• India’s domestic passengers have almost doubled in the last 5 years owing to the UDAN scheme
• In 2020, the number of airports in India reached the 100 mark.

• The geographical, economic and demographic conditions are such that India can be on the third-largest number of airline passengers. These favourable conditions are listed below.
  • India’s geographical situation in the middle of the Eastern and Western Hemisphere
  • India has a robust middle class of about 35 cr Indians. 
  • Rising income due to India being one of the fastest-growing economies globally
  • High tourism potential
• But strict and outdated regulations have not allowed the sector to achieve its potential, and India is ranked 10th globally wrt the number of airline passengers. 

1. Infrastructure constraints

• The civil aviation infrastructure, especially in the metros such as Delhi, Mumbai etc., has been operating at saturated levels. Therefore, the government will have to attract large investments in building new and upgrading the existing infrastructure.

2. Aviation Turbine Fuel (ATF)

• The taxation on Aviation Turbine Fuel (ATF) in India is high. Hence, ATF is priced 60% higher in India compared to the global average. Given the fact that ATF accounts for 40% of the operating costs of airlines, it puts Indian airlines under considerable pressure.

3. Lack of Skilled Workers

• Given the growth of the aviation sector, India will need 0.25 skilled workers in the aviation sector over the next decade.

4. Limited Capacity of Airlines

• 90% of traffic is concentrated in the metro cities. Although the potential consumer base is large, airlines have not been able to tap it.

5. Predatory Pricing

• Indian airlines indulge in Predatory pricing, i.e. sell their tickets at very low prices to bleed the competitors out of business. But in the process, they bleed themselves and make substantial losses.

6. Aviation Safety

• In India, there were 440 aviation safety violations in 2016 and 340 in 2017, which are quite high compared to global standards.

7. Other challenges

• High Airport Charges
• High aircraft to man ratio

Timeline of Air India

Debt Causes

Air India has a debt of ₹ 50,000 crores, accumulated for various reasons spanning decades. CAG Report of 2011 too has given detailed reasons for this 

1. Unprofessionalism in management when compared to world-class airlines. 
2. Massive fleet expansion 
3. Free travels by VVIPs like Ministers and Officials
4. In early 2005, Indian Airlines inducted planes despite no demand for them. These were funded by raising high-interest loans.  
5. Liberalized policy on international routes like nonstop flights to the US was loss-making.

Pros of disinvestment of Air India

• Indian Airlines is loss-making. Hence, keeping it afloat under government control would be wasting taxpayers’ money.  
• The private sector has taken up, and private airlines already cater to over 85% of the air travel demand in the country.
• It would bring professionalism in management.  
• Government money that keeps Air India afloat would be better used to fund important social and infrastructure programs. 
• It will help the government to spend its energy on core governance issues. 
• The sale of Pawan Hans in 2016 revived the company owing to the infusion of professionalism and better management.

Cons of disinvestment of Air India

• Many sectors and routes that private airlines may not find economical to operate are handled by Air India. E.g., Private Airlines give limited services to North East. 
• Air India, which is a sovereign airline, is used by Government in emergency evacuations of Indian nationals from warzones.  

Key highlights of  Aviation Policy-2016 are as follows

1. 5/20 rule Scrapped

• 5/20 rule, i.e. 5 years of operation and a fleet of 20 aircraft before handling international flights, has been scrapped. 
• But airlines will have to operate at least 20 aeroplanes or 20% of their planes (whichever is higher) on domestic routes. 

2. Improve Air connectivity to smaller cities 

• The policy wants to improve air connectivity with smaller cities. 

3. Subsidized Tickets

• Under the regional connectivity scheme, the maximum price that can be charged is Rs 2500 per hour.
• A 2% levy is to be charged on all domestic and overseas tickets to subsidize airlines’ losses.

4. Infrastructure

• Airports in Tier 2 and 3 cities will be operationalized on the ‘No Frills Model’. 

5. Open Skies Policy

• Under the ‘Open Skies Policy’, foreign airlines can operate unrestricted and unlimited flights in and out of India. It will help India become a regional hub like Dubai and Hong Kong. 

6. Other important

• Maintenance, Repair & Overhaul (MRO) don’t have to pay a royalty to airports where they operate, which will help make India an MRO hub. Royalty is up to 20% presently.  

