Revised Draft National Civil Aviation Policy (NCAP 2015) released

New Delhi. 30 October, 2015. Minister of Civil Aviation P. Ashok Gajapathi Raju released the Revised Draft National Civil Aviation Policy (NCAP 2015) in New Delhi today. Speaking on the occasion Shri Raju urged all stakeholders to participate in the process of firming up the policy by giving their valuable suggestions to the Ministry. He said that the Civil Aviation Policy should be a dynamic one which can keep pace with the ever changing demands of the sector.

Minister of State for Civil Aviation and MoS (I/C) Tourism and Culture Dr Mahesh Sharma was also present at the function. Dr. Sharma underscored the importance of bringing air travel within reach of the common man and facilitating regional air connectivity within the country.

Secretary Civil Aviation Rajiv Nayan Choubey gave a presentation highlighting the salient features of the draft policy, which are as follows :

Aim of the Policy

To provide a conducive environment and a level playing field to various aviation sub-sectors, i.e Airlines, Airports, Cargo, Maintenance Repairs and Overhaul services, General Aviation, Aerospace manufacturing, Skill Development, etc
To create an eco-system to enable 30 crore domestic ticketing by 2022 and 50 crore by 2027. Similarly, international ticketing to increase to 20 crore by 2027.

Draft Policy covers:-

Regional Connectivity Scheme (RCS)

Scheme will come into effect from 1 April 2016
Airfare about Rs 2500 for a one-hour flight in RCS
This will be implemented by way of:
Revival of un-served or under-served airstrips.
Only 75 out of 476 airstrips/airports have scheduled operations. Revival of these depending on demand.
Build ‘no-frills’ airports at a cost of Rs 50 crores.
Viability Gap Funding (VGF) for scheduled commuter airlines.
VGF indexed to ATF prices and inflation.
VGF to be shared between Centre and State at 80:20.
Creation of Regional Connectivity Fund (RCF) for VGF.
Levy of 2% on all domestic and international tickets on all routes, other than CAT IIA and RCS.

Concessions by different stakeholders:

1. State Government-

Provide free land and multimodal hinterland connectivity.
Concessional rates of power, water and other utilities.
VAT on ATF 1% or less in RCS airports

2. Central Govt-

Service Tax on tickets under RCS will be exempted.
ATF drawn by SCA’s from RCS airports exempt from excise duty.
SCA’s to be treated at par with SOPs for customs duty.
Cost-effective security solutions by BCAS and state government.

3. Scheduled Commuter Airlines (SCA)

Eligibility criteria in terms of paid-up capital to be kept at Rs 2 crore.
Aircraft with capacity of 100 seats or less.
No restrictions on number of aircrafts.
Minimum movements per week to RCS destinations as prescribed.
SCA can enter into code share with other airlines
Will be allowed self- handling.
No airport charges on SCA for their operations under RCS. Rationalise in other non- RCS airport

3. Maintenance, Repair and Overhaul (MRO)

Develop India as an MRO hub in Asia.
Service Tax on output services of MRO will be zero-rated.
Aircraft maintenance tools and tool-kits will be exempt from Customs Duty.
Tax- free storage period of spare parts imported by MRO’s extended for 3 years.
To allow import of unserviceable parts by MROs by providing advance exchange.
Procedures for custom clearance to be simplified.
Clearance of the parts by allowing for self -attestation by the MROs.
Foreign aircraft brought to India for MRO work will be allowed to stay for 6 months. Beyond this, with DGCA permission .
Persuade State Govt to make VAT zero-rated
Airport royalty and additional levies to be rationalised in consultations with Airport Operators.

Fiscal incentives

MRO, ground handling, cargo and ATF infrastructure co-located at an airport will also get the benefit of ‘infrastructure’ sector, with benefits under Section 80-IA of Income Tax Act.

Rule 5/20

The government invites suggestions on three possible policy options:

5/20 Rule may continue as it is,

5/20 Rule will be abolished with immediate effect,

Domestic airlines will need to accumulate 300 DFC before commencing flights to SAARC countries and countries beyond 5000 km radius from New Delhi.
They will need to accumulate 600 DFC before starting flights to the remaining parts of the world.
The DFC earned will be equal to the Available Seat Kilometer (ASKM) deployed by the airline on domestic routes divided by 1 crore.
All domestic airlines will required to earn at least 300 DFC per annum in order to maintain their international flying rights.
Free to re-deploy their excess capacity (above 300) between domestic and foreign operations and also trade them.

