New Civil Aviation Policy approved by Govt, Key Features

By | June 15, 2016
(Last Updated On: June 15, 2016)

Cabinet approves Civil Aviation Policy

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for the Civil Aviation Policy. This is the first time since Independence that an integrated Civil Aviation Policy has been brought out by the Ministry of Civil Aviation.

Highlights

 

The Policy aims at:

 

  • India to become 3rd largest civil aviation market by 2022 from 9th
  • Domestic ticketing to grow from 8 crore in 2015 to 30 crore by 2022
  • Airports having scheduled commercial flights to increase from 77 in 2016 to 127 by 2019
  • Cargo volumes to increase by 4 times to 10 million tonnes by 2027
  • Taking flying to masses – Enabling Indians to fly at Rs. 2,500 per hour under Regional Connectivity Scheme at unserved airports
  • Requirement of 5 years of domestic flying for starting international operations removed
  • Flexible and liberalized ‘open skies’ and ‘code share’ agreements
  • Incentives to MRO sector to develop as hub for South Asia
  • Ensuring availability of quality certified 3.3 lakh skilled personnel by 2025
  • Development of green-field airports and heliports
  • Enhancing ease of doing business through deregulation, simplified procedures and e-governance
  • Promoting ‘Make In India’ in Civil Aviation Sector

 

Areas covered in the Policy:

i.Regional connectivity

ii. Safety

iii.Air Transport Operations

iv. Route Dispersal Guidelines

v. 5/20 Requirement for International    Operations

vi. Bilateral traffic rights

vii.  Code-share agreements

viii. Fiscal Support

ix. Airports developed by State Govt, Private sector or in PPP mode

x. Airports Authority of India

xi. Air Navigation Services

xii.  Aviation security, Immigration and Customs

xiii. Helicopters

xiv. Charters

xv. Maintenance, Repair and Overhaul

xvi.      Ground handling

xvii.     Air-cargo

xviii.    Aeronautical ‘Make in India’

xix.      Aviation education and skill development

xx. Sustainable aviation

xxi       Miscellaneous

xxii.    Essential Services Maintenance Act, 1968

 

Salient features of the Policy

 

i. The Viability Gap Funding (VGF) will be funded by a small levy per departure on all domestic routes other than Cat II/ Cat IIA routes, RCS routes and small aircraft at a rate as decided by the Ministry from time to time. A detailed scheme will be put up in the Public domain for stakeholders consultations.

ii. The 5/20 rule for commencement of international flight in operation since 2004 is replaced by a formulation which provides a level playing field and allows airlines, both new and old, to commence international operations provided they continue to meet some obligation for domestic operation. All airlines can commence international operations provided 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.

iii.                Necessary administrative and financial flexibility will be provided to Director General of Civil Aviation (DGCA) for an effective aviation safety oversight system and for creating a transparent single-window system for all aviation safety related issues.

iv. The Route Dispersal Guidelines (RDG)  have been rationalised by making the criteria for declaring a route as Category I (trunk route) more transparent, while the traffic to be deployed on Cat II and IIA expressed in terms of a percentage of CAT I traffic remains the same. The criteria proposed for a Cat I route are a flying distance of more than 700 km, average seat factor of more than 70% and annual traffic of 5 lakh passengers. The percentage for CAT III will be reduced in view of the Regional Connectivity Scheme coming into operation. Uttarakhand and Himachal Pradesh have been included as part of category II routes.

v. The regime of bilateral rights and code share agreements will be liberalised leading to greater ease of doing business and wider choice to passengers. “Open skies” will be implemented on a reciprocal basis for SAARC countries and countries beyond 5000 kms from Delhi. A method will be recommended by a Committee headed by the Cabinet Secretary for the allotment of additional capacity entitlements wherever designated Indian carriers have not utilised 80% of their bilateral rights but the foreign airlines/countries have utilised their part and are pressing for increase in the capacity.

vi. The Ministry will continue to encourage development of airports by the State Government or the private sector or in PPP mode and endeavour to provide regulatory certainty. Future greenfield and brownfield airports will have cost efficient functionality with no compromise on safety and security.

vii.              Airport Authority of India (AAI) will continue to develop and modernise its airports and upgrade quality of services. AAI will be suitably compensated in case a new greenfield airport is approved in future within 150 km radius of an existing operational AAI airport which is not yet saturated.

viii.            Upgradation and modernisation of Air Navigation Services will continue in line with global trends. AAI will provide a fully harmonised Air Navigation System considering International Civil Aviation Organisation (ICAO) Global Air Navigation Plan, Aviation system Block Upgrade and modern performance based technologies and procedures.

ix. The Government will promote helicopter usage by issuing separate regulations for helicopters and development of four heli-hubs initially. Ministry of Civil Aviation will also coordinate with all the agencies and stakeholders concerned to facilitate Helicopter Emergency Medical Services.

x. In the budget for 2016-17, the customs duty for MRO’s  has been rationalised and the procedure for clearance of goods simplified, in particular duty on tools and tool kits. Further incentives have been proposed in the policy to give a push to this sector :-

 

  • MoCA will persuade State Governments to make VAT zero-rated on MRO activities
  • Provision for adequate land for MRO service providers will be made in all future airport/heliport projects where potential for such MRO services exists.
  • Airport royalty and additional charges will not be levied on MRO service providers for a period of five years from the date of approval of the policy.

xi. The existing ground handling policy is being replaced with a new framework to ensure fair competition. The airport operator will ensure that there will be three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at all major airports as defined in AERA Act 2008. At  non-major airports, the airport operator to decide on the number of ground handling agencies, based on the traffic output, airside and terminal building capacity. All domestic scheduled airline operators including helicopter operators will be free to carry out self-handling at all airports. Hiring of employees through manpower supplier will not be permitted.

