New aviation policy opens door to all to fly with cheap tickets and connectivity

Two per cent levy to fund regional connectivity scheme, tax incentives and open skies are proposed in the civil aviation policy

GN Bureau | October 30, 2015


#aviation policy   #aviation   #cheap tickets   #connectivity   #aviation policy  

The new aviation policy seeks to take flying to the masses.

The government today (Friday) released its draft civil aviation policy for inputs from stakeholders, which offers travellers an incentive to fly to small towns at affordable rates and eases norms for domestic carriers to operate services abroad.

It also proposed a two per cent levy on all domestic and overseas tickets; the levy will be used to fund regional connectivity scheme.

The primary aim of the policy is to ensure a tariff of no more than Rs 2,500 per ticket for each flying-hour with a host of incentives and other benefits to both airport developers and operators to make that happen. The government will provide viability gap funding to ensure that airfares for one hour flights can be limited to Rs 2500 per passenger. The funding will be indexed to aviation turbine fuel prices, which forms a major chunk of airlines’ expenses.  The viability gap funding will be shared by the Centre and the State in the ratio of 80:20.

The policy dwells on upgrade of airports, better regional connectivity, easing of norms for flying abroad, further liberalisation in open skies regime, development of cargo business, chopper services, attracting investments in maintenance sector, ground-handling and security.

It wants to raise foreign direct investment in domestic airlines from the current 49 per cent to over 50 per cent, besides a slew of tax incentives for airlines and maintenance works.

"A lot of consultation has taken place. We invite suggestions from stakeholders and public — since it involves the people of India. After all those suggestions come in, we will look into it," civil aviation minister P Ashok Gajapathi Raju said.

"The basic (idea) behind the national civil aviation policy is to take flying to the masses," civil aviation secretary Rajiv Nayan Choubey said.

"We currently have some 430 airstrips and airports. But only around 90 are operational — 300-odd are not being used. This is a huge unused asset. These airports will form the basis for enhancing our regional connectivity," said Choubey.

He said these will be upgraded to no-frills airports at a cost of Rs 50 crore each. Besides, to make operations in such airports feasible, the security will be aircraft-based, so that the airport is sanitised just around an hour or two before the flight.

The draft policy proposes total liberalisation in time-bound manner, but based on a reciprocal arrangement from the partner country. It has proposed three ways forward on allowing domestic airline operators to fly abroad.

First suggests continuing with the existing norm of five-year operation with a 20-aircraft fleet. The second is about abolishing this altogether. And the third is to draft a new set of norms under which an operator must earn some minimum credit with domestic operations before being allowed to fly abroad.

Finally, the government aims to lift India to the third rank in the global aviation industry from the tenth rank currently. The policy has been put up for public comments, and then for inter-ministerial consultations, after which it will be sent for cabinet approval.

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