Govt unveils draft civil aviation policy, aims to make air travel affordable

30 Oct 2015 Evaluate

Minister of Civil Aviation Pusapati Ashok Gajapathi Raju has unveiled the draft National Civil Aviation policy (NCAP 2015). In its draft, the centre aims to incentivize flights to smaller towns and allows creation of no-frill airports to boost regional numbers. The government has also proposed hiking foreign direct investment in domestic airlines to over 50% under the open skies policy based on a reciprocal arrangement from the partner country.

According to the draft civil aviation policy, the government proposes to levy a 2% additional levy on all domestic and international tickets to fund its bid to boost regional aviation connectivity. The policy comes as airline passenger numbers increased 20% a year to 38.8 million in the first half of 2015, leaving India’s major airports, which account for four-fifths of traffic, saturated. One of the policy’s primary aims is ensuring a tariff of no more than Rs 2,500 a ticket for each flying hour to destinations with “un-served and under-served” airports and airstrips under the Regional Connectivity Scheme (RCS) that will come into effect from 1 April 2016. It also contains a host of incentives and other benefits to airport developers and operators to make this happen. The policy has mooted various measures to boost regional connectivity including setting up of no-frills airports and providing viability gap funding for airlines. The viability gap funding will be shared by the Centre and State in the ratio of 80:20.

The policy set an ambitious target of increasing the sale of air tickets from the current annual figure of 7 crore to 30 crore by 2022 and 50 crore by 2027.

Further, on the 5/20 rule, the policy has proposed three alternatives: One, retain it; Two, remove it completely; Three, airlines be allowed to fly to SAARC nations if they have earned 300 domestic flying credits and for other countries, 600 domestic flying credits. A final decision on 5/20 rule will be taken by the Cabinet. The draft policy also pushes Make In India in aeronautics.

The policy has been put up for public comments and then for inter ministerial consultations after which it will be sent for Cabinet approval.

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