Warts apart, a credible policy

NCAP tries to address long-term issues even as it is focused on speedy implementation

THE National Civil Aviation Policy 2016 aims to provide an eco-system for the harmonised growth of various aviation sub-sectors. The Policy is credible in that it is wide and addresses as many as 22 policy areas while still preserving and maintaining an integrated view of the sector in terms of the vision, mission and objectives outlined in it. Also, it is noteworthy that the policy frameworks outlined for each of the sub-sectors have consistent reference to the identified objectives in terms of establishing an integrated eco-system; enhancing ease of doing business through deregulation, simplified procedures and e-governance; ensuring safety, security and sustainability of the aviation sector, etc.

Given the pendency of some of these issues and the associated debate, there had to be trade-offs. What was important was that adequate debate preceded the policy pronouncement and the trade-offs were identified up-front, analysed, and informed choices made through the stakeholder consultation process. The Ministry of Civil Aviation undertook extensive consultations, providing stakeholders the opportunity of sharing their perspectives and viewpoints.

So is this a good policy document? A defining feature of a good policy is that it should be amenable to speedy and effective implementation. NCAP’s focus on making flying affordable for the masses and the release of associated implementation details for stakeholder consultation on 1st July is a good example of the policy trying to address longerterm priorities— looking beyond minor tweaks, while remaining focusedonspeedy implementation.

However, an area that the Policy has touched upon but not addressed fully in terms of associated inter-linkages is of tariff determination for airports. The Policy mentions that the Ministry will endeavour to provide regulatory certainty with a framework and “to ensure uniformity and level playing field across various operators, future tariffs at all airports will be calculated on a ‘hybrid till’ (30%) basis unless otherwise specified for any project being bid out in future”. The till issue, however, is a part of the entire tariff regulatory framework and given the conclusions reached by Airports Economic Regulatory Authority of India (AERA) in the past after evaluation/consultations, operationalising this policy direction may impact AERA’s view on another critical aspect of economic regulation— rate of return. In any case, to address regulatory uncertainty in the sector, a closure would be required to the large number of cases pending review & decision by the Appellate Tribunal and courts.

Also, a key implementation issue in realising the Ministry’s vision of growth would be the roles various government entities are able to play and the speed with which they respond to the requirements of the sector. For instance, the Policy states that the ministry will continue to encourage development of airports by state governments or the private sector or by forming Special Purpose Vehicles with the Airports Authority of India/Public Sector Undertakings. With the Navi Mumbai Airport project being a case in point, we do not have a track record of developing airport projects speedily. Going forward, with the projected growth, Chennai and other airports would face constraints as well. In this context, it would be important to support state governments/other entities by having a Long Term Airport Infrastructure Perspective Plan to facilitate and ensure that key infrastructure gets developed in time.

Finally, flexibility would be required in implementing various policy initiatives— in response to evolving exogenous factors. Appropriate capacity at key implementing agencies/regulatory institutions in the sector would be critical in this regard.