India Inc, stakeholders welcome new civil aviation policy

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Mumbai, June 15 (IANS) India Inc. and various stakeholders on Wednesday welcomed the Indian government’s new civil aviation policy which will permit carriers fly abroad, promote affordable regional connectivity and boost cargo operations.

Terming it as ‘outstanding’, FICCI’s Civil Aviation Committee co-chairman Palash Roy Chowdhury said it’s a progressive policy-framework towards ensuring a safe and sustainable development of the aviation sector in India.

“The comprehensive, well-thought-out policy will pave the way for a balanced aviation growth in the country. It will help in stimulating growth and competitiveness of Indian aviation sector when implemented effectively, make flying more affordable for domestic flyers and India more accessible to international travellers”, added Roy Chowdhury.

Asocham Secretary General D.S. Rawat termed the policy as “a turning point” which would help attract more investments which had become quite viable after a sharp correction in fuel prices.

“While capping of airfares will propel the regional connectivity and provide an affordable alternative to first class rail travel, the economics of the concept should be properly worked out to ensure that the operators are not made to suffer losses on the short-haul routes,” Rawat urged.

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Noting that the policy covers 22 aspects of aviation, KPMP India’s Partner and Head of Aerospace and Defence Amber Dubey said it was creditable that Civil Aviation secretary R.N. Choubey managed to bring together all stakeholders for the first integrated aviation policy since 1947.

However, Dubey said it remains silent on government-owned entities and aspects like forming an independent Civil Aviation Authority, Air India privatisation, market listing of AAI, hive-off of Air Navigation Services from the AAI.

“It is a significant step forward in ensuring the interests of all stakeholders — the consumers, existing operators and new entrants — are protected and enhanced. It will go towards making Indian an ‘aviation-friendly’ regime and help broadbase the coverage and network,” said Roland Berger India’s Rahul Gangal, Partner of Aerospace and Defence.

“With the new policy, the ministry has now consolidated its policies and intended actions on various sub-sectors providing directional guidance to the industry,” remarked Deloitte India Partner Peeyush Naidu.

He said the new policy seeks to provide a fillip to the sector through putting in place a mechanism for providing transparent VGF for regional connectivity and measures for a segment like MRO.

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Yatra.Com President Sharat Dhall said the long-awaited policy has some path-breaking changes which could unlock regional connectivity and open up opportunities for carriers entering the Indian markets.

“The abolition of the 5/20 rule will be a respite to many carriers that have entered the market in the last few years and enable them expand services internationally now,” Dhall pointed out.

By subsidising the shorter domestic routes for airlines, the government has given a strong push to regional connectivity by capping fares and help expand the market.

“A cap of Rs 1,200 for a 30-minute flight and Rs 2500 for a 60-minute flight should really drive growth in a hugely under-penetrated domestic air market and catalyse economic growth in tier II and III markets,” Dhall noted.

The new policy aims to create an eco-system to handle 300 million domestic fliers by 2022 and 500 million by 2027, besides 200 million international passengers by 2027, against the 139 million domestic and more than 50 million international air travellers last year.

PwC Partner, Aerospace and Defence, Dhiraj Mathur said the amendment to 5/20 rule will attract new entrants and the requirement of 20 aircraft is a reasonable one on which the government finally took a call.

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Moreover, no company can start international operations with one-two aircraft, so this will not only augment supply and increase investment in the aviation sector in India but offer more choices to consumers.

“The five-year clause was irrational as it constrained Indian players. Anyway, a totally new entrant with no experience will hardly be able to start international operations. So only someone who ties up with an existing player would be able to do so,” Mathur pointed out.

However, this could put existing airlines at a disadvantage, but something that is irrational must go sooner than later, he noted.

Welcoming the cap on domestic fares, he said this will increase penetration of regional aviation in India which the railways alone cannot do owing to various limitations.

However, Mathur sought a 100 per cent FDI in the sector as the cap on it is inconsistent with the government’s objective of expanding the aviation sector.



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