Govt. of India new aviation policy draft seeks to help "Everyone fly".

Incentives to fly to small towns at affordable costs and easing the norms for domestic carriers to operate services abroad are some of the highlights of the new draft aviation policy, released on on 30^th Oct for feedback before finalisation.

Among other things, the draft policy proposes to rationalise jet fuel cost, promote air cargo, maintenance, repair and operations (MRO) through fiscal and regulatory concessions

 Here are highlights and likely impact :

• Open sky for countries beyond 5,000 km radius from New Delhi
  
  IMPACT: To benefit airlines from Europe, Asia, Middle East  among others, to operate to and from India without restriction on of flights, seats
   
• Auction seats for those in 5,000 km
  
  IMPACT: India will earn from auction proceeds; airlines from Gulf, West Asia and South East Asia will be able to increase frequency to and from India
   
• Increase in FDI cap from 49% to above 50% to be considered in 2020
  
  IMPACT: Would open doors for participation of more foreign carriers in Indian aviation sector

5/20 RULE ( i,e  5 years of Minimum  operational experience and  fleet of 20 Aircraft)

• Uncertainty remains as three ways considered: keep it, scrap it or replace it with credit-based system
  
  IMPACT: New domestic airlines  would have to wait longer to fly abroad due to lack of clarity on 5/20

AIRPORTS

• To encourage development of airports through PPP mode
  
  IMPACT: Would help in modernisation of airports

REGIONAL CONNECTIVITY SCHEME

• Fares to be capped at Rs 2,500 per hour flying on regional airports; Proposal to levy 2% cess on tickets and use collection to fund airlines' losses if they fly to remote areas;  80% funds to flow from Centre, rest from states.
  
  IMPACT: Move would incentivise development of low-cost airports, Domestic, international fares would go up; 2% .

ROUTE DISPERSAL GUIDELINES

• Policy to continue; additional routes to be added to Category-I (metro) routes
  
  IMPACT: Airlines would have to deploy a share of traffic to non-metro regions; won't be able to withdraw from there

GROUND HANDLING

• Airlines can handle operations related to flight on their own through contract workers
  
  IMPACT: Help airlines reduce cost of operations.

 Link to policy document  Draft

Among other things, the draft policy proposes to rationalise jet fuel cost, promote air cargo, maintenance, repair and operations (MRO) through fiscal and regulatory concessions and frame separate regulations for promoting helicopter operations.
The ministry has considered a slew of fiscal incentives for stakeholders in the draft policy across the country’s fledging aviation industry to reduce operating costs for airlines and rationalise air fares.
The ministry is looking at tax waivers to incentivise stakeholders across the value chain for a specified period of time. The growth in the sector would be evaluated thereafter and the tax breaks realigned.
Regulations for bilateral agreements between India and other countries are proposed to be changed with an option to auction seats. The ministry is considering linking the opening up of Indian skies with liberalisation of FDI in Indian airlines. ‘We will consider extending FDI in Indian airlines beyond 49 per cent. This will be linked to India’s open skies arrangement with other countries. The current system of traffic rights is based on
bilateral arrangements but once there are open skies it does not make much sense to distinguish between domestic and foreign carriers’, said a senior ministry official.
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