National Civil Aviation Policy: Civil Services Mentor Magazine: July - 2016

National Civil Aviation Policy

India has the potential to be among the global top three nations in terms of domestic and international passenger traffic. It has an ideal geographical location between the eastern and western hemisphere, a strong middle class of about 30 crore Indians and a rapidly growing economy. Despite these advantages, the Indian aviation sector has not achieved the position it should have and at present it is ranked 10th in the world in terms of number of passengers.The Government has proposed to promote the growth of India naviation sector in a significant manner as the development of this sector has a multiplier effect on the economy. The Government has proposed to take flying to the masses by making it affordable and convenient. For example, if every Indian in middle class income bracket takes just one flight in a year, it would result in a sale of 35 crore tickets, a big jump from 7 crore domestic tickets sold in 2014-15.

NCAP 2016 – Vision, mission and objectives

Vision: To create an eco-system to make flying affordable for the masses and to enable 30 crore domestic ticketing by 2022 and 50 crore by 2027, and international ticketing to increase to 20 crore by 2027. Similarly, cargo volumes should increase to 10 million tonnes by 2027.

Mission: Provide safe, secure, affordable and sustainable air travel for passengers and air transportation of cargo with access to various parts of India and the world.

Objectives

i) Establish an integrated eco-system which will lead to significant growth of civil aviation sector, which in turn would promote tourism, increase employment and lead to a balanced regional growth.
ii) Ensure safety, security and sustainability of aviation sector through the use of technology and effective monitoring.
iii) Enhance regional connectivity through fiscal support and infrastructure development.
iv) Enhance ease of doing business through deregulation, simplified procedures and e-governance.
v) Promote the entire aviation sector chain in a harmonised manner covering cargo, MRO, general aviation, aerospace manufacturing and skill development.

NCAP 2016 covers the following policy areas:

a) Regional connectivity
b) Safety
c) Air Transport Operations
d) Route Dispersal Guidelines
e) 5/20 Requirement for International Operations
f) Bilateral traffic rights
g) Code-share agreements
h) Fiscal Support
i) Airports developed by State Govt, Private sector or in PPP mode
j) Airports Authority of India
k) Air Navigation Services
l) Aviation security, Immigration and Customs
m) Helicopters
n) Charters
o) Maintenance, Repair and Overhaul
p) Ground handling
q) Air-cargo
r) Aeronautical ‘ Make in India’

The policy is very comprehensive, covering 22 areas of the Civil Aviation sector. Its salient features are as follows :

Regional Connectivity Scheme

• This scheme will come into effect in the second quarter of 2016-17
• Airfare of about Rs2500 per passenger for a one-hour flight This will be implemented by way of:
• Revival of airstrips/airports as No-Frills Airports at an indicative cost of Rs.50 crore to Rs100 crore
• Demand driven selection of Airports/airstrips for revival in consultation with State Govts and airlines
• Viability Gap Funding (VGF) toairlineoperators
• RCS only in those states which reduce VAT on ATF to 1% or less, provide other support services and 20% of VGF.
• Concessions by Stakeholders
• There will be 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
• State government will provide police and fire services free of cost. Power, water and other utilities at concessional rates

Policy also aims to create a 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 bythe Ministry from time to time. VGF to be shared between MoCA and State Governments in the ratio of 80:20. For the North Eastern States, the ratio is 90:10.

National civil aviation policy also comes up with Route Dispersal Guidelines (RDG) for better mangement of route and traffic. Important route dispersal guidelines are given below:

• Category I to be rationalized based on a transparent criteria, i.e., flying distance of more than 700km, average seat factor of 70% and above and annual traffic of 5 lakh passengers
• The percentage of Cat.I traffic to be deployed on Cat.II, and IIA will remain the same while for CATIII it will be 35%. Routes to Uttarakhand and Himachal Pradesh included in Category II
• Revised categorization to apply from winter schedule of 2017
• There view of routes will be done by MoCA once every 5 years
• Withdrawal or revision of domestic operations to and within North East Region etc, subject to full compliance of RDG, can be done under prior intimation to MoCA at least three months before withdrawal or revision of the service

In October 2004, the Union Cabinet stipulated that for Indian carriers to fly abroad, they must fly on domestic routes for 5 years and have a fleet of 20 aircraft. Keeping in view the developments since its implementation, various options were considered. It was felt that this stipulation, which is unique to India, needs to be replaced by a scheme which provides a completely level playing field and allows airlines, both new and old, to commence international operations provided they continue to meet some obligation for domestic operation. Accordingly, after extensive consultations with stakeholders the following requirement is stipulated:

• Replaced with a scheme which provides a level playing field
• 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 plans to liberalize the regime of bilateral rights leading to greater ease of doing business and wider choice to passengers. The government will enter into an ‘Open sky’ ASA on a reciprocal basis with SAARC countries and countries with territory located entirely beyond a 5000 km radius from New Delhi. Unlimited flights above the existing bilateral rights will be allowed directly to and from major international airports within the country as notified by MoCA from time to time. However, the points of call at other airports under the existing ASA will continue to be honoured till the same are renegotiated. For countries partly or fully within 5000 km radius, where the designated carriers of India have not fully utilised 80% of their capacity entitlements, but foreign carriers /countries have utilised their bilateral rights and are pressing for increase in capacity, a method will be recommended by a Committee headed by the Cabinet Secretary for the allotment of the additional capacity entitlements.

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