DRAFT CIVIL AVIATION POLICY - HOPE IT TAKES OFF....

By Ruma Duey

The Civil Aviation Ministry released the new Draft Policy today. Needless to say, the policy reads well, making every Indian feel so proud. It actually mesmerizes one into thinking that the Govt is thinking so much good for us, even if it comes at the cost of the Govt and companies. The new Draft policy is exactly what we all want in our country but the moot question is  whether these Utopian policies are workable, will they ever be implemented? Somehow, the disenchantment begins right from the Swacha Bharat campaign and the best step of all – building toilets. Today, Swachh Bharat is all but forgotten and toilets? Well, many toilets in that euphoric moment have been built but over 90% of them have no water. In the past year, the Govt has built more than 5.8 million toilets — up from 4.9 million the previous year. But reports show that many of them have gone unused or that they are being used to store grain or clothes or to tether goats. And therein lay the fear – the policies and thoughts coming are all very good, intentions are great but somehow, doubts persist that these never become a reality.

Take a look at what the New Civil Aviation Draft Policy intends to do:

• To take flying to the masses by making it affordable. This will be possible if the air-fare, especially on the regional routes is brought down to an affordable level. The reduction in costs will require concessions by the stakeholders, primarily the Central and State Governments and Airports.

• 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.

• The services rendered by DGCA will be fully automated by 1 April 2016 by implementing eGCA project on priority.

• Regional Connectivity Scheme (RCS) will come in to effect from 1 April 2016.

• It will target an all-inclusive airfare not exceeding Rs 2500 per passenger, indexed to inflation for a one-hour flight on RCS routes.

• Currently around 75 out of 476 airstrips/airports have scheduled operations. Revival of air strips, depending on demand, as No-Frills Airports will be done at a cost not exceeding Rs 50 crore, mostly through AAI.

• RCS will be made operational only in those States which reduce VAT on ATF at these airports to 1% or less.

• State Government will provide free land and multi-modal hinterland connectivity (road, rail, metro, waterways, etc) as required.

• ATF drawn by SCA’s from the Regional Connectivity Scheme (RCS) airports shall be exempt from excise duty.

• The viability gap funding will be shared by the Centre and the State in the ratio of 80:20.

• On the 5:20 rule – where airlines need to fly domestic routes for 5 years and have a fleet of 20 aircraft.  It has invited suggestions whether this rule remains as it, or is abolished or if they need to bring in a system of domestic flying credits (DFC).

• To help airline companies keep costs down, it has proposed tax concessions – it has proposed removal of custom duty on aviation turbine fuel drawn from RCS and waiver of service tax on maintenance, repair and overhaul (MRO) expenses incurred by airline companies.
• Govt will enter into an ‘Open sky’ ASA on a reciprocal basis with SAARC countries and countries with territory located entirely beyond a 5000 km radius from New Delhi.

• Increase in FDI in airlines from 49% to above 50% will be examined if the Govt decides to go in for open skies for countries lying within 5000 km radius.

• On code-sharing  - Indian carriers will be free to enter into code-share agreements with foreign carriers for any destination within India on a reciprocal basis.  International is also completely liberalized, subject to the ASA between India and the relevant country wherein no prior approvals from MoCA will be required. Indian carriers simply need to inform MoCA 30 days prior to starting the code-share flights.

• The policy has also tried to take initiatives to help open up more new airports across India and these are to be developed in PPP mode.

As we said earlier, it’s all good. Intentions are indeed splendid and very comprehensive, exactly what we all need. But making it work in this machinery, where there exists years of red tape, corruption and now increasing bigotry, it could take a long while. We do have a crisis in terms of infrastructure and that could take, if all things work, around 5-6 years to clear. Thus any improvement we are looking could be after clearance of that bottleneck. Code-sharing could happen much sooner than later and if tax concessions are indeed provided to airliners, only then can cost of flying come down. So the moot question – do we spend the weekend happy in thinking that the intent is good or do we think how much of all this will see the light of the day? We Indians are great when it comes to planning but implementing…..

For a complete read of the new draft policy: http://www.civilaviation.gov.in/sites/default/files/Revised_Draft_NCAP%202015_30Oct2015_1.pdf