of traffic rights as they affected
them vitally.. airport were never in the consultative process in the earlier phase of
development of international civil aviation. With management of airport slot
becoming a problem with increasing traffic, Ministries and Directors General had to
consult airport management before granting traffic rights. When the air traffic
services were separated from the airports, both had to be consulted as handling of
flights had its impact on runway, taxi way, parking bay and terminal building in
addition to airspace on approach. With corporatization and then after privatization,
airports remained more at a distance from the Ministries and DGCAs. Therefore,
grant of traffic rights was not usually getting influenced by the airports unless
airports could lobby with Ministries. More liberal was the regime with regard to
grant of traffic rights, more opportunities came to the airports for making income and
doing better business.There was a conflict between the interest of national airlines
and the interest of airports The national carriers, particularly when they were under
the state control opposed the liberal grant of traffic rights, and came on the way of
open sky policy as they feared competition. Even some private national airlines could
also influence the governments not to grant traffic rights to foreign airlines.. Right up
to mid-nineties of the last century the national airlines all over the world had
overwhelming influence over their national governments whether or not to adopt open
sky policy. As a result of this, airports particularly those which were corporatised or
privatized came in conflicts with their national airlines.


Role of ACI

With emergence of good number of private airports, they could also lobby with their
governments to increase their commercial viability, and their approach was mostly
for more liberal regime of exchange of traffic rights. Airport Council International a
body consisting of airports of the world has significantly influenced the national
policy. It has been a strong advocate of liberalism in air transport. It recommends
that airport capacity issues be addressed during negotiations of traffic rights.. The
best way to ensure this outcome is to have airport representatives participate in
national or multi-national negotiating teams.


Foreign airlines are for liberalism and domestic airlines recommend cautious
approach almost verging on restrictions. In such circumstances, there is always good
cooperation between airports and foreign airlines. With increased access of foreign
airlines the airport profits augment. Each autonomous airport likes more airlines to
operate.



Competition

There can be competition between airports. Vienna and Bratislava are close to each
other..They are both close to city centres with well connected highways, and rail
services to airport. Bratislava can offer more competitive terms like lower landing
charges to attract airlines. Passengers traveling from Vienna can easily travel by
road to Bratislava and passengers from Bratislava can travel to Vienna by road. In
the early eighties, there was a competition between Abu Dhabi and Dubai although
Abu Dhabi and Dubai are both under UAE.. Since Dubai was a separate sheikhdom,
the administration of Dubai was always encouraging foreign airlines to fly to Dubai.
In mid-eighties Sarjah grew up as an international airport. The local administration
was trying its best to promote its airports for foreign airlines. The Fujairah airport
was completed towards the end of eighties. That airport was being promoted to
foreign airlines to increase its business. Indian Airlines was offered to fly to Fujairah
without corresponding concession in traffic rights to Gulf Air and Emirates both the
airlines of UAE. Similarly, Calcutta was offered by India to foreign airlines to
increase its viability. Singapore Airlines and Jat were the beneficiaries of this
approach. When Mirabel Airport was constructed at Montreal, the government of
Canada in order to promote the airport made it a pre-condition that new airlines can
fly to Toronto only if they flew to Montreal. Air India could have access to Toronto
only by flying to Montreal.. All these things will show airports, sometimes, are
promoted by the governments to make them profitable.


To quote ACI, airports compete now more than at any time in the history of aviation.
They compete for new air services, for low-cost carrier traffic, for transit traffic and
for cargo services. Indeed, some 550 airports congregated last year in Copenhagen to
talk to the carriers about new routes and route development.

Dubai, while geographically distant from the Asian hubs, also compete for transit
traffic between Europe and Oceania and was recently estimated to be a transit hub
for approximately one-sixth of all passengers traveling between Europe and Australia.
In addition a number of the world’s urban areas have strong competition amongst
local airports. In the San Francisco area where there are three airports compete with
each other for domestic traffic. The same is true in case of Washington D.C. which
has three airports serving the area. Another competitive situation exists between
smaller airports near city centres and the established airport operators. London,
Luton and City Airport come within this category.
.
Environmental issues


The traffic to the airports is sometimes affected on the grounds of environments. The
airports in Europe and East Asia are sensitive to movement against noise pollution.
Night curfews leave the airports unutilized for substantial period of time leading to
congestion in the morning and diversion of flights do take place to other airports
which affects profits of the airports. Because of night curfews both in the West as well
as in the East, sub-continent of India experiences congestion in the night. This has
considerably increased the revenue receipts of the international airports of the sub-
continents. At the same time, during the day airports are empty. With rising
consciousness among the middle class Indians and Pakistanis for better quality of life,
the sub-continental airports may be affected by the night curfews.

The above paragraphs will show to what extent the traffic right, environmental
concerns will affect the revenue of the airports and their profitability.


Revenues

Landing charges, parking service charges, security charges, noise related charges
and other charges on the air traffic operations are the sources of revenue of the
airport. In addition there are income from ground handling charges. ICAO’s Policies
on Charges is the guidance that provides for determining the charges. Article 15 of
the Chicago Convention and Document 9082 regulate the provisions relating to
airport and route navigational charges.


Non-aeronautical activities

Aviation fuel and oil concessions including throughput charges, restaurant bars
cafeterias and catering services, duty free shops, rentals constitute non-
aeronautical revenues.

