- New civil aviation policy has been approved by Union Cabinet.The new policy focuses on taking "flying to the masses" and making it "affordable, convenient, cheap."
- The long-awaited policy will make it simpler for new domestic airline companies to start flying international routes, will make short-span travel cheaper, focus on improving regional connectivity, develop chopper and charter operations, and lots more.
Major features of this policy are:
Archaic 5/20 rule is now 0/20:
- The 5/20 rule was a huge hurdle for new domestic airline companies that wanted to expand their wings and go international.
- The new aviation policy has partially done away with the rule. It has scrapped the 5-year rider and kept the 20-aircraft requirement -- ie 5/20 is now 0/20. This means, a new airline regardless of how long it has been in operation, can go international once it has a fleet of 20 aircraft.
- Other rules to allow domestic airlines go international have also been made simpler.
- One of the mandates, however, says that carriers will have to deploy atleast 20% capacity for domestic operations even after it goes overseas.
- This will increase the domestic footfall and will lead to better connectivity.
A cap on short duration flights -- Air travel to get cheaper:
- With the country's population of nearly 1.3 billion, only 0.08 billion fly by air annually This means, there is huge potential for the domestic aviation sector to grow and prosper.
- For this, the cabinet has approved a cap on short-span flights. It has capped the flight ticket fares for journeys with 30-minute airtime at Rs 1,500 and the ones with one-hour air time at Rs 2,500.
- To make this possible, the new policy will aim at bringing down tax-based cost for airlines. All the states will be required to bring down VAT on ATF to 1%, and a viability gap funding will be provided by the government to help it cut ticket cost.
Regional Connectivity Scheme:
- India's 35-crore strong middle class only flies once in four years. To correct this, the government has identified 350 unused airstrips and airports.
- They will be revived in a phased manner, depending on the demand. A regional connectivity fund will be set up with a levy per departure on domestic flights.
Cancellation fees:
- The policy will put a cap on cancellation fees. Under the new policy, it will not go beyond the basic fare.
Refunds:
- Getting refunds for cancelled tickets or flight will be made easier. The sector will work upon giving the refund within 15 days of the cancelled ticket or flight. Even cancellation of special and promotional fare tickets will be eligible for refunds, which was not the case so far.
- The compensation for cancelled flights has also been hiked under the new policy.
2% cess on regional flights scrapped:
- The government wants to tap the large population that still doesn't fly and bring them in, to boost the sector.
- For this, the earlier proposed 2% cess on all regional flights has been done away with. The cess was proposed to collect funds to improve regional infrastructure.
Excess baggage fee reduced:
- While the baggage allowance hasn't been hiked, the policy mandates a cut in the excess baggage fees from the current Rs 300 per extra kg to Rs 100 per extra kg over and above the permissible 15 kg up to 20 kg.
Bilateral traffic rights:
- India currently has bilateral traffic rights with 109 countries. Under the new policy, India will have a the bilateral traffic rights on a reciprocal basis for countries beyond 5000 km those countries.
- Which means, if they have "open sky" for India, Indian skies will be available to them.
- This will ensure unlimited access for Indian carriers abroad.
Maintenance, Repair and Operations (MRO):
- The government wants to make India into a MRO hub. For this, some concessions were announced in the Budget.
- Most of the Rs 5,000 crore MRO business goes out of the country because of taxation issues and charges that airport operators levy on MRO.
- To change this, the policy mandates airport operators to bring down airport charges and royalty for MRO. They will have to reduce VAT on MRO and also provide adequate land for MRO.
- There will only be a single point certification and the processes to bring in imported items and tools will be made simpler to promote MRO.
Make unemployed Commercial Pilot Licence holders employable:
- The slowdown in the aviation sector has rendered thousands of CPL holders unemployed.
- To make them employable, the policy mandates setting up simulators for type rating of CPL holders so that their job prospects improve within the country or outside it.
Question: India’s aviation sector has been in distress for so long, but the new civil aviation policy focuses on taking "flying to the masses" and making it "affordable, convenient, cheap. Discuss.
Suggested approach:
- Problems of aviation sector in brief.
- Major features of new policy.
- Any suggestion to further improve improve the policy.
