DGCA seeks monthly details from carriers on airfares

DGCA seeks monthly details from carriers on airfares

“We will ask for details of the number of seats sold on the highest and the lowest fare buckets.”

The Directorate General of Civil Aviation (DGCA) has decided to ask all domestic carriers to furnish details of the number of tickets they sell in the highest fare bucket, and the contribution of such tickets to their revenue from 20 domestic routes, in a bid to check sharp surges in airline fares.

Make data public

The DGCA plans to make the data public and would incorporate these numbers in its monthly traffic data reports, a senior official at the aviation regulator said on Friday. The move comes on the back of complaints from Parliamentarians on rising airfares. “We have received complaints on high airfares. The purpose of the move is to form a clear perspective on how many seats are being sold in the highest fare bucket,” the official said. Airlines offer different fare brackets for each flight, known as fare bucket.

The twenty routes for which airlines would have to share these details include Bangalore-Mumbai, Delhi-Mumbai, Delhi-Chennai, Calcutta-Port Blair and Hyderabad-Mumbai.

“We will ask for details of the number of seats sold on the highest and the lowest fare buckets and the revenue earned on selling such seats,” the official added.

Experts criticise

Some aviation experts criticised the government for monitoring airfares and said it is a function of demand and supply.

“DGCA is involving itself in the pricing regime. It must get its priorities right — it is a safety compliance and standard organisation, not an economic regulatory bureau,” said Mark D Martin, founder and chief executive of Martin Consulting, an aviation consulting firm. DGCA had conducted an analysis of airfares in 2014 and found that the average fares were closer to the minimum fare, meaning most tickets sold were not priced exorbitantly. Civil Aviation Minister Ashok Gajapathi Raju had said in Lok Sabha earlier this week that airlines have passed on the benefits of declining aviation turbine fuel to passengers, as per a study conducted by the government during January-March this year.

In the debate on demand for grants of the Civil Aviation Ministry, some Parliamentarians had sought action against airlines and had alleged airfares remained high despite decline in jet fuel prices which accounts for over 40 per cent of airline’s operational costs.

 –NEW DELHI, May 7, 2016

Ministry of Civil Aviation delegates power to grant initial NOC/ In-principle approval for import or acquisition of aircrafts to DGCA

Ministry of Civil Aviation delegates power to grant initial NOC/ In-principle approval for import or acquisition of aircrafts to DGCA

The Ministry of Civil Aviation has decided to delegate the power to grant initial NOC/ In-principle approval for import or acquisition of aircrafts to the Directorate General of Civil Aviation (DGCA). As per the existing procedure, Scheduled Operators and Regional Scheduled Operators have to seek such approval from the Ministry of Civil Aviation. The delegation of power is being done in order to simplify procedures as compliance of various Civil Aviation Requirements (CAR) are regulated by the DGCA.

The Ministry of Civil Aviation had requested Director General of Foreign Trade and Reserve Bank of India to amend their existing notification and Master Circular respectively in this regard. Accordingly, DGFT vide notification no. 24/2015-2020 dated 9th October, 2015 and Reserve Bank of India vide its Master Circular no. 30 dated 26th November, 2015 have carried out the requisite amendments. DGCA has now been requested to make necessary amendment in the related CAR/Rules in accordance with it.

After effecting the requisite changes by DGCA, the Scheduled Operators/Regional Scheduled Operators need not approach the Ministry of Civil Aviation for initial NOC/In-principle approval for import/acquisition of aircrafts.

-Ministry of Civil Aviation, 28-November, 2015

19.96% growth in passengers carried by domestic airlines during January-October, 2015

19.96% growth in passengers carried by domestic airlines during January-October, 2015 

Passengers carried by domestic airlines during Jan-Oct 2015 were 660.60 lakhs as against 550.69 lakhs during the corresponding period of previous year,  thereby registering a growth of 19.96%

Click below to  see the details of  performance of domestic airline for the year 2015

Performance of domestic airlines for the year 2015

Civil Aviation Minister releases Revised Draft National Civil Aviation Policy (NCAP 2015)

Civil Aviation Minister releases Revised Draft National Civil Aviation Policy (NCAP 2015)

Minister of Civil Aviation Shri P. Ashok Gajapathi Raju released the Revised Draft National Civil Aviation Policy (NCAP 2015) in New Delhi today. Speaking on the occasion Shri Raju urged all stakeholders to participate in the process of firming up the policy by giving their valuable suggestions to the Ministry.  He said that the Civil Aviation Policy should be a dynamic one which can keep pace with the ever changing demands of the sector.

Minister of State for Civil Aviation and MoS (I/C) Tourism and Culture Dr Mahesh Sharma was also present  at the function.  Dr. Sharma  underscored  the importance of bringing air travel within reach of the common man and  facilitating regional air connectivity within the country.

