NEW DELHI: Feb 18, 2016.
Union Home Minister Rajnath Singh chaired a meeting to discuss the new civil aviation policy, which is likely to be finalised soon. The meeting, chaired by Rajnath Singh, was attended by Civil Aviation Minister Ashok Gajapathi Raju, his deputy Mahesh Sharma, Finance Minister Arun Jaitley, Defence Minister Manohar Parrikar, Railway Minister Suresh Prabhu, Power Minister Piyush Goyal and Skill Development Minister Rajiv Pratap Rudy besides Civil Aviation Secretary R.N. Choubey, official sources said.
This was the first ministerial-level consultation on the draft policy document after it was rolled out in October 2015. It also had invited comments from all concerned citizens. Deadlines were revised. So far discussions were held between the Ministry of Civil Aviation and the stakeholders in the sector like airlines, airport operators, among others.
Significantly, the meeting was held a day after the domestic airlines body Federation of Indian Airlines (FIA) representing the established airlines: the four private carriers -- Jet Airways, IndiGo, SpiceJet and Go Air had sought Prime Minister's Office (PMO) intervention in incorporating some of its concerns while finalising the draft civil aviation policy. It had called on Minister of State in PMO Jitendra Singh and submitted a memorandum, raising issues such as FIA's opposition to the removal of 5/20 norm, auctioning of additional seats to foreign players and the issue of substantial ownership and effective control, among others.
The draft civil aviation policy contains key provisions, apart from others, like:-
- over 50 per cent FDI
- auctioning of bilateral rights
- regional connectivity scheme for places that are not served presently
- 2% levy on all air tickets to provide viability gap funding for regional connectivity, though many analysts believe that normal air fare would have been made 2% cheaper. There was no need for 2% levy.
- tax sops,
- setting up of no-frills airports
- launch of "regional flights" at a minimum fare of Rs 2,500 per flying hour, although fares for an hour of flight are as low as Rs 1500 even today.
which will certainly have a bearing on the general economical well being of the country. There will be several financial implications when the policy comes for implementation. A number of such issues including the abolition of the so-called 5/20 rule, are under active discussion.
Under the decade-long rule, popularly known as the controversial 5/20 rule, an airline that has had five years of domestic industry experience and a fleet of 20 aircraft can qualify to operate on international routes.
After the detailed discussions on the 5/20 issue in the meeting, the decision - whether to continue with the existing rule or tweak it or scrap it altogether - has been left to the Civil Aviation Ministry.
Present Scenario of Indian Aviation- Lobbying By Airlines going on.
View 1. FIA - GoAir + SpiceJet + Jet Airways + IndiGo.
3 of the 4 FIA members carry "Unfair Business Practitioner Tag".
We represent 90 per cent of the Indian air industry and therefore "our views deserve to be heard before finalizing any policy."
5/20 rule should stay, status quo be maintained. The new policy exempting the new airlines from this obligation will amount to injustice towards the already operating airlines.
Creation of a new airline AirAsia India was a subversion of FDI rules. A lot of decisions in Vistara and AirAsia India are taken by their foreign partners. This is not fair. In 2013, BJP leader Subramanian Swamy had filed a PIL in the Supreme Court seeking to quash the government approval given to the AirAsia India.
View 2. Non FIA - Two startup airlines Vistara + AirAsia India.
2-year old Indian carrier AirAsia India would "shortly" add two aircraft as part of its fleet expansion plans. Full service carrier Vistara has added 9th Airbus A320 in its Fleet.
5/20 rule should go. Let us also be given a level playing field.
Arun Bhatia, a stakeholder in AirAsia India: "All key decisions about AirAsia India are taken by its foreign parent Malaysia's AirAsia Berhad".
The 5/20 rule is likely to be replaced by another rule that will ensure that domestic connectivity is not compromised after airlines are allowed to go international.
Abolition of the 5/20 norm will benefit new players like Vistara and AirAsia India, which will be allowed to fly international. The FIA has been opposing abolishing the policy. The FIA has demanded that the matter of "effective control of carriers" be solved before the government changes international operation rules.
Immediately after Bihar Assembly elections in November 2015 wherein the ruling BJP lost miserably, norms for FDI in Regional Airlines were eased. At present FDI limit in aviation is 49 per cent. Under open skies policy, foreign airlines can operate unlimited number of flights into and out of India.
In the memorandum submitted to the minister, FIA has demanded that they should also be accorded due importance, they should be kept in the loop during the consultations before finalizing the new policy.
FIA has complained that while no other country in the world allows substantial ownership and effective control of its Airlines to be taken over by foreign Airlines, India has permitted some airlines to operate despite being effectively controlled by their foreign parent.
FIA has also met commerce minister Nirmala Sitharaman and conveyed its concerns on the current FDI rules.
In the middle of all this, the share prices of the listed Indian aviation companies stayed volatile. InterGlobe Aviation (which owns IndiGo) stock closed at Rs 839.50, down 1.21 percent from its previous close, while the Jet Airways scrip rose 2.82 percent and settled at Rs 557.50; SpiceJet gained 4.11 percent to close at Rs 68.40 on the BSE.
(PTI inputs)