Traffic growth generates higher aeronautical revenues through an increase in
aircraft movements .It also drives non-aeronautical income higher with more
passengers spending on airport products and services. Chapter VI of the Airport
Economic Manual, (Document 9562) identifies the types of non-aeronautical
business in the airports those have been promoting to increase in the
profitability .Data from ICAO in 1990 indicates that only about 30% of airport
revenues were from non-aeronautical sources. ACI survey has confirmed that the
global figure is now closer to 50%..A number of airports have income to the tune
of 60% through this source which includes retail concession, auto-parking, rental
car concessions and property income from leasing of airport land.

Tourist traffic

 The flow of tourist traffic to airport can be a major source of income with
increase in
arrival of passengers and scheduled and non-scheduled flights. This will depend
upon the infrastructure that exists to facilitate the tourists in the hinter land of
the airports. The efficiency of the airports starting from immigration ,customs
clearance and baggage handling etc will affect the marketability of the airport.
Facilitation at the airport will constitute an important factor. Annex 9 of ICAO
gives the guidance with regard to facilitation.. Security is guided by Annex 17
which is equally important. .Facilitation and security are mutually complementary
Growth of autonomous airports in India


The history of aviation in India traced back to the early part of the last century
with law relating to aviation coming into book in the thirties envisioned at that
stage that airports, air traffic control services, licensing and regulatory system
would all come under the umbrella of Director General of Civil Aviation. There
were civil airports and military airports. It was quite common for civil aircraft
operating from the military airports. With the growth of international traffic,
Bombay, Calcutta, Madras and Delhi were identified as international airports and
were brought under the banner of the International Airport Authority of India
under the law of Parliament This authority had control over these four airport but
air traffic services remained under the DGCA. In the mid-eighties of the last
century, National Airport Authority was created, having been being carved out of
the establishment of DGCA. It became an autonomous, statutory body for all
domestic airports. In addition, it retained the air traffic services under its control.
In the next stage of development in India, Airport Authority of India was
established which controlled all airports both domestic and international and also
looked after air traffic services.


Private airports


 Concept of private airport also came in the nineties. First attempt was made at
Bangalore. Meanwhile, at Cochin with public and private participation, an airport
has come up giving considerable opening to the traffic from and out of Gulf. In
the last couple of years, Delhi airport has been privatized. .This is in the area of
restructuring and modernization. Trend towards private airports has taken root in
India. Bangalore is a Greenfield airport .The De;hi Airport under GMR is under the
concept operate and manage.
In India there are 450 airports managed by Government agencies such as
defense services, State Governments and Airport Authority of India .Scope for
privatization of airports is large. Opportunities to make these entities run on
commercial basis do exist as has been seen in many parts of the world. London.
Amsterdam, Singapore, Hong Kong and Paris show how booming business
activities do take place in the airport and around them


Conclusion


The Annual Report of ICAO states the following: “the strong growth on the
autonomous airports and air navigation services providers worldwide continued.
The involvement of private interests also accelerated but principally in the
airport sector. This occurred not so much through outright purchases of airports,
but rather through various forms of private involvement such as partial ownership
and management contracts.”



From the beginning of civil aviation hundred years ago, safety has been the
primary concern of the governments, airlines and passengers. With evolution of
commercial aviation with growth of passenger traffic across national borders the
need for international body to prescribe standards of safety was felt from the
early years of the twentieth century fructifying after the First World War with the
establishment of the CINA(Commission           for International Air Navigation )
supported by the League of Nations. Progress of work to prepare international
regulation of aviation safety was halted by the collapse of the League and out
break of the Second World War. The effort restarted after the Chicago Convention
was adopted and ICAO was created. In few years due to global effort and
consensus , standards and recommended practices of safety were prescribed by
ICAO and they were designated as Annexes to the Convention covering issues
relating to licensing, rules of air, meteorology, charts and maps, aircraft marking,
aircraft operations, airworthiness, facilitation, communication, air traffic services,
search and rescue, accident investigation, airports, aeronautical information,
environment, aviation security and carriage of dangerous goods. In addition to
these      Annexes,      ICAO       produced    Procedures    of     Air   Navigation
Services(PANS),Supplementary Procedures(SUPPS),Regional Procedures and
Circulars, Manuals, Digests and organised seminars and workshops to
disseminate the host of technical information among the States for the benefits of
pilots, air traffic controllers, aircraft maintenance engineers, flight engineers and
radio operators and flight crew. For less developed States ICAO promoted a large
scale technical cooperation program to ensure that safety in aviation is given the
highest priority

The States unless they filed their differences to ICAO Annexes are obliged to
follow them. It was expected that they would have to make their regulations
compliant to international standards and recommended practices(SARPS). The
cornerstone of the Chicago Convention was the State sovereignty.
Notwithstanding the provisions in the Convention under Article 48 read with
Article 54(k) to report on a sovereign member State of the Organisation(ICAO)
for failure to adhere to the Convention, for non-compliance to Annexes no explicit
action was envisaged either by way of sanction or embargo etc. At the same time
there existed provisions between Articles 69 and 72 for the Council of ICAO to
rectify defects in the air navigation facilities which were safety related in a
State ,of course with its consent .Till such time such defects were either not
rectified by the State itself or by the Council of ICAO, it could advise other States
from desisting use of such facilities.

