Mumbai–Various stakeholders in the sector on Wednesday welcomed what is considered the country’s first formal civil aviation policy that eases norms to enable domestic carriers fly abroad, promotes cheap regional connectivity and boosts cargo operations.
“It is a significant step forward in ensuring the interests of all stakeholders — the consumers, existing operators and new entrants — are protected and enhanced. It will go towards making Indian an aviation-friendly regime and help broadbase air network,” said Roland Berger India’s Rahul Gangal, a partner of Aerospace and Defence.
“With the new policy, the Aviation Ministry has now consolidated its policies and intended actions on various sub-sectors providing directional guidance to the industry,” remarked Deloitte India partner Peeyush Naidu.
Naidu felt the new policy seeks to provide a fillip to the sector through putting in place a mechanism for providing transparent VGF (Viability Gap Funding) for regional connectivity and measures for a segment like MRO (maintenance, repair and operations).
Yatra.Com President Sharat Dhall said the long-awaited policy has facilitated some path-breaking changes that could unlock regional connectivity and open up opportunities for carriers entering the Indian markets.
“The abolition of the 5/20 rule will be a respite to many carriers that have entered the market in the last few years and enable them expand services internationally now,” Dhall pointed out.
By subsidising the shorter domestic routes for airlines, the government has given a strong push to regional connectivity by capping fares and help expand the market.
“A cap of Rs 1,200 for a 30-minute flight and Rs 2,500 for a 60-minute flight should really drive growth in a hugely under-penetrated domestic air market and catalyse economic growth in tier II and III markets,” Dhall noted.
PwC Partner Aerospace and Defence’s Dhiraj Mathur said the amendment to 5/20 rule will attract new entrants and the requirement of 20 aircraft is a reasonable one on which the government finally took a call.
“The 5-year clause was irrational as it constrained Indian players. Anyway, a totally new entrant with no experience will hardly be able to start international operations, so only someone who ties up with an existing player would be able to do so,” Mathur pointed out.
However, this could put existing airlines at a disadvantage, but something that is irrational must go sooner than later, he noted.
Welcoming the cap on domestic fares, he said this will increase penetration of regional aviation in India which the railways alone cannot do owing to various limitations.
However, Mathur sought a 100 per cent Foreign Direct Investment in the sector as the cap on it is inconsistent with the government’s objective of expanding the aviation sector.
