To enable the common man to fly at least once every year, the Ministry for Civil Aviation (MoCA) today unveiled the draft civil aviation policy proposing a two per cent levy on air fares on trunk routes to subsidise air travel to under-served and un-served destinations.
The ministry additionally proposed a replacement to the 5/20 rule (which requires an Indian airline to have a fleet of 20 aircraft and operational experience of five years to commence international operations) with a reworked domestic flying credits (DFC) formula, but it also left open options to either retain or abolish the regulation altogether. A final decision on the issue will be taken after public consultations and will subsequently be notified when the final civil aviation policy is cleared by the Cabinet.
In an effort to boost air connectivity, the civil aviation ministry is looking at an upfront subsidy to airlines so that the cost of air travel on certain routes would be brought within the reach of the common man at about Rs 2,500 per flying hour under the Regional Connectivity Scheme (RCS). The subsidy would be collected in a Regional Connectivity Fund (RCF) and generated by levying a two per cent charge on air tickets in high-volume traffic making sectors.
No-frills airports at over 401 unused air strips across the country would be developed at estimated cost of around Rs 50 crore each for supporting flights to these unconnected destinations. The push for air travel proposed under the regional connectivity scheme is expected to boost domestic air traffic to 300 million by 2022 from 70 million now. Domestic air ticketing is expected to go up further to 500 million by 2027.
Among other things, the draft policy proposes to rationalise jet fuel cost, promote air cargo, maintenance, repair and operations (MRO) through fiscal and regulatory concessions and frame separate regulations for promoting helicopter operations.
The ministry has considered a slew of fiscal incentives for stakeholders in the draft policy across the country’s fledging aviation industry to reduce operating costs for airlines and rationalise air fares.
The ministry is looking at tax waivers to incentivise stakeholders across the value chain for a specified period of time. The growth in the sector would be evaluated thereafter and the tax breaks realigned.
Regulations for bilateral agreements between India and other countries are proposed to be changed with an option to auction seats. The ministry is considering linking the opening up of Indian skies with liberalisation of FDI in Indian airlines. ‘We will consider extending FDI in Indian airlines beyond 49 per cent. This will be linked to India’s open skies arrangement with other countries. The current system of traffic rights is based on
bilateral arrangements but once there are open skies it does not make much sense to distinguish between domestic and foreign carriers’, said a senior ministry official.