Side Topic: No Frills Airport

• No Frill Airports are the airports with lesser facilities like no escalators, no AC Lounges etc.
• These Airports are made in small cities because airports providing high-end facilities are not feasible in Tier II & III Cities.

Timeline

Under Scheme

• Capping the fare
  1. Airfare for an hour’s journey of about 500km is capped at ₹2,500. 
  2. In the case of helicopter operations, fares are capped at ₹2,500 for a 30-minute flight.
  3. Seaplanes have also been included in the scheme in the subsequent phases. 
• Capping of airfare is applicable on half of the flight’s seats.
• Centre provides subsidy support to airlines via a Viability Gap Fund (VGF), which obtains money by levying cess on non-regional routes. 
• Airlines get three-year exclusive rights to operate regional flights. 
• No airport charges for airlines as airline operators complain that airport expenses constitute 25% to 30% of operating costs.
• The scheme will be operational for a period of 10 years. 

Importance

• The scheme has brought Tier 2 and Tier 3 cities into the country’s aviation network. 
• Positive Spillover Effect on Economy: The scheme will make businesses and trade more efficient, enable medical services and promote tourism.
• Employment Generation: As per the International Civil Aviation Organisation, each job created in the aviation sector creates 6.1 jobs in the economy. 
• This scheme can help in improving the health of the ailing Aviation Sector. Even if 1 middle-class family buy 1 air trip per year, the Aviation sector can sell 35 crore tickets. 

Issues

• Misdirection of Subsidy 
  • Even without the subsidy, there was an increase in air flyers.  
  • The subsidy is given to Middle Class when it could better serve some Social Schemes aimed at Lower Class.
• Against Laisse – Faire: Airlines are given exclusive rights for 3 years, and other airlines cant operate there even if they want to. 
• Another levy for creating the Viability Gap Fund will impact the already overtaxed Aviation Sector. Taxes on ATF is already among the highest in the world.

Ministry of Civil Aviation

• Ministry of Civil Aviation mainly looks after the Aviation sector in India 

Airport Authority of India

• AAI is a PSU of Miniratna category. 
• Sovereign Air traffic controller of India.
• It manages international airports, domestic airports, and custom airports.

Directorate General of Civil Aviation (DGCA)

• DGCA is the regulatory body of Civil Aviation. 
• Its functions include 
  • Registrar of civil aircrafts
  • Laying down airworthiness requirement 
  • Gives license to pilots
  • Investigates of minor accidents 
  • Implements Chicago Convention

Bureau of Civil Aviation Security (BCAS)

• Initially, it was a cell in DGCA setup in 1976 on the recommendation of the Pandey Committee after an aircraft hijack in 1976. It has been restructured now an independent department under the Ministry of civil aviation, after Kanishka Tragedy in 1985
• BCAS is the regulator of the security of civil aviation. 
• Under Aircraft Security Rules, 2022, BCAS can impose penalties of up to ₹1 crore on airports and airlines for violation of security measures. 

International Civil Aviation Organization (ICAO)

• ICAO is a specialized agency of the UN and was set up under the provisions of the Chicago Convention of 1944.
• It is headquartered in Montreal, Canada and India is a member of ICAO since its inception.
• ICAO ensures the operation of airlines between different countries.

Timeline

Share of Railways in the transportation of goods

In the US, 44% of goods are transported through railways, but in India share has been decreasing each passing year  (65% in 1970, 30% in 2007 & 25% in 2020)

Benefit of Railways wrt other modes of transport

• Cheaper: The transportation cost of goods using railways is low (₹2/ton/km).
• Low Carbon Footprint: Railways are a greener mode of transportation as they consume 20% less energy.
• Integrate India with world markets: Railways can help to expand & integrate markets as they did in Europe and the USA. 
• Spur economic activity: According to Economic Survey, 1 rupee invested in the railways increases GDP output by 5 rupees.

Railway gauge size

• Ranking track length in India: broad > meter > narrow
• Under the Project uni-gauge, Railways has converted selected routes into broad gauge.

