The Union Cabinet made a few amendments to the civil aviation policy, making it easier for new airlines to fly overseas, ramp up air travel almost four times in five years, and massively expand air connectivity. The National Civil Aviation Police was approved, replacing the controversial 5/20 overseas flying rule for domestic carriers with a "0/20" formulation.
Existing rules for domestic airlines wanting to fly abroad require them to have a minimum of five years of operation and at least a fleet of 20 with the rider that 20 per cent of the total seat capacity of the airline be deployed locally, which ever is higher. This means new carriers like AirAsia India and Vistara, can operate internationally even before completing five years of operations provided they increase their fleet strength to 20 aircraft.
Minister for Civil Aviation Ashok Gajapathi Raju said the "centrepiece of the policy is making regional connectivity a reality". Which is why, he added, the government plans to develop 50 no-frills airports and promote connectivity in "unserved areas" through airfare of Rs 2,500 for one hour flights to Tier 2 and Tier 3 cities. The Centre will provide viability gap funding to airlines for the success of the regional connectivity scheme, while states will give tax sops in the form of lower excise duty at 2 per cent and VAT at 1 per cent on aviation turbine fuel picked up at RCS airports. The scheme will come into effect in the second quarter of 2016-17. The government will provide funds to the RCS through a levy per departure on domestic flights at a rate decided by the aviation ministry from time to time.
The government will also exempt airlines from all landing, parking, and other charges on the RCS airports. Civil Aviation Secretary RN Choubey said the government expects the policy to push up the sale of domestic tickets from existing 80 million to 300 million in five years. It also dropped its earlier proposal of auctioning unused bilateral traffic rights on international routes as it has opposed strongly by domestic industry across the board. "Auctioning is not the only way of transparently allocating bilateral traffic rights," Choubey said. About auctioning of additional entitlements, the policy reads, "For countries within 5,000 km radius, where the Indian carriers have not utilised 80 per cent 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."
The Ministry said the 5/20 rule will be 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 obligations for domestic operation."
