The overt reliance on cross-subsidisation as policy tool to boost regional connectivity in the Draft National Civil Aviation Policy is misplaced. It would lead to distortions and misallocate resources. Also, speedily augmenting regulatory capacity seems to have been given short shrift. There are other glitches.
The main policy move proffered is a 2% cess on ‘all domestic and international tickets’ to subsidise ‘airfare not exceeding Rs 2,500 per passenger, indexed to inflation, for a one-hour flight’. Instead, it would be far more sensible, efficient and cost-effective to promote faster rail services that would provide point-to-point travel without time-consuming to and fro airport commute and checkin. Also proposed is the concept of Scheduled Commuter Airlines for the short-haul trips, which would mandatorily have aircraft capacity of 100 seats or less. But such constraints would be further distorting. We surely need improved regional connectivity for the scheduled carriers; multiple aircraft types would in any case rev up overall costs. The policy proposes new no-frills airports to boost regional connectivity, ‘mostly through AAI’. But the Airports Authority of India (AAI) itself needs to be speedily overhauled. Given that the AAI does manage the largest portfolio of airports in the world, and also provides air navigation services, what’s required is its structural revamp into corporate entities for distinct functions, synergy and focus. The no-frills airports need to be modular, with adequate scope for expansion and improved access.
The host of tax and fiscal benefits for the maintenance, repair and overhaul (MRO) business puts the ball in the finance ministry’s court. On bilateral traffic rights, the open-sky policy suggested on a reciprocal basis is sound, as is liberalisation of code-share agreements. The flexibility proposed in the five-year and 20-aircraft rule for flying abroad is also welcome. But increased foreign direct investment in airlines would be case by case, and only from carriers from ‘countries lying within 5,000-km radius’. The draft needs revising.
