The new civil aviation policy cleared by the Union Cabinet on Wednesday will prove to be a turning point for the aviation sector, attracting more players and take flying to the masses.
The policy was welcomed by scrapping the 5/20 rule that hindered Indian carriers to fly internationally. This yester-year rule mandated new airlines to fly domestic routes for at least five years and have a fleet of 20 aircrafts before they could fly international.
Some of the important takeaways from this policy are as follows:
1. Regional connectivity scheme
This scheme will come into effect in the second quarter of FY'16 and airlines that enrol in the same will mostly ferry passengers between one-hour destinations.
There as many as 34 regional airports in India that will start to operate more because of this scheme. The government has also done away with the initially proposed 2 per cent cess on regional flights so as to encourage more people to fly.
2. Travel just got cheaper
Following the regional connectivity scheme, the Cabinet has approved a cap on short duration flight tickets rates with 30-minute air travel at Rs 1,500 and one-hour air travel at Rs 2,500 with the aim of increasing the number of domestic flyers as per the population of the country.
To bring this into effect, the new policy will aim at bringing down tax-based cost for airlines. As per the policy all states will be required to bring down VAT on ATF to 1 per cent and a viability gap funding will be provided by the government to help it cut ticket cost.
This move will now allow more than one billion of the population the opportunity to fly who once could not afford it.
3. No more 5/20
However, the 5/20 rule has now been replaced by a 0/20 which requires airlines to have a fleet of 20 aircrafts and no additional requirement of five years of domestic operations to fly international.
Airlines like Vistara and AirAsia India can now operate internationally but on the flipside incumbent carriers like JetAirways now face more competition.
Overall, passengers will have more Indian carrier options to choose from and this move will lead to an exponential growth in the aviation sector.
4. Better airports
The policy encourages development of airports by allowing public-private partnership along with AAI and the state governments. Part of the airport security will now be outsourced by private parties.
5. Helicopters and Charters
Helicopters will be free to fly from one point to another without prior ATC clearance and will be reasonably charged. This will be beneficial for Air ambulances and other urgent matters.
6. Bilateral traffic rights
The government of India will now enter into 'Open Sky' policy arrangement on a reciprocal basis with SAARC countries and countries located beyond 5000 km from Delhi. This will considerably enhance traffic in South Asian countries thereby allowing domestic carriers to economically fly overseas.