Making flying affordable for masses — National Civil Aviation Policy 2016

Regional air connectivity and making flying affordable for the masses is the highlight of the National Civil Aviation Policy 2016 released by Minister of Civil Aviation P. Ashok Gajapathi Raju in the Capital. Touted as the first integrated civil aviation policy in the country since independence it is claimed at establishing an integrated eco-system which will lead to significant growth of the civil aviation sector to promote tourism, employment and balanced regional growth, enhance regional connectivity through fiscal support and infrastructure development and enhance ease of doing business through de-regulation, simplified procedures and e-governance.

The policy covers 22 areas of the civil aviation sector with salient features like Regional Connectivity Scheme (RCS) which will come into effect in the second quarter of 2016-17. It envisages airfare of about Rs.2500 per passenger for a one hour flight.

 This will be undertaken through revival of airstrips/airports as no-frills airports at an indicative cost of Rs.50 to Rs.100 crore. Such airports will be selected on the basis of demand, in consultation with State governments and airlines. It includes Viability Gap Funding (VGF) to airline operators.

The RCS will only apply in those states which reduce VAT on Air Turbine Fuel (ATF) to 1% or less, provide other support services and 20% of VGF.

For facilitation of Regional Connectivity Scheme, concessions will have to be given by the stakeholders like no airport charges, reduced Service tax on tickets (on 10% of the taxable value) for 1 year initially, reduced Excise duty at 2% on ATF picked at RCS airports. The concerned State government will provide police and fire services free of cost and power, water and other utilities at concessional rates.

It is proposed to Create Regional Connectivity fund for VGF through a small levy per departure on all domestic flights other than Cat II/ Cat IIA routes, RCS routes and small aircraft below 80 seats at a rate as decided by the Ministry from time to time.

The proposed VGF will be shared between Ministry of Civil Aviation and State Governments in the ratio of 80:20; for the North Eastern States, the ratio is 90:10.

The Route Dispersal Guidelines (RDG) foresee the review of routes to be done by the Ministry of Civil Aviation once every 5 years.

 All airlines can now commence international operations provided that they deploy 20 aircraft or 20% of total capacity (in term of average number of seats on all departures put together), whichever is higher for domestic operations.

The Government of India will enter into ‘Open Sky’ ASA on a reciprocal basis with SAARC countries and countries located beyond 5000 km from Delhi. For countries within 5000 km radius, where the Indian carriers have not utilised 80% of their capacity entitlements but foreign carriers /countries have utilised their bilateral rights, a method will be recommended by a Committee headed by Cabinet Secretary for the allotment of additional capacity entitlements.  

The Ground Handling Policy/ Instructions/Regulations will be replaced by a new framework under which the airport operator will ensure that there will be three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at all major airports as defined in AERA Act.   At non-major airports, the airport operator to decide on the number of ground handling agencies, based on the traffic output, airside and terminal building capacity.

All domestic scheduled airline operators including helicopter operators will be free to carry out self-handling at all airports through their regular employees.   Hiring of employees through manpower supplier or contract   workers will not be permitted for security reasons

Development of airports to be done by the Airports Authority of India (AAI), State  governments, the private sector or in PPP mode.    Future tariffs at all airports will be calculated on a ‘hybrid till’ basis, unless specified otherwise in concession agreements.  The AAI is to be compensated in case a new greenfield airport is approved in future within a 150 km radius of an existing unsaturated operational AAI airport.

The Ministry of Civil Aviation will develop ‘service delivery modules’ for aviation security, Immigration, Customs, quarantine officers in consultations with respective ministries/departments.

 Encourage use of private security agencies at airports for non- core security functions to be decided in consultation with Ministry of Home Affairs.

Separate regulations for helicopters will be notified by Director General of Civil Aviation.            

Helicopters will be free to fly from point to point without prior ATC clearance in airspace below 5000 feet and areas other than controlled or prohibited or restricted airspace.

 Airport charges for helicopter operations will be suitably rationalized.  The existing policy of allowing Inclusive tour package charters will be further reviewed to include more categories of passenger charter flights recognised globally.

The Maintenance, Repair and Overhaul (MRO) business of Indian carriers is around Rs 5000 crore, 90% of which is currently spent outside India. In the budget for 2016-17, customs duty has been rationalised and the procedure for clearance of goods simplified. Further incentives have been proposed in the policy to give a push to the sector.

The Ministry of Civil Aviation will persuade State governments to make VAT zero- rated on MRO activities.

Provision for adequate land for MRO service providers will be made in all future airport/heliport projects where potential for such MRO services exists.   Airport royalty and additional charges will not be levied on MRO service providers for a period of five years from the date of approval of the policy.

Estimated direct additional employment requirement of the civil aviation sector by 2025 is about 3.3 lakh. All training in non-licensed category will conform to National Skill Qualification Framework standards.  The Ministry of Civil Aviation will provide full support to the Aviation Sector Skill Council and other similar organisations/agencies for imparting skills for the growing aviation industry. 

There are nearly 8000 pilots holding Commercial Pilot Licence (CPL), but who have not found any regular employment. The Ministry will develop a scheme with budgetary support for type-rating of Pilots.