In spite of these provisions, principle of sovereignty insulated States from their
deficiencies. Assembly Resolutions although had political significance could not
irrevocably bind the States down to safety obligations without any action through
international organization like ICAO.

Many developed States in particular the United States took bilateral action for
compliance of safety measures. Sometimes FAA inspectors visited other States to
asses the safety and security measures. They advised the States to rectify the
defects noticed during their visit. At later stage they advised their own air lines
about lack of safety requirement in the States they were flying into. Further due
to Congressional pressure particularly after the Avianca crash they published the
list of States who were non-compliant and suggested that their airlines would not
be given access to US airports notwithstanding bilateral agreements for traffic
rights. This unilateral action produced international reaction from the developing
States. Even the European States protested against the US decision on aviation
security which authorized the FAA inspectors to have access to the European
airports to give clearance. At this stage ,the European regulatory bodies insisted
on ramp inspection of airlines from Africa, Middle East and Latin America and Asia
-Pacific. Since there was global concern about safety of aviation, ICAO convened
a conference of DGCAs under the initiative of France where the idea of
international audit came up. This was supported by an Assembly Resolution. It
envisaged universal, neutral, independent and mandatory oversight audit under
ICAO(IUSOAP). To make it legal and consistent with the principle of State
sovereignty each State was urged to sign a Memorandum of Understanding with
ICAO allowing audit by a team of experts chosen by the Organization. It was
envisaged that the audit should remain confidential till finalization. Certain time
was given to the States to rectify defects. Initially audit covered Annex 1,2 and 8
but afterwards it was extended to Annex 11,13,14,and 17.Now the scope of audit
covers all Annexes except Annex 9 which relates to facilitation. This also takes
into account all the regulatory materials developed by ICAO under different
Annexes. After 9/11 the security audit became universal and mandatory under
ICAO. Thus Annex 17 was embraced under IUSOAP although it is called Universal
Security Audit Programme(USAP).

In the last several years the safety audit programme has evolved to take into
account the principles of universality, transparency, objectivity, consistency,
fairness ,timeliness, all inclusiveness and quality. The transparency now includes
full disclosure of the final audit reports after the period available for rectification
has elapsed in order to make States aware of the state of oversight that exists in
other States. The scope of audit covers regulatory legislation, training of
oversight officials, licensing ,certification of technical personnel, and continuous
surveillance.

India’s civil aviation     has developed since early part of the last century.
Legislation came into being since mid-thirties. After independence there was
nationalization of airlines. The airports, air navigation services, aero-meteorology
and regulation all remained within the ambit of the direct control of the central
government. As years passed gradual autonomy in the sector came into being
with International Airport Authority of India, National Airport Authority, and now
there is Airport Authority of India. The DGCA has remained as a regulatory body.
After economic liberalization, the private airlines have emerged in a big way.
Private airports have come up. In the light of this development in the last few
years, the importance of oversight has become all the more relevant. Since India
as a member of ICAO is under obligation to follow IUSOAP, in the present
liberalized background it must also improve audit and inspection programme.
Although the aircraft legislation is supported by rules and executive instructions
which are in tune with development of aviation in India, it is worthwhile making a
review as to whether there is any regulatory gap in the light of the regulatory
materials which have developed over period of last several years by ICAO.

With creation of National Airport Authority and subsequently Airport Authority of
India the expertise on airport and air navigation services have moved out of
DGCA. Airports and air navigation services provided by AAI and other private
sector airports need to be inspected and audited from the safety point. It will not
be correct to leave auditing and inspection of these facilities to Airport Authority
of India as it cannot be neutral and objective. While AAI can audit private airports,
it will be appropriate to give this responsibility to DGCA. The Government must
review the expertise available in DGCA and buttress it not only in respect of
airworthiness, licensing, accident investigation and but also in areas of airports
and air navigation services.

With increase in number of private airlines responsibility of DGCA has expanded.
Internal safety audit system of these air lines has to be in place. While Air India
has gathered institutional expertise over many decades the small low cost airlines
have to acquire their experience. These airline companies have be nurtured
carefully under protective eyes of the of the government and regulator. It cannot
be simply left to market forces. These companies have acquired a large number
of aircraft and other equipment at considerable cost with heavy outgo of foreign
of exchange. Any mishap can make them bankrupt. If Pan Am after Lockerbie and
TWA after B747 fuel tank explosion could fold up after years of institutional
experience and goodwill, these fledgling low cost carriers can go into oblivion.
Safety is crucial to growth civil aviation and cannot be left to market forces and
remain unregulated.

What is true of safety audit is equally good for security audit. Now increased
threat levels owing to cross border terrorism, ultra-leftist extremism and ethnic
militant secessionism have made aviation security audit all the more important.
The Commissioner of Civil Aviation Security is the regulator, whose authority
should be supported by statute and he should be given a fixity of tenure. In
addition to vigilance at airports, there is need for vigilance of airlines. The
regulator should ensure that airlines and airports have their internal security
audit system in position. Verification of antecedents of personnel at the time of
recruitment should be made obligatory. Indoctrinated persons in the cadre of
airlines and airports can be great hazard to aviation security. Surveillance
system should remain in place to continuously monitor any slippage.

