In aviation policy draft, India seeks to make air travel affordable (Roundup)

New Delhi, Oct 30 (IANS) Incentives to fly to small towns at affordable costs and easing norms for domestic carriers to operate services abroad are some of the highlights of the new draft aviation policy, released on Friday for inputs from stakeholders before finalisation.

The primary aim of the policy is to ensure a tariff of no more than Rs.2,500 per ticket for each flying-hour with a host of incentives and other benefits to both airport developers and operators to make that happen.

“A lot of consultation has taken place. We invite suggestions from stakeholders and public — since it involves the people of India. After all those suggestions come in, we will look into it,” said Civil Aviation Minister Pusapati Ashok Gajapathi Raju.

“The basic behind of National Civil Aviation Policy is to take flying to the masses,” said Civil Aviation Secretary Rajiv Nayan Choubey, adding that operators will get some doles to fly to smaller towns with incentives linked to fuel prices and inflation.

The key to government’s drive to increase flying among the public is the Regional Connectivity Scheme, while central to the RCS is the proposal to revive underserved airstrips and build no-frills airports.

“We currently have some 430 airstrips and airports. But only around 90 in operation — nearly 300-odd are not being used. This is a huge unused asset. These airports will form the basis for enhancing our regional connectivity,” said Choubey.

He said these will be upgraded into a no-frills airport at cost of Rs.50 crore each. Besides, to make operations in such airports feasible, the security will be aircraft-based — so that the airport is sanitised just around an hour or two before the flight.

The policy dwells on upgrade of airports, better regional connectivity, easing of norms for

flying abroad, further liberalisation in open skies regime, development of cargo business,

chopper services, attracting investments in maintenance sector, ground handling and security.

For an open skies regime, the draft policy proposes total liberalisation in time-bound manner, but based on a reciprocal arrangement from the partner country.

It has proposed three ways forward on allowing domestic airline operators to fly abroad: One, to continue with the existing norm of five-year operation with a 20-aircraft fleet. Two, to abolish this altogether. Three, draft new set of norms under which an operator must earn some minimum credit with domestic operations before being allowed to fly abroad.

“Our aim is to create an ecosystem that will enable 30 crore (30 million) domestic tickets per annum by 2022 and 50 crore by 2027. Similarly, increase the international ticketing to 20 crore by 2017,” Choubey said.

The policy calls for levy of 2 percent cess on all domestic and international tickets on all routes other than Cat IIA and RCS, while proposing to put service tax at zero to promote Maintenance, Repair and Overhaul facility.

The government also proposes hiking foreign direct insurance (FDI) in domestic airlines to over 50 percent under the open skies policy.

Indian carriers ferried 67.38 million domestic passengers in 2014, to register a growth of 9.7 percent over the 61.43 million in the previous year. In the first nine months of this year, 59.02 million passengers were ferried to log a growth of 20.1 percent.

Indian industry was unanimous in its praise for the draft aviation policy.

“This is a welcome step which was long overdue. It is a clear signal for taking air-travel to the masses and promoting regional connectivity”, said industry chamber FICCI’s secretary general A.Didar Singh in a statement here.

“We welcome the proposal of exempting Service Tax on output services of MRO and granting infrastructure status to MRO, ground handling, cargo and ATF infrastructure to avail the fiscal benefits under Section 80-IA of the Income Tax Act,” he added.

“Undoubtedly with the right framework in place, we are hopeful that an open, liberal and competitive aviation sector would provide impetus for Indian aviation to reach the next wave of growth,” said the Confederation of Indian Industry.

Rajiv Chib, director (Aerospace and Defence) at Pricewaterhouse Coopers told IANS that though “long standing demands of the aviation stakeholders have been met in the draft policy”, the “challenge, however, is in the implementation, especially about the subsidies and fiscal concessions”.

Stakeholders and the public have been given 3 weeks time to send their comments on the draft policy. After these are considered, the ministry intends to notify the policy in about two months time, Choubey said.

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