Cabinet approves Civil Aviation Policy

No: --- Dated: Jun, 15 2016

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 3^rd largest civil aviation market by 2022 from 9^th
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

xxiii. 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.

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.
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.
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.
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.
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.
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.
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.
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.
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.

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.