National Civil Aviation Policy, 2016 : Salient Features

The Minister of Civil Aviation Shri P. Ashok Gajapathi Raju released the  National Civil Aviation Policy 2016 in New Delhi today. This is the first time since  independence that an integrated Civil Aviation Policy has been  brought out by the Ministry.  Speaking on the occasion Shri Raju said that the centre-piece of the policy is to make regional air connectivity a reality. He said that the policy aims to take flying to the masses by making it affordable and convenient,  establish an integrated eco-system which will lead to significant growth of  the civil aviation sector  to promote tourism, employment and balanced regional growth, enhance regional connectivity through fiscal support and infrastructure development and  enhance ease of doing business through deregulation, simplified procedures and e-governance.

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
  • ViabilityGapFunding(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
  • Creation of 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

Route Dispersal Guidelines (RDG)

  • 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 every5 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 

5/20 Requirement

 

  • 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 

Bilateral Traffic Rights

  • GoI will enter into ‘Open Sky’ ASA on a reciprocal basis with SAARC countries and countries located beyond 5000 km from Delhi
  • For countries within 5000 km radius, where the Indian carriers have not utilised 80% of their capacity entitlements but foreign carriers /countries have utilised their bilateral rights, a method will be recommended by a Committee headed by Cabinet Secretary for the allotment of additional capacity entitlements
  • Whenever designated carriers of India have utilised 80% their capacity entitlements, the same will be renegotiated in the usual manner 

Ground Handling Policy

  • The Ground Handling Policy/ Instructions/Regulations will be replaced by a new framework:
  • The airport operator will ensure that there will be three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at all major airports as defined in AERA Act
  • At non-major airports, the airport operator to decide on the  number of ground handling agencies, based on the traffic output, airside and terminal building capacity
  • All domestic scheduled airline operators including helicopter operators will be free to carry out self-handling at all airports through their regular employees
  • Hiring of employees through manpower supplier or contract
  • workers will not be permitted for security reasons 

Airport PPP/AAI

  • Encourage development of airports by AAI, State  Governments, the private sector or in PPP mode
  • Future tariffs at all airports will be calculated on a ‘hybrid till’ basis, unless specified otherwise in concession agreements. 30% of non-aeronautical revenue will be used to cross- subsidise aeronautical charges
  • Increase non-aeronautical revenue by better utilisation of commercial opportunities of city side land
  • AAI to be compensated in case a new greenfield airport is approved in future within a 150 km radius of an existing unsaturated operational AAI airport (not applicable to civil enclaves)

Aviation Security, Immigration and customs

  • sMoCA will develop ‘service delivery modules’ for aviation security, Immigration, Customs, quarantine officers etc in consultations with respective Ministries/Departments
  • Allow Indian carriers to provide security services to other domestic airlines subject to approval of BCAS
  • Encourage use of private security agencies at airports for non- core security functions to be decided in consultation with MHA
  • Such agencies should be registered under the Private Security Agencies (Regulation) Act, 2005 and will also be separately accredited by BCAS
  • Subject to minimum benchmarks being met, security architecture at the different airports will be proportionate to the threat classification and traffic volume

Helicopters and Charters I 

  • Separate regulations for helicopters will be notified by DGCA

after due stakeholder consultation

  • MoCA to coordinate with Govt agencies and other helicopter operators to facilitate Helicopter Emergency Medical Services
  • Helicopters will be free to fly from point to point without prior ATC clearance in airspace below 5000 feet and areas other than controlled or prohibited or restricted airspace
  • Airport charges for helicopter operations will be suitably rationalized
  • The existing policy of allowing Inclusive tour package charters will be further reviewed to include more categories of passenger charter flights recognised globally.

Maintenance, Repair and Overhaul

The MRO business of Indian carriers is around Rs 5000 crore, 90% of which is currently spent  outside India. In the budget for 2016-17, customs duty has been rationalised and the procedure for clearance of goods simplified. Further incentives proposed in the policy to give a push to this sector:

  • MoCA will persuade State Governments to make VAT zero- rated on MRO activities
  • Provision for adequate land for MRO service providers will be made in all future airport/heliport projects where potential for such MRO services exists
  • Airport royalty and additional charges will not be levied on MRO service providers for a period of five years from the date of approval of the policy

Aviation Education and Skill Building

 

Estimated direct additional employment requirement of the Civil Aviation Sector by 2025 is about 3.3 lakh . All training in non licensed category will conform to National Skill Qualification Framework standards. MoCA will provide full support to the Aviation Sector Skill Council and other similar organisations/agencies for imparting skills for the growing aviation industry . There are nearly 8000 pilots holding CPL but who have not found any regular employment. MoCA will develop a scheme with budgetary support for Type- rating of Pilots. The detailed scheme will be worked out separately.

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