TAKE-OFF FOR NA­TIONAL CIVIL AVI­A­TION POL­ICY

As the In­dian civil avi­a­tion in­dus­try is ex­pected to be­come the third largest by 2022, it would be nec­es­sary for the gov­ern­ment to have the right vi­sion, plan­ning and ex­e­cu­tion

SP's Airbuz - - Front Page - BY B. K. PANDEY

THE LONG-AWAITED NA­TIONAL CIVIL Avi­a­tion Pol­icy (NCAP) was fi­nally cleared by the gov­ern­ment on June 15, 2016. This is the first time since In­de­pen­dence that an in­te­grated civil avi­a­tion pol­icy has been is­sued. Quite un­der­stand­ably, this has gen­er­ated con­sid­er­able ex­cite­ment not only in the In­dian civil avi­a­tion in­dus­try, but amongst the trav­el­ling pub­lic as well. The air­line in­dus­try has rea­sons to be en­thralled as the new pol­icy doc­u­ment con­tains a va­ri­ety of mea­sures to de­velop an ecosys­tem that will pro­vide the re­quired im­pe­tus for the bal­anced growth of the coun­try’s un­der­de­vel­oped and un­der­ex­ploited civil avi­a­tion in­dus­try.

On com­ing to power in May 2014, the NDA Gov­ern­ment had un­veiled the draft NCAP in Novem­ber 2014. Af­ter ini­tial re­vi­sion, the draft pol­icy doc­u­ment was cir­cu­lated amongst the stake­hold­ers for their com­ments, views and sug­ges­tions. There were also sev­eral rounds of de­lib­er­a­tions with them. The Min­istry of Civil Avi­a­tion (MoCA) re­ceived as many as 450 re­sponses from the stake­hold­ers who would now be anx­iously look­ing for the take­aways from the new dis­pen­sa­tion. ABROGATION OF THE 5/20 RULE. Ini­tially, the pol­icy was ex­pected to be fi­nalised by March 31, 2016, as some of the pro­pos­als were to be in ef­fect from the com­mence­ment of the cur­rent fi­nan­cial year. How­ever, res­o­lu­tion of the dif­fer­ences among stake­hold­ers es­pe­cially on the highly con­tro­ver­sial 5/20 rule, proved to be a sen­si­tive and a tricky is­sue to re­solve. This led to the de­lay in the gov­ern­ment say­ing the fi­nal word. Dis­posal of the 5/20 rule was the sin­gle is­sue that gen­er­ated con­sid­er­able de­bate and some ac­ri­mony in the process of evo­lu­tion of the pol­icy. As ex­pected, the In­dian air­line in­dus­try was clearly di­vided on the is­sue with legacy car­ri­ers op­pos­ing any changes to the 5/20 rule while the newly es­tab­lished air­lines vo­cif­er­ously in­sist­ing on its abrogation. It will be some time be­fore the de­tails of the newly ap­proved pol­icy doc­u­ment is made avail­able in the pub­lic do­main and its im­pact is ac­cu­rately eval­u­ated by all the stake­hold­ers.

Just to re­cap, the highly con­tro­ver­sial 12-year-old 5/20 rule en­forced by the UPA Gov­ern­ment that re­quired new car­ri­ers en­ter­ing the mar­ket to meet with two pre­con­di­tions be­fore they could be per­mit­ted to op­er­ate flights in the in­ter­na­tional seg­ment. Ap­pli­ca­tion by a newly es­tab­lished do­mes­tic car­rier for a li­cence to fly on in­ter­na­tional routes would only be con­sid­ered if the air­line had a min­i­mum of 20 air­lin­ers on its fleet and had com­pleted five years of op­er­a­tions in the do­mes­tic sec­tor. With the ar­rival on the scene of heavy­weights such as AirAsia In­dia and Vis­tara, the two joint ven­ture air­line set up by the house of Tatas with AirAsia Ber­had and Sin­ga­pore Air­lines that had an im­mac­u­late global rep­u­ta­tion, the 5/20 rule sud­denly got em­broiled in an un­gainly con­tro­versy. How­ever, the 5/20 rule has now been re­placed by what is be­ing re­ferred to as the 0/20 rule. This im­plies that a new en­trant will be re­quired to have a fleet of a min­i­mum of 20 air­craft be­fore it can ap­ply for li­cence to op­er­ate on in­ter­na­tional routes. The pre­con­di­tion of ex­pe­ri­ence of five years of op­er­a­tion in the do­mes­tic sec­tor has been done away with. At present, Vis­tara has 11 air­craft in its in­ven­tory and AirAsia In­dia is oper­at­ing with six. Both these car­ri­ers will be in­spired to quickly build up their fleet strength to 20 to ben­e­fit from the abrogation of the 5/20 rule. This how­ever, may take a few years.