Secretary Civil Aviation Shri Rajiv Nayan Choubey gave a presentation highlighting the salient features of the draft policy, which are as follows :

Aim of the Policy

Ø      To provide a conducive environment and a level playing field to various aviation sub-sectors, i.e  Airlines, Airports, Cargo, Maintenance Repairs and Overhaul services, General Aviation, Aerospace manufacturing, Skill Development, etc

Ø      To create an eco-system to enable 30 crore domestic ticketing by 2022 and 50 crore by 2027. Similarly, international ticketing to increase to 20 crore by 2027.

Draft Policy covers:-

  1. Regional Connectivity Scheme (RCS)

Ø      Scheme will come into effect from 1 April 2016

Ø      Airfare about Rs 2500 for a one-hour flight in RCS

Ø      This will be implemented by way of:

ü      Revival of un-served or under-served airstrips.

  • Only 75 out of 476 airstrips/airports have scheduled operations. Revival of these depending on demand.
  • Build ‘no-frills’ airports at a cost of Rs 50 crores.

ü      Viability Gap Funding (VGF) for scheduled commuter airlines.

  • VGF indexed to ATF prices and inflation.
  • VGF to be shared between Centre and State at 80:20.
  • Creation of Regional Connectivity Fund (RCF) for VGF.
  • Levy of 2% on all domestic and international tickets on all routes, other than CAT IIA and RCS.

ü      Concessions by different stakeholders:

  • State Government-

o       Provide free land and multimodal hinterland connectivity.

o       Concessional rates of power, water and other utilities.

o       VAT on ATF  1% or less in RCS airports.

  • Central Govt-

o       Service Tax on tickets under RCS will be exempted.

o       ATF drawn by SCA’s from RCS airports exempt from excise duty.

o       SCA’s to be treated at par with SOPs for customs duty.

ü      Cost-effective security solutions by BCAS and state government.

  1. Scheduled Commuter Airlines (SCA)

 

Ø      Eligibility criteria in terms of paid-up capital to be kept at Rs 2 crore.

Ø      Aircraft with capacity of 100 seats or less.

Ø      No restrictions on number of aircrafts.

Ø      Minimum movements per week to RCS destinations as prescribed.

Ø      SCA can enter into code share with other airlines

Ø      Will be allowed self- handling.

Ø      No airport charges on  SCA  for their operations under RCS. Rationalise in other non- RCS airports

  1. Maintenance, Repair and Overhaul (MRO)

Ø      Develop India as an MRO hub in Asia.

Ø        Service Tax on output services of MRO will be zero-rated.

Ø        Aircraft maintenance tools and tool-kits will be exempt from Customs Duty.

Ø       Tax- free storage period of spare parts imported by MRO’s extended for 3  years.

Ø      To allow import of unserviceable parts by MROs by providing advance exchange.

Ø      Procedures for custom clearance to be simplified.

Ø      Clearance of the parts  by allowing for self -attestation by the MROs.

Ø      Foreign aircraft brought to India for MRO work will be allowed to stay for 6 months. Beyond this, with  DGCA permission .

Ø      Persuade State Govt to make VAT zero-rated

Ø      Airport royalty and additional levies to be rationalised in consultations with Airport Operators.

 

 

  1. Fiscal incentives

Ø      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.

  1. Rule 5/20

 

Ø      The government invites suggestions on three possible policy options:

                                         5/20 Rule may continue as it is,

                                                            OR

                          5/20 Rule will be abolished with immediate effect,

                                                           OR

ü        Domestic airlines will need to accumulate 300 DFC before commencing flights to SAARC countries and countries beyond 5000 km radius from New Delhi.

ü      They will need to accumulate 600 DFC before starting flights to the remaining parts of the world.

ü      The DFC earned will be equal to the Available Seat Kilometer (ASKM) deployed by the airline on domestic routes divided by 1 crore.

ü      All domestic airlines will required to earn at least 300 DFC per annum in order to maintain their international flying rights.

ü      Free to re-deploy their excess capacity (above 300) between domestic and foreign operations and also trade them.

  1. Bilateral Traffic Rights

Ø      Liberalise regime of bilateral rights.

Ø      Open sky on reciprocal basis with SAARC countries and countries beyond a 5000 km radius from New Delhi.

Ø      For countries within 5,000 kms where domestic airlines have not fully utilised their quota, additional seats above existing rights would be allotted by bidding for a three year period, proceeds of which will go to RCF.

Ø      Open skies for countries within 5000 kms will be considered with effect from 1 April 2020.

Ø      Increase in FDI in airlines from 49% to above 50% if the government decides to go in for open skies

  1. Code Share

 

Ø      Indian carriers will be free to enter into code-share agreements with foreign carriers for any destination within India on a reciprocal basis.

Ø      International code share between Indian and foreign carriers will be completely liberalised, subject to ASA between India and the country.

Ø      No prior approvals from MoCA will be required. Indian carriers need to simply inform MoCA 30 days prior to starting the code-share flights.

Ø      A review will be carried out after 5 years to consider the requirement of further liberalisation in code-share agreements and to drop the requirement of reciprocity.

