After credit rating upgrading by S&P, India’s air security ranking now needs upgrading


FederalMarkets in India have shown signs of great boom after global rating agency Standard & Poor has upgraded India’s credit outlook to stable from the earlier poor. S&P has given indications that the rating could be raised further if the economy reverts to a real per capita GDP trend growth of 5.5 % per year. Until now, S&P was rating India as ‘BBB—’, the lowest in the investment grade, with a negative outlook.

Representatives of Standard & Poor’s had met Finance Ministry officials on August 12. They had informed S&P about the government’s road map to reduce fiscal deficit to 3 percent of GDP by 2016—17. They were also told that in the current fiscal, the government proposes to bring down the fiscal deficit to 4.1 percent of the GDP from 4.5 percent a year ago. With the new Modi Government’s big bang reforms, India expects fiscal breach to go lower in the near future and investments to pick up.

However, there is still an area of concern related to air safety ranking which too has been downgraded recently by the US aviation regulator Federal Aviation Administration (FAA). Experts from FAA are expected to visit India in December 2014 to review the country’s downgraded safety ranking.

The FAA had downgraded India’s safety ranking in January 2014 to Category II, finding regulatory oversight to be inadequate in a move that blocked Air India and Jet Airways from expanding to U.S. cities or collaborating with U.S. airlines. As regards to air safety ranking, India is now clubbed with countries like Ghana, Indonesia, Uruguay and Zimbabwe.

As per information provided by Les Dorr, Spokesperson, FAA, the DGCA (Directorate General of Civil Aviation) had requested a reassessment to take place a little after downgrading. According to Les Dorr, lack of trained DGCA officials, the absence of documented procedures for inducting new types of aircraft, and a shortage of flight inspectors to monitor India’s growing number of airlines were cited as the chief reasons for downgrading.

DGCA is of opinion that it is now fully prepared to receive the FAA officials in the first week of December for a review. DGCA has taken several steps lately, as part of preparations. This include hiring of flight inspectors, conducting a financial audit of airlines, cracking down on errant carriers, pulling them up for training, conducting engineering checks, and stopping operators from importing aircraft until they have checked and fulfilled all the safety norms listed by FAA.

A DGCA team led by Director General Prabhat Kumar was in Washington some time back to prepare for the review and update FAA on the action taken so far. No decision could have been taken during PM Modi’s recent visit to the US as upgrading requires several physical checks as well.

Air India has about 21 weekly flights between India and the US, and Jet Airways seven, while other Indian airlines fly mostly to South East and West Asia. New airlines such as Tata-SIA Airlines Ltd.’s Vistara that are hoping to fly abroad cannot fly to the US until an upgrade, even if India relaxes its rule to let only those airlines with five years’ domestic flying experience and 20 aircraft to fly abroad. They also cannot sign commercial flying agreements with US carriers. They also have to be prepared for surprise safety checks on their aircraft by regulatory authorities.