Railway Undertakings

Indian Railway has 14 undertakings. Important ones are 

• IRCTC (provides catering services)
• CONCOR (Container Corporation of India)
• Railtel

Statistics about Indian Railways

UNESCO World Heritage: Indian railways

1. Darjeeling Himalayan Railways
2. Nilgiri Mountain Railways
3. Kalka Simla Railway
4. Chhatrapati Shivaji Terminus (Victoria Terminus) (It was designed by British architect FW Stevens in  Gothic Style)

National Rail Plan for India, 2030

Under this plan, the government of India wants to achieve the following

1. Increase Indian railway’s share in freight transportation to 45% and average speed of freight transportation to 50% by 2030.
2. Achieve 100% electrification of all train routes.
3. Increase the speed of Delhi-Howrah and Delhi-Mumbai routes to 160 km/hr.
4. Identify and develop new Dedicated Freight Corridors and High-Speed Rail Corridors.
5. Improve the safety of railway tracks in India.

Railway Budget vs General Budget

• 1924-25: British separated rail budget based on the recommendations of Acworth Committee (1921).
• Indian constitution didn’t provide for a separate railway budget or budget in parts. But Parliamentary rules of procedure permitted it.
• 2017: Railway Budget was merged with General Budget.

Arguments for merging Railway Budget with General Budget

1. Economic Reasons:
   • Saving funds of financially starved Railways: Indian Railways need not pay the annual dividend of ₹10,000 crores to the Government. 
   • Railways will be better equipped to raise funds on the strength of the sovereign instead of being restricted to the Indian Railway Finance Corporation.
2. The situation is different from 1924:  In 1924, the railway’s expenditure was more than the expenditure of all other administrative expenses. It has presently reduced to just 6% of total government spending.
3. Any other country does not follow this system. 
4. Politicization of Railways: This provision was used by politicians for populist reasons.   
5. Bibek Debroy Committee too has suggested separating the railway budget from the general budget.

Why should there be a separate budget for the Railways?

1. Indian Railways is different from other central ministries due to its size and scope. Whereas other ministries just spend, Railways is an operational ministry as it earns and spends. 
2. Bibek Debroy Committee has recommended separating the railway budget from the general budget. But it wasn’t a standalone measure.

• Rapid transit, also known as the metro or subway, is high-capacity public transport. Unlike buses & trams, they are electric & operate on an exclusive right-of-way. 
• First Metros was started in Kolkata in 1984 from Dum Dum to Tollygunge. 

Benefits

1. Reduced traffic density on the roads
2. Reduced vehicular emission leading to decreased air pollution
3. Reduced fatalities due to road accidents
4. Reliable & safer journey
5. Decreased fuel consumption
6. Decreased vehicular operating cost

Metro Rail Policy, 2017

Indian Government has announced its Metro Rail Policy with PPP as the centre of the scheme. 

• PPP is the centre of the scheme. The PPP component has been made mandatory for availing assistance from the central government.
• The new policy mandates Transit Oriented Development (TOD).
• Power to set up Fare Fixation Authorities has been vested with states. 
• States can raise low-cost debt capital through the issuance of corporate bonds. 
• Empowers state to charge a “betterment levy” in areas that will benefit from the metro rail projects. 

Problem with the Policy

• The main problem is with the PPP model. PPP model has failed in Delhi Metro’s airport line — and is faltering in the Mumbai and Hyderabad metro rail projects. Due to various positive externalities of Metro, these projects must be subsidized by the government. In  Delhi Metro, the Centre and state government have footed much of the bills. Even E Sreedharan has opined that the PPP model is not suitable for Metros as private players expect more than 12% return from metro projects while no metro project can yield more than 3 per cent.

MetroLite or MetroNeo

• MetroLite or MetroNeo is the model for Metros in smaller cities such as Nashville in the USA and Indian cities of Jammu, Coimbatore, Srinagar etc.
• It was announced in the budget of 2021. 
• These are a lighter version of conventional metro rail and can be set up at a lesser cost (2/3rd to 1/3rd cost of the normal metro).

Bibek Debroy is a noted economist & member of NITI AYOG. The committee was formed under Bibek Debroy to suggest measures to restructure railways. 

Suggestions of Committee

The committee does not recommend the privatization of Indian Railways. However, it does endorse private entry with the provision of an independent regulator.