What can elude everybody is the absence identification, inspection and vigilance
of unused and derelict airports and airstrips now under State governments
constructed by them or by the British during the Second World War particularly in
the Eastern India and also such facilities by erstwhile ruling princes before the
merger of their States. Terrorist organizations after assembling a light aircraft,
even single engine aircraft, with loaded explosives can convert it into a weapon
of incalculable destruction. One should not rule out the possibility of terrorists
even entering sanitized airport from these airstrips and hijacking a parked
aircraft.

Aviation audit is a preventive measure for safety and security, the crucial
elements in growth of civil aviation must be given the priority it deserves for a
growing economy. India can ill afford to ignore.

Vivek Pattanayak
WHAT IS AT STAKE WHEN THERE IS BOOM IN AVIATION IN INDIA


In 2005 while I was in Montreal, I received news report of massive purchase of
aircraft by Airlines operators of India some known in the world and some totally
unknown. People in ICAO wondered how such a gigantic fleet expansion is taking
place   in India. Other day I was flying from Mumbai to Bhubaneswar via Raipur,
the aircraft was kept on hold as other aircraft was either arriving or departing. I
remember, when there used to be only one landing         and one take off for the
whole day at Raipur. It is now a common thing for the aircraft to be stacked
around Delhi. Bhubaneswar which hardly received not more than two flights a day
until recently is buzzing with landing and take off with Air India, Jet Airways,
Jetlite, Deccan, King Fisher, Indigo etc. Statistics appearing in the newspaper
give an impression of annual growth of 20%,and with 9% GDP growth the
pressure in aviation will mount. No wonder there will be impact on airlines,
airports and air navigation services. This will also increase the work load of the
regulatory bodies like DGCA, Bureau of Civil Aviation Security and the Ministry of
Civil Aviation.


The impact on airlines will be by way of fleet expansion, replacement of aircraft ,
demand for pilots, flight engineers, cabin crew, aircraft maintenance engineers,
ground handling staff, commercial staff and IT personnel. Although after the new
aviation policy will come into effect in 2008 which envisages the ground handling
will be allowed to three agencies like airport operators, Air India or any other
ground handling service providers to be selected to competitive bidding,        the
CEOs of private airlines have sought permission to retain ground handling
activities to have cost control and efficiency. Safety inspectorate within the
airlines will have to be strengthened. With growing terrorism across the country
and in the neighborhood, aviation security concern will increase in the airlines.
Although the State provides safety and security oversight mechanism, the airlines
cannot abandon their own responsibility. Engineering facilities of the newly
emerging airlines have to be strengthened first for the sake of safety and
secondly for the sake of efficiency. All these involve recruitment of personnel both
young and experienced and the facilities for training. After the creation of Indira
Gandhi Uran Academy no major training centres for pilots have been established.
Good 20 years have passed. Producing pilots is not an easy matter. The present
working of the flying clubs in the country needs to be reviewed. Many of them are
perhaps moribund or not up to mark. One must recognize that many young
people are going to USA, Australia and New Zealand for the sake of training.
Nearly thousand Indian students are now        abroad for flying training and more
than 500 are being trained in India. There have been fatal accidents during
training in Florida, in New Zealand and in other places. Media report states that
there have been orders for import of 180 aircrafts last year calling for about 1800
pilots. Dependence on foreign pilots is a temporary solution but it has its own
disadvantage. Knowledge of the English language is very important for the
communication between the pilots and air traffic controllers. International Civil
Aviation Organisation    has been giving a lot of importance to the proficiency of
language. One should remember the mid-air collision over Delhi sky. Quick
conversion of young pilots has its limitation. There is discussion regarding flying
experience and experience gathered through simulators. The concept of Multiple
Crew License (MCL) is under active consideration in the forum of ICAO. In this
context, the view given by Bill Voss, the former Director of Air Navigation Bureau
of ICAO now the President of Flight Safety Foundation to take cautious approach
has relevance for India. What is true for the pilots’ training is also true for other
personnel recruited or to be recruited by the Airlines.


The pressure on airports will also increase. Runway, taxiway and aprons will be
more in use. Optimum availability of run way for landing and take off is important.
There is also a question of fuel burn when aircraft is kept on hold. Runways need
maintenance on a continuous basis. There is a wear and tear. The question of
creating new runways, taxiways and parking bays will naturally arise. Pressure on
terminal building has already increased. Long ques with inadequate space has
already become a feature in many airports. Need for more checking in counters
has been felt. This will call for redesigning of terminal buildings or creation of new
terminal buildings. Adequate baggage handling facilities must exist if the
management of the ground handling facilities is exclusively given to the airports.
There is Airport Authority of India with more than hundred airports. There are
airports under private operators. New airports are in the horizon at least in
concept and paper. Facilities for maintenance in all airports must be available to
keep the airport running. This should match with growth. Recruitment of
personnel and their training will be also a major concern. One has not taken into
account the impact the general aviation, business aviation and personal aviation
will have on the airports with general growth in the economy. With introduction of
very light jets in Europe personal aviation will have revolutionary impact. India
will soon be affected by this taking the cue from growing demand on executive
jets in the country.
Air traffic management involving separation of aircraft at various heights has to
significantly improve with increasing aircrafts in the sky. Similarly, air navigation
facilities on the ground like, NDB, VOR, Radars both primary and secondary, ILS
for Category 1, 2 and 3 landing have to be adequately reviewed. With increase in
traffic, particularly in the fog bound airports, these concerns must be addressed.
Runway facilities as mentioned above also play an important role in air navigation.
Runway incursions, near misses, aircraft taking off without ATC clearance damage
the public confidence on aviation.Maintenance facilities of the equipments and
engineering personnel for servicing them must be available. Air traffic controllers
are very important people for safety of aviation. One should not forget mid-air
collision over the Swiss sky involving Russian aircraft which carried young
children. Recruitment of right type of personnel and their training will be a
challenge.


