17 Jun, 2016

Bulletpoint highlights of India’s National Civil Aviation Policy, 2016

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New Delhi, 15-June-2016 — The Minister of Civil Aviation 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 Mr 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 covers 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

• Viability Gap Funding (VGF) to airline operators

• 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

• MoCA 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 exist

• 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.