Centre plans aam-aadmi flights

Centre plans aam-aadmi flights

Now, the common man’s long-cherished dreams of travelling by air may come true as the Government proposes to take a slew of measures, including making flying affordable for the masses, in its draft civil aviation policy announced on Friday.

The policy, with around 15 key takeaway measures, unveiled  by the Civil Aviation Ministry, was described as “progressive” by leading air carriers in the country.

There are plans to incentivise flights to smaller towns and allow creation of no-frill airports to boost regional numbers. Besides, the draft civil aviation policy proposes to cap airfares for one-hour flights between small cities at `2,500 per passenger.

In a bid to ratify such measures taken by the Government, public comments have been invited over the next three weeks, after which inter-ministerial consultations would be held. The final policy is expected to be decided in a couple of months after looking into comments on all draft proposals.

The Government also proposes levy on air tickets in its aviation policy and a significant Foreign Direct Investment (FDI) push for Indian carriers. The draft policy has also said that fliers may have to pay 2 per cent more towards a new regional connectivity levy.

The Civil Aviation Ministry has also pitched for over 50 per cent FDI in domestic carriers in case an open skies policy is implemented, while, at present, the FDI limit is just 49 per cent. Under the open skies policy, overseas airlines can operate unlimited number of flights into and out of India.

The Ministry has now sought comments on three options, abolish the 5/20 norm completely, continue with it, or link the overseas flying rights with domestic flying credits.

When asked, leading carriers IndiGo and SpiceJet, however, did not provide a clear answer on the contentious 5/20 norm that makes it mandatory for domestic airlines to have a minimum of five years of flying experience and 20 aircraft to fly abroad.

Start-up carriers like Vistara and AirAsia India have also been pitching for removal of the 5/20 norms.

As far as the proposed 2 per cent levy on all domestic and international air tickets is concerned, it is expected that the Government can rake in Rs 1,500 crore a year that would be used to expand regional routes.

The much-awaited revised draft policy has been rolled out after wide ranging consultations which were never done before. However, Civil Aviation Minister Ashok Gajapathi Raju said: “We have proposed it and let us get the feedback soon.”

Commenting on the efforts made by the Government, Civil Aviation Secretary Rajeev Nayan Choubey said: “The draft policy is in line with the Prime Minister’s directives that the policy should promote civil aviation in a big way and take flying to the masses.”

“The Government expects about Rs 1,500 crore annually from charging 2 per cent levy,” Choubey added. To make maintenance, repair, overhaul (MRO) cheaper, the Government has proposed to exempt such activities from Service Tax net and not levy any VAT. The policy also envisages making India an Asia hub for MRO business.

Seeking to provide a friendly MRO regime in the domestic market, the Ministry has proposed exemption from Service Tax for those activities and simplified Customs clearance procedures. “The MRO, ground handling, cargo and ATF infrastructure co-located at an airport will also get the benefit of infrastructure sector, with benefits under Section 80-IA of Income-Tax Act,” Choubey said.

To boost regional connectivity, the policy has proposed various concessions such as State Governments providing free land and lowering the Value Added Tax (VAT) on ATF to 1 per cent or less. There would be no Service Tax on tickets under the Regional Connectivity Scheme (RCS), apart from Service Tax exemption for scheduled commuter airlines taking jet fuel from RCS airports. The RCS scheme will come into effect from April 1, 2016.

For regional connectivity, 80 per cent of the viability gap funding would be shared by the Centre and the rest by the States concerned. No-frills airports are also being proposed to be set up at a cost of Rs 50 crore each.

The revised policy has floated the concept of Scheduled Commuter Airlines (SCAs) which would have relaxed norms and those entities would not be liable to pay airport charges for operations under RCS. The SCAs can be set up with a minimum paid-up capital of Rs 2 crore and their aircraft would have a capacity of 100 seats or less. These entities can also enter into code-share arrangements with other airlines.

Various measures have been mooted for rationalisation under route dispersal guidelines as well as for liberalised bilateral rights framework. Domestic carriers would be allowed to enter into code-share pacts with foreign airlines without prior approvals. “A review will be carried out after five years to consider the requirement of further liberalisation in code share agreements and drop the requirement of reciprocity,” Choubey said.

The broader aim of the draft policy is to create an ecosystem for 30 crore domestic ticketing by 2022 and 50 crore by 2027 besides targeting international ticketing at 20 crore. The original one-page draft policy, which was released last November, was later junked by the Ministry amid significant concerns raised by stakeholders.

Leading air carriers welcomed the draft aviation policy. IndiGo President Aditya Ghosh said the policy is ‘broadly progressive’ and setting up of low-cost airports would help bring more cost-efficiency.

On development of airports, the Ministry will explore ways to unlock the potential land use by liberalising the end use restrictions for existing, excluding Public Private Partnership (PPP), and future airports of AAI and future airport projects under PPP.

The revised draft policy, however, said that tariff at all future airports would be calculated on a hybrid till basis. With respect to ground handling, the Ministry has suggested that there should be at least three agencies for that purpose, including Air India’s subsidiary or joint venture at an airport. Besides, the Civil Aviation and Defence Ministries would work together to ensure commercial aero-manufacturing is covered under Defence offset requirements. Areas where “aero-manufacturing takes place would be notified as Special Economic Zone (SEZ),” the policy added.

The Ministry would also develop ‘service delivery modules’ for aviation security, immigration and customs, among others, in consultation with other Ministries. “Helicopters will be free to fly from point to point without prior ATC clearance in airspace below 5,000 feet and outside ATC control areas and those other than prohibited and restricted ones after filing the flight plan with the nearest ATC office,” it said.

On the cargo front, a detailed action plan would be drawn up to ensure it takes less time for the clearance. “The revised draft seeks to provide a level-playing field for sub-sectors such as airlines, airports, cargo, MRO, general aviation, aerospace manufacturing and skill development,” Choubey said, adding that there will be no ambiguity when the final policy comes out.

-31 October 2015, MADHUSUDAN SAHOO , New Delhi