  1. Route Dispersal Guidelines (RDG)

 

Ø      Category I will be rationalized by adding more routes based on transparent criteria, i.e., flying distance of more than 700 km, average seat factor of 70% and annual traffic of 5 lakh passengers.

Ø      The percentage of Cat. I traffic to be deployed on Cat. II, IIA and III will remain the same.

Ø      Revised categorization will apply 12 months after date of notification.

Ø      Review of routes under different categories will be done by MoCA once every 5 years.

Ø      Airlines may change routes in Cat II and III with a 30 days prior intimation to MoCA and DGCA.

Ø      Prior permission of MoCA required for withdrawal of existing operations to and within N.E region, Islands and Ladakh.

 

  1. Airports

Ø     MoCA will continue to encourage development of airports by the State Government or the private sector or in PPP mode.

Ø     MoCA will endeavour to provide regulatory certainty.

Ø     The capital expenditure of all future greenfield and brownfield airport projects promoted by AAI in PPP mode will be monitored closely by AAI.

Ø     Tariff at all future airports will be calculated on a ‘hybrid till’ basis.

Ø     MoCA will explore ways to unlock the potential land use by liberalising the end-use restrictions for existing (excluding PPP) and future airports of AAI and future airport projects under PPP.

 

  1. Airport Authority of India

Ø     AAI will continue to modernize airports and upgrade quality of services.

Ø     AAI will maintain an ASQ rating of 4.5 or more across all airports with throughput above 1.5 mppa and ASQ rating of 4.0 or more for the rest.

Ø     AAI may be suitably compensated in case a new greenfield airport is approved in future within a 150 km radius of an existing operational AAI airport (not applicable to civil enclaves). Alternatively, give option to have the right of first refusal or equity participation upto 49% in the new airport at its discretion.

Ø     AAI will continue to provide necessary financial support and facilitate technological upgradation of ANS to keep pace with the global best practices.

  1. Ground handling

 

Ø      There will be at least three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at an airport.

Ø      Domestic airlines and charter operators will be free to carry out self-handling themselves or through their subsidiaries or to outsource the same to other airlines or to a GHA.

Ø      Ground handling staff will have to be on the rolls of the airlines or their subsidiaries or the GHA. Domestic airlines (including subsidiaries) and GHAs will be permitted to take contract employees on their rolls.  Such employment contracts will be for a period of at least one year.

  1. Aviation Security

 

Ø      MoCA will develop ‘service delivery modules’ for aviation security, Immigration, Customs, quarantine officers etc in consultations with respective Ministries/Departments.

Ø      The Government will encourage use of private security agencies at airports for non- core security functions which will be decided in consultation with MHA.

Ø      Private security agencies will comprise retired personnel from military and para-military forces. BCAS will provide scope of work and norms.

Ø      Security auditors of  BCAS will carry out regular and surprise audits with the power to penalize and blacklist the errant agencies

  1. Helicopters

Ø     Government will support growth of helicopters for remote area connectivity, intra-city movement, tourism, law enforcement, disaster relief, medical evacuation, etc.

Ø     Separate regulations for helicopters will be notified by DGCA by 1 April 2016, after due stakeholder consultation.

Ø     The government will facilitate the development of four heli-hubs initially.

Ø     Helicopters will be free to fly from point to point without prior ATC clearance in airspace below 5000 feet and outside ATC control areas and areas other than prohibited and restricted ones, after filing the flight plan with the nearest ATC office.

  1. Cargo

Ø      The Air Cargo Logistics Promotion Board (ACLPB) will submit a detailed action plan with the objective of reducing dwell time of air cargo from ‘aircraft to truck’ which should also ensure shift to paperless processing.

Ø      ACLPB will develop ‘service delivery modules’ for all elements of air cargo value chain.

Ø      Advanced Cargo Information system to be implemented by 1 April 2016.

Ø      ACLPB to propose specific action steps to promote transhipment.

Ø      ACLPB will work with AERA and AAI to ensure are competitive vis-à-vis competing aviation hubs.

Ø      ACLPB will lay down norms for time slots and parking for freighter aircraft.

Ø      Optimum use of 24×7 Customs operations to spread out cargo handling.

Ø      AAI to provide space on10 year lease for express cargo and freighters.

  1. Aeronautical ‘Make in India’

 

Ø      MoCA will be nodal agency for developing commercial aero-related manufacturing and its eco-system in India.

Ø      MoCA and MoD will work together to ensure that commercial aero-manufacturing is covered under defence offsets requirements.

Ø       Area where aero-manufacturing takes place will be notified as SEZ.

 

  1. Other policy reforms

 

  • Greater de-regulation, transparency and e-governance
  • Aviation education and skill building
  • Promotion of sustainable aviation practices

Streamlining Charter Operations

The Ministers and the Secretary also addressed the media on the occasion and answered their  queries. The Draft Policy has been uploaded  on the website of the Ministry and details are  available athttp://www.civilaviation.gov.in/.  The Ministry has sought feedback from stakeholders, which can be sent to the following email-id:  feedback-avpolicy@gov.in

-Ministry of Civil Aviation, 30-October, 2015