1. Reform in Human Resource Management

• There are 8 services in Railways with different cadres, thus reducing the administrative efficacy. 
• Recommendations: Unify the Cadre System for optimal utilization of human resources.  

2. Outsourcing

• Outsource non-core areas, i.e. Police force, schools, hospitals, water bottling, museums etc. 

3. Regulator

• The Committee has recommended that the Independent RAILWAY Regulator. 
• Railway Board should continue only as an entity for the management of Indian Railways (PSU).
• 2018 Update: Rail Development Authority has been constituted with the following functions
  1. Recommend tariff “commensurate with costs.” 
  2. Benchmark service standards
  3. Frame guidelines for track access charges on dedicated freight corridors.

4. Towards entry of private players

• It recommended separating railway track construction, train operations, and rolling-stock production units under different entities to enable open access to private operators. 

5. Other Recommendations

• Merge rail budget with General Budget.

The main recommendations of the Committee include

1. Wind up organizations such as Central Organisation for Railway Electrification (CORE), Centre for Railway Information System (CRIS) etc.
2. Merge Rail Vikas Nigam into IRCON, Railtel into IRCTC and takeover of Braithwaite and Co. Limited by RITES as their functions overlap.
3. Outsource the non-core functions. 

On selected routes, Private train operators will Design, Build, Finance and Operate (DBFO Model) their own private trains on government tracks  & charge market-linked fares. . Government (Indian Railways) will provide track and signalling infrastructure to them in return for which Private train operator will share a percentage of its revenue with Government.

Timeline of Rail Privatization

Benefits of Rail Privatization

• It will lead to improved efficiency as private players will bring superior management, technology and amenities.
• It will lead to a lack of political interference in the railway operations, and decisions will be taken on sound economic principles.
• Increased competition: The entry of private players will ensure improved quality of service with competitive fares. 
• Prevent Government’s loss: The revenue generated by the Indian Railways is low and keeps the system always at losses. 
• Reducing the supply-demand deficit: Since waitlisted passengers comprise ~15% of the reserved passengers. 
• Private investment: According to estimates, railway infrastructure needs an investment of ₹50 trillion between 2018 and 2030. Given the FRBM restrictions, involvement of private capital is required.  
• Economic Growth: Private investment in the railways will also lead to economic growth due to its positive spillover effects.

Challenges with Rail Privatization

• Private monopoly: Privatization in railways might create a private monopoly that might seek to set higher prices and exploit consumers.  
• Coverage Limited to Lucrative Sectors: With privatization, less popular routes could be eliminated, thus hurting connectivity and rendering some parts of the country virtually inaccessible.  
• Apprehension among railway employees about job-loss, if Government reduces the number of Government trains.
• Fragmentation in the railways: Rail privatization broke unified railway operations into infrastructure management and train operating companies in the UK. It led to the absence of clear demarcation of responsibility.

Bharat Gaurav Trains and Bharat Gaurav Policy

• Bharat Gaurav Trains are private trains that will operate on theme-based circuits (e.g., Ramayana Express connecting places associated with Lord Ram).
• The operator can lease the train and coaches from the Indian railways and change the interiors provided they comply with the safety norms.
• The tenure of arrangement can vary from a minimum of two years to the life of the coach. 
• The operator can also decide the halts, sell advertisement rights etc.

Main categories of Railway Accidents

• Derailment of Trains is the primary cause of railway accidents, constituting 50% of railway accidents.
• Accident on unmanned level crossing gates (36%)
• Train collisions
• Rail Fire 
• Persons standing on railway tracks (e.g., In 2018, 61 people were crushed to death in Amritsar).
• Natural Causes such as floods, landslides etc. 

Between 2012-2018, a total of 600 rail accidents happened.