Need for strengthening of regulatory mechanism of the State is inevitable.
Existing Aircraft Act and the Rules and the other legal instruments under them
need to be reviewed. Aircraft Act has served the Indian aviation for more than 75
years. To what extent the regulatory mechanism are in line with international
standards and recommended practices have to be considered as more foreign
airlines will operate into India with the open sky policy and more number of
Indian operators will fly out of India to foreign countries.


The Chicago Convention of 1944 is a multi-lateral treaty of which India is a
signatory even before the country became independent. The International Civil
Aviation Organisation (ICAO) is a creature of that legal instrument. They produce
Standards and Recommended Practices (SARPS) on licensing, rules of air, aircraft
operations, air worthiness, air traffic services, airports and aviation security. In
addition, they produce procedures for air navigation (PANS), supplementary
procedures (SUPPS) and regional procedures, manuals, circulars and guidance
materials. Expansion of fleet, increase of airports and greater use of air space will
call for more intensive review to ensure that all the provisions of annexes are
followed so also procedures of air navigation etc.The question to what extent the
personnel working at various levels of regulatory bodies are aware of         matter
must not be brushed aside.


ICAO has been calling for improvement of oversights in the States. Now they
have established universal safety oversight audit programmes. The States were
subject to audit for annex 1, 6 & 8. It has been further expanded to include
annexes 11, 13, 14 & 17. The States have signed memorandum of understanding
with ICAO to comply with the Assembly resolution regarding oversight and
comply with the deficiencies detected during audit. Non-compliance will expose
the country to bye-passing of its        airports by airlines of other countries and
denying of landing of airlines in other countries. Increase of traffic will call for
greater vigilance.


Accident prevention is very important. ICAO has a programme for prevention of
controlled   flight into terrain and carriage of ground proximity warning system
(GPWS). Prompt action to investigate accident and more particularly incidents, is
very important as this is an effective mechanism of accident prevention.
Personnel training, information feedback and analysis and implement of voluntary
and non-punitive reporting system are a few examples identified by ICAO for
close attention as preventive measure. Myriads of information from flights either
through flight data recorders or cockpit voice recorders and conversation between
pilots and air traffic controllers need to be closely monitored and analyzed to
know whether there is a possibility of accident. Federal Aviation Administration of
United States had made an excellent presentation few years ago in a conference
of ICAO wherein they had pointed out that there can be many errors which may
not cause an accident. When all possible errors gravitate around the same point,
the accident will take place. A diagram of concentric circles of errors will
demonstrate this.. A few years ago, an American commercial aircraft taking off
from a domestic airport chose a wrong runway of shorter length which caused a
fatal   accident.    The   National   Transportation   Safety   Board   (NTSB),   after
investigation, found that in last 10 years 20 such mistakes had been committed
due to faulty communications between pilots and air traffic controllers but they
were avoided at the last minute. This error should have been flagged for that
particular airport and the pilots warned to be careful. When there is more aircraft
operations accident prevention becomes a lot more important.


Compliance to ICAO resolutions on matters of implementation of regional plans,
regional supplementary procedures, coordination of civil and military air traffic,
provisions of adequate aerodromes, relationship between flight safety and human
factor, airport and airspace congestion and environmental protection should be
the aim of the stakeholders of the Indian aviation. The Regional Air Navigation
Plans must be studied seriously by all concerned and action taken to implement
them.
Safety is given the highest priority under the Chicago Convention mention having
been made under the Preamble, Article 44(a), (d) and (h), Article 37 of the
Convention. Unless one files a difference, one is obliged to follow the standards
and recommended practices(SARPS). Annexes 1 – 18 covers safety except
Annexes 9 and 17. Safety is not only the concern of regulator but also that of the
operator. TWA was wiped out after its B-747 went down into the Atlantic in 1996.
Explosion of the fuel tank could have been avoided if TWA had information about
similar experience by US Navy.


Unlawful interference in civil aviation has been there from the early stage of
growth of civil aviation in the world. Nevertheless, it had not reached a serious
proportion and till sixties of the last century when hijacking of aircraft, placing
bomb on the aircraft, attack on the airport and terminal building started
increasing. The word security was not specifically mentioned in the Convention.
Annex 17 was legislated to bring the aviation security into fold to prevent
unlawful interference into the civil aviation. Series of multi-lateral legal
instruments were brought into force to deal with the offences committed on
aircraft (Tokyo), suppression of unlawful seizure of aircraft (The Hague), and
suppression of unlawful act against the safety of civil aviation (Montreal).Marking
of plastic explosives has been covered by a multilateral treaty. Terrorism in and
around India is growing and post 9/11 situation reflect that although awareness
has increased but threats have not diminished. Responsibility exists for both
State and the operator. One should remember the PANAM Lockerbie disaster
brought bankruptcy to the airline.