Thank­fully, the sug­ges­tion by the MoCA to in­tro­duce a sys­tem of ac­cu­mu­lat­ing a cer­tain num­ber of do­mes­tic fly­ing cred­its (DFC) points be­fore be­com­ing el­i­gi­ble to op­er­ate on in­ter­na­tional routes, has not been adopted. If the sys­tem of ac­cu­mu­lat­ing DFC points had in­deed been adopted, it would have in­volved con­sid­er­able amount of num­ber crunch­ing and, as ob­served by ex­perts, it would have been a case of “the cure be­ing worse than the dis­ease”! Mer­ci­fully, bet­ter sense has pre­vailed. FIL­LIP TO RE­GIONAL AVI­A­TION. The other area of fo­cus of the NCAP is the Re­gional Con­nec­tiv­ity Scheme to strengthen re­gional avi­a­tion by mak­ing fly­ing at­trac­tive and fi­nan­cially af­ford­able for the mid­dle class. Largely ne­glected so far, it is this seg­ment of the in­dus­try that is the prover­bial low-hang­ing fruit and hence it is only ap­pro­pri­ate that the NCAP has set the stage for the In­dian air­line in­dus­try to ex­ploit the im­mense growth po­ten­tial of this sec­tor. While the new pol­icy has lu­cra­tive fi­nan­cial in­cen­tives to mo­ti­vate the do­mes­tic car­ri­ers to op­er­ate on re­gional routes and avail of the ben­e­fits pro­vided for by the gov­ern­ment such as waiver of air­port charges and re­duced level of tax­a­tion on avi­a­tion fuel, the NCAP also has a slew of mea­sures to in­duce pas­sen­gers to ex­ploit the con­ve­nience of re­gional con­nec­tiv­ity. Pas­sen­gers will ben­e­fit from the pro­vi­sion in the pol­icy to cap air­fare at ` 2,500 for a flight of a du­ra­tion of an hour and ` 1,200 for a 30-minute flight on re­gional routes. As per the scheme, the Cen­tral Gov­ern­ment will pro­vide funds to make up for up to 80 per cent of the losses suf­fered by the air­lines oper­at­ing on re­gional routes. The state gov­ern­ments would have to bear the re­main­ing 20 per cent. To gen­er­ate re­sources to com­pen­sate the do­mes­tic car­ri­ers oper­at­ing on loss-mak­ing re­gional routes, the pol­icy has a pro­vi­sion for Vi­a­bil­ity Gap Fund­ing through the cre­ation of cre­at­ing a re­gional con­nec­tiv­ity fund through a levy of a cess of two per cent on non-re­gional do­mes­tic routes and in­ter­na­tional flights. A SLEW OF INI­TIA­TIVES. Apart from the two ma­jor is­sues dis­cussed above, the NCAP in­cor­po­rates ini­tia­tives to re­vive in con­sul­ta­tion with the state gov­ern­ments, the large num­ber of airstrips in the coun­try that are ly­ing in dis­use, build new low-cost, no-frills air­ports through then pub­lic-pri­vate part­ner­ship model even within 150 km of the ex­ist­ing ones, in­sti­tute ded­i­cated reg­u­la­tions for ro­tary-wing air­craft, fa­cil­i­tate the growth of the main­te­nance, re­pair and over­haul in­dus­try through lower taxes or other levies, ra­tio­nal­i­sa­tion of pol­icy re­lated to ground han­dling at air­ports, ra­tio­nal­i­sa­tion of route dis­per­sal guide­lines and mea­sures to boost skill de­vel­op­ment to meet with fu­ture de­mands of the avi­a­tion sec­tor. A num­ber of mea­sures have also been in­cor­po­rated to en­hance con­ve­nience of the trav­el­ling pub­lic through regulation of charges and fees im­posed by the do­mes­tic air­lines on pas­sen­gers as also to en­sure that ser­vices of­fered are fair and con­sumer-friendly. There are spe­cial pro­vi­sions for the dis­abled. PER­SPEC­TIVE OF THE GOV­ERN­MENT. As per Ashok Ga­jap­athi Raju, the Min­is­ter of Civil Avi­a­tion, the NCAP ap­proved by the gov­ern­ment on June 15, 2016, will be a ‘ game changer.’ He went on to say that as the In­dian civil avi­a­tion in­dus­try was ex­pected to be­come the third largest in the world by 2022, it would be nec­es­sary for the gov­ern­ment to have the right in­ten­tions, vi­sion, plan­ning and proper ex­e­cu­tion. The Min­is­ter stated that the ob­jec­tives of the Na­tional Civil Avi­a­tion Pol­icy are to “make fly­ing af­ford­able, safe, con­ve­nient”, pro­mote bal­anced re­gional growth, tourism, in­fra­struc­ture and, most im­por­tant of all, to help im­prove the ease of do­ing busi­ness. The Min­is­ter also ob­served that the In­dian civil avi­a­tion sec­tor was most un­der-pen­e­trated. Re­fer­ring to data, the Min­is­ter stated that while around 35 crore in­di­vid­u­als con­sti­tute the mid­dle class in In­dia that have the fi­nan­cial ca­pa­bil­ity to avail of air travel, the to­tal num­ber of per­sons trav­el­ling by air in the course of a year stands at a measly eight crore. The av­er­age In­dian thus flies only once in five years. There is ob­vi­ously im­mense scope for growth.

With the im­ple­men­ta­tion of the NCAP, there is a good chance that the In­dian civil avi­a­tion in­dus­try and the air trav­eller could look for­ward to good times ahead!

WE HAVE PUT OUR HEART AND SOUL INTO DRAFT­ING THE NA­TIONAL CIVIL AVI­A­TION POL­ICY. WE WILL MAKE SURE IT IS IM­PLE­MENTED PROP­ERLY. (PART OF THE AN­SWER GIVEN TO SP’S). —P. ASHOK GA­JAP­ATHI RAJU, MIN­IS­TER OF CIVIL AVI­A­TION WE IN­VITE IN­DUS­TRY TO GIVE US THE IN­PUTS AS TO HOW TO RE­DUCE THE COST OF LEAS­ING AS THIS WILL EN­ABLE REAL GROWTH IN RE­GIONAL CON­NEC­TIV­ITY. — RA­JIV NAYAN CHOUBEY, SEC­RE­TARY OF CIVIL AVI­A­TION

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