Reasons for Railway Accidents

1. Lack of anti-collision technologies that automatically halts the train if it overshoots a red signal.  
2. Inappropriate maintenance of tracks: Khanna Committee on Railways Safety commented that nearly 25% of the total railway track in India is overaged.  
3. Poor Rolling stock: Most trains’ locomotives are not equipped with the Linke Hoffman Busch (LHB) coaches. LHB coaches are more secure than ICF due to the lower centre of mass, preventing it from toppling, turtling, and telescoping.
4. Rail Fractures: Railway Tracks are made up of strong and durable steel, which can withstand extreme weight and fluctuations in temperature. But Railway fractures do occur due to many reasons like defects during manufacturing, defects during installation and lack of maintenance. These Rail fractures are also among the frequent reasons for derailments.
5. Government Negligence: Government has formed committees such as Sam Pitroda Committee, Khanna Committee and Bibek Debroy Committee. But all these reports kept on lying dormant and recommendations un-implemented.  

Steps taken by Government

• Rashtriya Rail Sanraksha Kosh was created with a corpus of 1 lakh crores to promote railway safety.   
• TCAS (Train Collision Avoidance System): TCAS is based on a combination of railway signalling data, global position, radio frequency identification devices (RFID), software and logic. 
• Tri-Netra System: Tri-Netra or Three Eyes system is made up of (1) Optical video camera, (2) Infrared video camera and (3) Radar-based terrain mapping system. It will help in avoiding collisions even during the fog.

• Changing to LHB: Indian Railways is replacing the ICF (Integral Coach Factory) coaches with German-made Linke Hofmann Busch (LHB) coaches. 
• Setu Bharatam Project: Under the Setu-Bharatam project, unmanned railway crossings are eliminated. 

Way Forward: An independent body like Railway Safety Authority should be constituted to set the standards for Rail Safety and find the reasons and persons responsible for it in case of an accident.

High-Speed Rail Corridor Plan (Diamond Quadrilateral)

• Under the High-Speed Railway Corridors (HSR) plan, the Railways intend to run trains at the average speed of 200- 300 Kmph.
• Ministry of Railways has selected the following six corridors
  1. Delhi-Chandigarh-Amritsar
  2. Pune-Mumbai-Ahmedabad
  3. Hyderabad-Dornakal-Vijaywada-Chennai
  4. Chennai-Bangalore-Coimbatore-Ernakulam
  5. Howrah-Haldia
  6. Delhi-Agra-Lucknow – Patna

Ahmedabad-Mumbai HSR

• Work on the Ahmedabad-Mumbai line has already been started.
• It’s details are as follows

Why should India go towards HSR ?

• Globally, India’s railway network is the fourth largest. Hence, India should build High-Speed Railways to move forward on the learning curve.
• It has a multiplier effect. 
  1. Improved specialization in construction technologies (as done by China)
  2. The emergence of large MNCs like Alston of France and Hitachi of Japan
• The development of HSR will have benefits on real estate & facilitate balanced urbanization. For example, the Beijing-Tianjin HSR line helped the growth of Tianjin’s real estate & commercial industry.  
• Although High-speed railways directly compete with economy class tickets of an airline but have the following benefits vis-a-vis road and airlines. 
  1. These rail systems have 30% less land requirement in comparison to expressways. 
  2. Energy consumption is 1/3 less than private cars & 5 times less than aeroplanes.
• HSR system is highly safe. No accident has been reported in the entire history of the Japanese High-Speed Rail.

1. Vande Bharat

• It was formerly known as Train -18.
• It was made and designed by Integral Coach Factory (ICF) based in Chennai under the Make in India Initiative 
• These are semi high-speed trains that run at a speed of 160 Kmph (fastest in India).
• It is an Engineless train running on Electrical Multiple Unit (EMU) Technology.
• The train has state of the art facilities like onboard WiFi, CCTVs, Rotating Chairs, disabled friendly, intelligent braking system etc. 
• Budget 2022: 75 new Vande Bharat trains will be added in Indian Railways till 15th August 2023 and 400 new trains in 3 years.

2. Bharat Gaurav Trains

• Bharat Gaurav Trains are theme-based trains launched in 2021.
• E.g., Buddhist Circuit Tourist Train (to explore Buddhist places), North East Circuit Train (to explore North Eastern States) etc.

3. Gatiman Express

• Gatiman Express is a semi-high speed train.
• It runs on electricity.

4. Antyodaya Express

• Antyodaya Express is a fully unreserved superfast train that runs on dense routes. 

5. Tejas Express

• Tejas runs at 130 Kmph and provides advanced amenities such as WiFi services.

6. Uday Express

• Uday is a double-decker train running on busy routes.