Efficiencies of aircraft operation find mention in Article 44(d) of the Convention.
Article 37 deals with SARPS on efficiency. Annex 9 deals with facilitation. There
are manuals developed by ICAO. Computer Reservation System (CRS) has been
covered by ICAO resolution. Charging policy of ICAO create conditions of
efficiency. Airports, airlines, security personnel, immigration officials and customs
officers have to play a part in complying the requirement of the Annex 9. Training
of personnel on this annex is absolutely important in India.


Article 44(d) refers to regularity. Article 67 imposes obligation to file reports and
provide information. Article 68 requires for designation of routes and airports.
These are necessary ingredients for ensuring continuity for aviation growth.
Environment as a subject has been dominating all discussions on forum of ICAO
for decades. Noise pollution and engine emission are cause of concern. Annex 16
deals with the subject. Assembly resolution (A33-7) relating to environmental
protection is extremely important particularly when the aviation is growing in
such a pace. Night curfew was considered as a luxury by India when Europe,
America, Japan, Hong Kong, Australia and Singapore imposed them. This had its
consequences over the sub-continental      skies. There was bunching of flights at
night. Residence near Delhi Airport was thin then. Now its density has increased.
So is the case Mumbai. Bunching will give rise to the problem. Citizens will react.
What was the situation in Europe two decades ago will become the situation in
India soon. This should be kept in picture. Land use planning and phasing out of
aircraft exceeding noise level are the requirement of ICAO resolution.


Obligation exists on the part of India to comply with the international law. Article
51 of the Constitution which is a part of directive principles of State policy casts
responsibility on the State to respect international obligations. The courts have
started enforcing directive principles of State policy. India is a signatory of the
Chicago Convention as mentioned earlier. SARPS designated as Annexes draw
their authority from Articles 37, 38, 54 and 90 of the Convention. International
Air Services Transit Agreement and Bilateral Agreements registered with ICAO are
part and parcel of international treaties covered by the Vienna Convention on
laws of treaties along with other multi-lateral instruments like Warsaw Convention
and Montreal Convention on liability for accidents. For rule of law to prevail, India
should honor and respect all the legal instruments to which India is a signatory.
On ethical ground, India must sign Montreal Convention on liability for accident.
Only other day, I read an article written by Swaminathan Iyer which sums up in
following lines about our country:
“India fares badly on several indicators. The quality of public services is pathetic.
Legal delays make a mockery of justice. Maoist violence affects 157 of our 600
districts. But India still boasts 9% economic growth and some social successes
too. Life expectancy has increased from 31 years in 1947 to 64 in 2005.”


No wonder there is concern with the growth and the boom in aviation. I have
identified the areas of concern and suggested how best to address them keeping
the international practices in picture. One cannot afford to forgo the boom as the
benefits both economic and social from this boom are tremendous. One must
recognize that this boom is inevitable.
Vivek Pattanayak
Creativity and Innovation in Aviation

Aviation is the driving force of economy. It contributes substantially to GDP. The
manufactured goods are transported by air to all important locations on the globe.
Symbiosis between aviation and tourism is well established. Tourism contributes
US$8 trillion. It represents 11% of capital investment,10% world foreign trade
and 10% of global wealth and provides 10% of global jobs.

The policy of economic liberalization although started in the early nineties after
financial crisis in India did not touch the aviation sector in any significant manner
till early 2005.Definte positive steps taken by the Government to encourage low
cost carrier in private sector gave a fillip to the domestic aviation. Airports started
buzzing with flights and the class of people who could never dream of flying in the
last decade used air transport for business and tourism. Growth of aviation was
spectacular in terms of passenger, landing and take off and density of traffic in air
giving rise to congestion. Travel trade experienced a new growth dimension.

In 2002 the Indian passenger traffic by air was 43 million and in 2007 it was 216
million. The Director General Civil Aviation of India predicts that India will be the
second largest aviation market in the world by 2025 leaving behind both China
and Japan

High cost of fuel affecting the world in 2007/08 in particular last summer, high
incidence of taxes, excise duty and other impositions in India on Aviation Turbine
Fuel , rising inflation in the most part of 2008,and recession in the Western world
have significantly dampened the growth forcing fledgling carriers to cancel orders
for purchase of aircraft, operators considering cost cutting measures including
laying off and mandatory leave, even by established carriers, and withdrawal of
flights from routes on the grounds of economy. IATA predicts a loss of S1.5 billion
dollars among the Indian carriers.

The Country Director of IATA stated that out of 230 member airlines both
passenger, freight and cargo, 30 air lines are facing bankruptcy. Globally there is
a loss of 190 billion dollars. In September the passenger traffic declined by 2.9%
and in October it went down by 1.3%.Similarly,freight came down by 7.7% in
September and 7.9% by October reflecting global economic crisis. Africa in the
largest percentage terms and Asia-Pacific in the highest absolute terms showed
down turn. North America and Western Europe have stagnated and Latin America
and Middle East usually buoyant have also suffered. World airline share price has
gone down by 35%

Scenario is, however, not all gloom and doom. In the first place the global fuel
price has fallen from $150 dollar a barrel to $ 45 dollar. The Government of India
has taken steps to reduce impositions on Aviation Turbine Fuel. Inflation has
come down to 6.7%.The economy of India has not been affected as expected by
the global financial crisis. Recent corporate results reflect that growth momentum
is not disappointing. Series of measures taken by the Government and Reserve
Bank of India have created a climate of resurgence. Domestic demand in India is
the fundamental strength with GDP growth rate is expected to remain above
6.5 %.

