New civil aviation policy to make flying affordable and increase air connectivity

The new policy envisages a fare cap of Rs 2,500 on hour-long flights

GN Bureau | June 16, 2016


#Ashok Gajapathi Raju   #Civil aviation policy  
Ashok Gajapathi Raju, civil aviation minister
Ashok Gajapathi Raju, civil aviation minister

The union cabinet has approved the new National Civil Aviation Policy 2016 that aims to make flying more affordable and increase air connectivity. Hailing the new policy as a “game changer”, civil aviation minister Ashok Gajapathi Raju said that the country’s aviation sector is poised to become the world’s third largest by 2022.

The NDA government unveiled the draft of the policy in November 2014 and replaced it with another draft in October 2015.

Here are the key highlights of the new policy:

  • The 2004 norm of ‘5/20 rule’ has been scrapped. As per the 5/20 rule, a carrier which has completed five years of domestic operations and had a fleet of 20 aircraft was eligible to fly abroad. But now an airline can commence international operations after operating at least 20 aircraft or 20 percent of their total flying capacity, whichever is higher, on domestic routes. This means, new airlines like Air Asia and Vistara, which began operations in 2014 and 2015 respectively, can fly international.
  •  An open skies policy would be implemented on a reciprocal basis for SAARC countries and countries beyond 5,000 km from Delhi. It means that airlines from such countries will have no restriction on flights to India, and Indian carriers can have as many flights as they want to such countries.
  • To make flying more affordable in tier II and III cities, the policy proposes a regional connectivity scheme. Under this scheme, passengers would be charged Rs 2,500 for an hour’s flight and Rs 1,200 for a 30-minute flight on regional routes. The government would provide financial support to fund airlines’ losses on such un-served routes. It will refund 80 percent of the losses incurred by airlines due to cap on fare on such routes.
  •  To fund the subsidy element, government would be imposing a two percent cess on domestic and international air travel, which is likely to make airfares costlier on longer routes.
  • Around 350 dilapidated or underused airstrips across India have been identified which would be developed into "no frills airports". Revival of such airports would take place at an indicative cost of Rs 50-100 crore.
  • No air traffic control (ATC) approval would be required for helicopters flying below 5,000 feet.
  • Maintenance repair and overhaul (MRO) would now not have to pay royalty to airports where they operate.

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