Policy push to aviation sector: Bid to multiply traffic from 80 mn to 300 mn in 2022
New Delhi : In a major push to the civil aviation sector the Modi Sarkar has unveiled a policy that seeks to shake off some decade old norms with a view to increasing the domestic ticket sales from the existing level of 80 million a year to 300 million (30 crore) a year by 2022.
It is an achievable target considering that the government has decided to cap the airfares at Rs 2,500 per hour of flying time on many under-served regional routes, particularly away from big cities. It has also decided to develop about 350 dilapidated or underused airstrips across India into “no frills airports” to improve domestic connectivity.
The government has, however, imposed a “small levy” on domestic and international passengers towards the regional connectivity fund. Airlines will also get tax incentives for operating on unserved routes under the regional connectivity scheme.
Refunds will be now applicable on all fares, including promotional and special rates. Even when booked through travel agents or online portals, the airlines will have to ensure refunds within 15 days to domestic passengers. In case of flight cancellations announced within 24 hours of departure, the compensation amount has been enhanced up to Rs 10,000. Compensation in case of denied boarding due to over-booking and no alternate flight within an hour has been significantly jacked up to Rs 20,000.
At a media briefing after the cabinet cleared the policy, civil aviation minister Ashok Gajapathi Raju described it as a “game changer” that would catapult the country’s aviation sector from its current status as the 9th largest in the world to become the third in size by 2022. “To achieve this, we need right intentions, vision, planning and execution,” he added.
The new policy, which represents a major economic initiative that does not need any parliamentary ratification, had been in the works for the last eight months. The civil aviation ministry had come out with a revised draft in October 2015 after many rounds of deliberations with stakeholders. The NDA government had for the first time unveiled the policy draft in November 2014.
In a major change that would boost the new entrants among the domestic carriers, the policy does away with the five year waiting period before they could fly international routes. Known as the 5/20 rule, it allowed only airlines that had operated for five years and had 20 aircraft in their fleets to fly internationally. Now they must still have 20 planes before they can fly internationally, but no longer have to operate for five years.
This changed rule will benefit new operators like AirAsia and Air Vistara and has come in the face of opposition from older airlines like Indigo and Jet. About the decision to scrap the rule, Union minister Ravi Shankar Prasad said, “A questionable legacy has been thrown into the dustbin.”
In an effort to increase air traffic and improve ease of doing business, the regime of bilateral rights and code share agreements would be liberalised. “Open skies will be implemented on a reciprocal basis for SAARC countries and countries beyond 5,000 km from Delhi,” the ministry said in a release.
A committee headed by the Cabinet Secretary would decide on allotment of additional capacity entitlements for overseas carriers wherever designated Indian airlines have not utilised 80 per cent of their bilateral rights but the foreign counterparts have utilised their quota and are looking for more.
Besides, regulator DGCA would be given necessary administrative and financial flexibility to ensure that an effective aviation oversight system is in place. A transparent single window system for all aviation safety-related issues would also be set up.
Among other measures, the existing ground handling policy is being replaced with a new framework to ensure fair competition. All domestic scheduled airline operators, including helicopter operators, will be free to carry out self-handling at all airports. Ground handling agencies would not be allowed to hire employee through manpower suppliers.
AIRPORTS AT YOUR DOORSTEP
* Air travel to be more affordable.
* 350 unused vintage airstrips and airports will be revived.
* Airfares capped at Rs 2,500 for hour-long
* flight and for flights to be taken to Tier II and III cities.
* Govt will refund 80% of losses incurred by airlines due to cap on airfares; besides, tax reductions will make flights to smaller towns viable.
* Cancellation charges will be kept below base fare.
* Refunds will be applicable on all fares, including promotional and special rates.
* Even when booked through travel agents or online portals, airlines will be obliged to ensure refunds within 15 days to domestic passengers.
* In case of flight cancellations announced within 24 hours of departure, compensation amount has been enhanced to Rs 10,000.
* Both domestic and international traveller will have to cough up 2% cess on all air tickets to fund the regional connectivity policy.
* In a major relief to new airlines, new policy has waived requirement of minimum five years of domestic flight before allowing them to fly abroad; but another condition of having a fleet of 20 aircraft remains.
