10 key takeaways from the new draft Civil Aviation Policy

The proposed new civil aviation policy may finally take off — after being presented for the first time in November 2014. The Ministry of Civil Aviation has cleared the aviation policy for final Cabinet approval after months of debates and inter-ministerial consultations. 

The draft policy was revised in October 2015. Public comments were thereafter invited. According to the revised draft, the government intends to create an ecosystem that will enable 30 crore domestic ticketing by 2022 and 50 crore by 2027. Similarly, it aims to increase international ticketing to 20 crore by 2027. The other goal of the government is to ensure safety and increase regional connectivity. 

1. Introduction of new regional flights, allowing new carriers to fly abroad — with partial or full abolition of the 5/20 rule. Under the 5/20 rule, carriers need to have atleast five years of operational experience and a fleet of minimum 20 aircrafts to be allowed to fly abroad.

2. The Centre has proposed a regional connectivity scheme (RCS) by offering concessions to the airlines, incentivising them to fly on regional routes. The government has also proposed a fare cap at Rs 2500 for an hour’s flight on regional routes. As per the scheme, the Centre will fund 80% of the airline's losses and the rest will come from the states.

3. The draft proposes a regional connectivity fund to be set up by levying a 2% cess on domestic and international tickets.

4. The Directorate General of Civil Aviation (DGCA) will try to create a single-window system for all aviation-related transactions, queries and complaints. 

5. DGCA also intends to ensure real-time safety tracking and prompt incident reporting. 

6. As per the draft, Indian carriers will be free to enter into code-share agreements with foreign carriers for any destination within India on a reciprocal basis. International code share between Indian and foreign carriers will also be completely liberalized, subject to Air Service Agreements (ASA), which India has with 109 countries, between India and the relevant country. 

7. The government plans to liberalize the regime of bilateral rights, leading to greater ease of doing business and wider choice to passengers.

8. 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. Requirement of 12% project IRR will be relaxed for revival of these airports, wherever the airport is under AAI control

9. 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. 

10.     The government will promote the growth of Scheduled Commuter Airlines (SCA). The eligibility criteria for SCA in terms of paid-up capital will be kept at Rs 2 crore. SCA shall have aircraft with capacity of 100 seats or less. There will be no restrictions on number of aircraft for an SCA, but it would need to operate a minimum number of movements per week to RCS destinations as prescribed. SCAs will also be able to enter into code shares with other airlines.

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