Considering the above, the aviation sector should be reviewed. Proactive action
taken by the Government to allow private initiative in the past in the airport
segment of the sector was step in the right direction. This trend should continue.
The country has large number of non-metro airports which have been identified
for development. Construction of terminal buildings, run way widening,
strengthening, and extensions, construction of parking bays and taxi ways,
aircraft hangers, and cargo facilities all come within infrastructure development
on which the Government can invest as a measure to bolster the economy
against impending recession. In addition public private participation wherever
possible should be encouraged.

In the        seminar of the International Foundation of Aviation and
Development(India Chapter) held in December 2008 in Delhi ,it was pointed out
that the recent green field airports in Bangalore and Hyderabad and third runway
in Delhi have had enormous impact on aviation infrastructure in terms of
relieving congestion and better air traffic management. Further, over dependence
on Delhi and Mumbai as gateway airports have its deleterious effect on both
aviation and tourism. Recent happening in Mumbai affecting the security scenario
of the country can be best countered by marketing other international airports
like Trivandrum, Cochin, Bangalore, Hyderabad, Kolkota. Bilateral air services
negotiations should take into account this factor. Tourism promotion need not be
confined to traditional sector. Cross-border transportation of manufactured goods,
cargo and freight movement can be reviewed taking into account the growth of
these airports. This will relieve congestion of air cargo at the metros. This of
course requires considerable amount of coordination between the governmental
agencies like Customs, Commerce Ministry, State Government and Aviation
Ministry.

Poor infrastructure at the airports have inhibited growth. Congestion of airspace
causes stacking of aircraft giving rise to unnecessary fuel burn contributing to
environmental hazard and causing needless extra expenditure without any
return.. Fog during winter is another factor of inefficiency in airspace use. ILS
facility for both CAT I and CAT II and even CAT III and training of pilots to use
such facilities are important steps needed to be taken. This requires investment
by airlines and airports. Airport Authority of India in charge of all air traffic
services which include navigational and communicational aid is an autonomous
body and therefore, it should have         freedom of decision making without
governmental fetters ,constraints and trappings.

Approach towards aviation security has changed since hijacking of IA 814.Airport
security and airline security in India by rigidly following Annex 17 to the Chicago
Convention have vastly improved with a dedicated aviation security force(CISF).
There is however no room for complacency. The manifestation of terrorism has
changed with terrorists resorting to suicide attacks. When Kanishka crash(1985)
over Atlantic and Pan Am crash over Lockerbie Scotland(1988) took place, the
assumption was that no terrorist would commit suicide while trying to blow up a
plane. He would only place the explosive surreptiously. Devices to detect bomb
through X Ray machines and bio-sensors, mandatory cooling off ,matching of
baggage with passenger and head counts were the answers .9/11 demonstrated
the weakness in the assumption Even ordinary box cutters were used to
immobilize the cockpit crew and hijack the aircraft to use as a weapon of
destruction Since then there has been sea change to method adopted by terrorist
in the world. Suicide attacks have become quite common. Apprehension has been
expressed that suicide attack can take place at the pre-checking area where large
number of passengers congregate.. All the airports have been designed in India
and possibly in most parts of the world before the Second Great War when
terrorism had not been taken into account. as a source of danger to aviation.
Checking in of passengers may have to take at a place far ahead of the terminal
building. Secondly if attack like Mumbai can take place the level of preparedness
at the airport should be entirely different. A truck loaded with explosives can
attack a hotel as it happened in Islamabad. Oklahoma type attack can also take
place at the airport. This calls for change of designing of airport and approach to
the airport and increasing surveillance and vigilance. There exists a doubt in
one’s mind regarding security and safety when it comes to private sector.
Concept of public private participation has received some kind of invisible
resistance due to this lingering doubt. Security is assumed as a manifestation of
sovereign function. Hitherto, this is the ruling doctrine. At the same time unless
culture of security is imbibed in all sections of citizenry the security will be
compromised. All the stake holders in the aviation sector need to be sensitized by
awareness program and training where necessary.

There are many airstrips in the States which need to be fenced, improved and
facilities created for light aircraft operation. First this enables creation of
opportunity for operation of non-scheduled and even scheduled carriers in the
remote parts of the country which have supported large industries like steel,
aluminium, alumina and mining activities like iron ore, bauxite and coal etc with
tourism potential. This allows the regional traffic to grow. This provides link to
State capitals which already have air connections. As earlier mentioned the non-
traditional tourism circuits should have to be explored and new routes identified.
This promotes both domestic tourism and in addition adds new destinations for
international tourism. Over selling of Golden Triangle and similar products are in
the long run not sustainable .A vast country with enormous diversities should be
thrown open to international traffic by creating infrastructure in the remote parts
and interiors. Our obsession to concentrate only on a few destinations and
places must end. The potential of tourism exists in many parts of the country
starting from eco-tourism, beach tourism to historical sites and indigenous art,
culture and life. Airport facilities in the interiors will open up the vast hinterland of
tourism of the country.


Secondly, this is an infrastructure for second line of defence. During the last
World War the British and Americans had developed many such airports in the
Eastern India as defensive position against the Japanese attack. They have
become derelict and are in the state of disuse. Thirdly, this is an absolute
necessity as a measure to counter possibility of terrorist using these airfield for
air attacks against both civilian and military establishments. The Tamil Tigers
have made surprise attacks on Colombo airport and military positions by using
light aircraft from abandoned airfields. Capability of terrorist must be
continuously reviewed. He makes a good study of vulnerability of the system and
weakness of defence .Let us not rule out the possibility of terrorist assembling a
light aircraft and using it as a weapon destruction with explosives on board. An
extremist is not necessarily an uneducated and unemployed youth and evidence
shows that highly qualified IT professional and engineers have joined the
cadre.9/11 revealed that the terrorist learnt how to fly and that too in a foreign
country. An enemy must be respected.

The infrastructure created will be an asset for future growth of civil aviation. The
States need funding from the Central Government. Although civil aviation is a
Central subject, there can be arrangement with the States.

The low cost carriers can operate more fuel efficient and less polluting medium
sized and medium range aircraft. They can be turbo-prop or pure jets. Our
carriers need not confine themselves only to traditional manufacturers. There are
other scopes as well which need to be explored. These aircraft will encourage air
traffic in the heart of the country as was being seen in the erstwhile Soviet Union.

Driving force of spectacular growth in aviation was low cost carrier. Slow down
was evident as they became unviable withdrawing low fare and new non-
traditional flights. Government must examine as to why they have become
financially weak. Most of factors are fuel and airport related. Abnormal rise of
global fuel price last year and compounded by sales tax, excise duty and other
impositions by Governments on ATF, airport charges, route facility charges and
taxes have paralyzed them. IATA has been making strong representation on their
behalf even indicating that some of the governmental interventions are not in
conformity with ICAO guidelines and the multi-lateral Chicago Convention of
which India is signatory since 1944 This sector which generated so much of traffic
creating huge employment opportunities and creating other economic activities
must not be allowed to atrophy by measures which are all within the exclusive
domain of the State. Private airports and public sector airports should be
encouraged to generate non-aeronautical revenue like Schiphol and aeronautical
charges should be based on ICAO Council Resolution             Aviation Economic
Regulatory Commission is a welcome step as it brings a balance between
consumers’ interest and that of industry interest. It should be composed of
professionals capable of taking bold and independent views in the interest of new
born growing industry .It should not become an institution of political favorites.

While there is recession in USA, Europe and Japan, China, in spite of slow down,
continues to be the beacon of hope. Brazil, Russia and South Africa will also be
the areas of growth. The Indian aviation should explore the market in these
countries. End to end traffic, what is called third freedom and fourth freedom
traffic may not justify operation... Aviation has never grown based on bilateral
traffic. What about fifth freedom and even sixth freedom traffic? KLM, Singapore,
and Thai grew as big carriers in the eighties and nineties by carrying traffic from
third countries. Gulf Air follows that example.

WTO reports indicate that by 2020 China will have 110 million out bound tourists.
In fifties of the last century the Americans started traveling, Japanese did it in
seventies and Koreans in nineties. Now the Chinese and Indian have started
traveling in big number. Traffic rights obtained from different countries through
bilateral should be reviewed and opportunities explored. Where necessary these
agreements should be negotiated for change and expansion. More unconventional
domain like seventh freedom, eighth freedom, ninth freedom and tenth freedom
should be explored taking advantage of the liberalization of the international
trade, globalization and the present market melt down. Let us not ignore the fact
when the world financial crisis has led to economic crisis of menacing proportion
in the West ,India and China have remained less affected giving higher prestige
and credibility to our economy. What India could not have achieved ten years ago
in any bilateral or multilateral negotiation it will be in better position to obtain
now.

 Air transport continues to be based upon Bermuda principle with modifications
from time to time with the Chicago Convention being central to its development.
India’s sky continues to be regimented and national carrier focusing on ethnic
traffic. More aggressive open sky policy is needed. It may appear to be risky but
worth moving forward. Reciprocity will be the basis of aggressive operation into
new market. This approach will give us access to other markets in the light of
newly found image of the country in a market melt down.

There is a strong nexus between growth of tourism and expansion of aviation.
One complements the other as indicated earlier with dependence on each other.
Shortage of hotel rooms in metros till last year was pathetic. Tariff in metro cities
were comparable to mega cities of the Western advanced countries. Tourist
product has incidence of tax ranging between 42% to 47% according to the
President of IATO which seems to be the highest in the world. Figures given by
him in a recent seminar shows Mumbai at $221,Delhi at $199 while it is $74 in
Bangalore in comparison to $63 in Suingapore,$40 in Kuala Lumpur ,$30 in Hong
Kong and $12 in Beijing. This needs to be corrected. Terrorist attack in Mumbai
and bomb blasts elsewhere have started sending shock waves pushing the tariff
down. When recession is coming the country should spend on infrastructure. This
is the Keynesian approach. Hotel construction is one of the answers. It will create
much needed hotel rooms at a capital cost which will be low as the commodity
prices like steel, cement and aluminium are falling. When the cycle of down turn
will be over India will be ready with hotels prepared to receive tourists by air. We
may have a year or so in hand to face the change in situation.

Carriage of cargo by air has big potential. Piracy in the sea increases its
importance. More liberal sky can be exploited by those who own large sized cargo
planes. Hence cargo facilities at airports are relevant..

At unusual times there should be usual step. Liberalization was unusual two
decades ago. Situation warranted such a step. Global recession is unprecedented.
This is the time for innovation and adventure.

Vivek Pattanayak

				
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