Bilateral Traffic Rights

Liberalise regime of bilateral rights.
Open sky on reciprocal basis with SAARC countries and countries beyond a 5000 km radius from New Delhi.
For countries within 5,000 kms where domestic airlines have not fully utilised their quota, additional seats above existing rights would be allotted by bidding for a three year period, proceeds of which will go to RCF.
Open skies for countries within 5000 kms will be considered with effect from 1 April 2020.
Increase in FDI in airlines from 49% to above 50% if the government decides to go in for open skies

Code Share

Indian carriers will be free to enter into code-share agreements with foreign carriers for any destination within India on a reciprocal basis.
International code share between Indian and foreign carriers will be completely liberalised, subject to ASA between India and the country.
No prior approvals from MoCA will be required. Indian carriers need to simply inform MoCA 30 days prior to starting the code-share flights.
A review will be carried out after 5 years to consider the requirement of further liberalisation in code-share agreements and to drop the requirement of reciprocity.

Route Dispersal Guidelines (RDG)

Category I will be rationalized by adding more routes based on transparent criteria, i.e., flying distance of more than 700 km, average seat factor of 70% and annual traffic of 5 lakh passengers.
The percentage of Cat. I traffic to be deployed on Cat. II, IIA and III will remain the same.
Revised categorization will apply 12 months after date of notification.
Review of routes under different categories will be done by MoCA once every 5 years.
Airlines may change routes in Cat II and III with a 30 days prior intimation to MoCA and DGCA.
Prior permission of MoCA required for withdrawal of existing operations to and within N.E region, Islands and Ladakh.

Airports

MoCA will continue to encourage development of airports by the State Government or the private sector or in PPP mode.
MoCA will endeavour to provide regulatory certainty.
The capital expenditure of all future greenfield and brownfield airport projects promoted by AAI in PPP mode will be monitored closely by AAI.
Tariff at all future airports will be calculated on a ‘hybrid till’ basis.
MoCA will explore ways to unlock the potential land use by liberalising the end-use restrictions for existing (excluding PPP) and future airports of AAI and future airport projects under PPP.

Airport Authority of India

AAI will continue to modernize airports and upgrade quality of services.
AAI will maintain an ASQ rating of 4.5 or more across all airports with throughput above 1.5 mppa and ASQ rating of 4.0 or more for the rest.
AAI may be suitably compensated in case a new greenfield airport is approved in future within a 150 km radius of an existing operational AAI airport (not applicable to civil enclaves). Alternatively, give option to have the right of first refusal or equity participation upto 49% in the new airport at its discretion.
AAI will continue to provide necessary financial support and facilitate technological upgradation of ANS to keep pace with the global best practices.

Ground handling

There will be at least three Ground Handling Agencies (GHA) including Air India’s subsidiary/JV at an airport.
Domestic airlines and charter operators will be free to carry out self-handling themselves or through their subsidiaries or to outsource the same to other airlines or to a GHA.
Ground handling staff will have to be on the rolls of the airlines or their subsidiaries or the GHA. Domestic airlines (including subsidiaries) and GHAs will be permitted to take contract employees on their rolls. Such employment contracts will be for a period of at least one year.

Aviation Security

MoCA will develop ‘service delivery modules’ for aviation security, Immigration, Customs, quarantine officers etc in consultations with respective Ministries/Departments.
The Government will encourage use of private security agencies at airports for non- core security functions which will be decided in consultation with MHA.
Private security agencies will comprise retired personnel from military and para-military forces. BCAS will provide scope of work and norms.
Security auditors of BCAS will carry out regular and surprise audits with the power to penalize and blacklist the errant agencies

Helicopters

Government will support growth of helicopters for remote area connectivity, intra-city movement, tourism, law enforcement, disaster relief, medical evacuation, etc.
Separate regulations for helicopters will be notified by DGCA by 1 April 2016, after due stakeholder consultation.
The government will facilitate the development of four heli-hubs initially.
Helicopters will be free to fly from point to point without prior ATC clearance in airspace below 5000 feet and outside ATC control areas and areas other than prohibited and restricted ones, after filing the flight plan with the nearest ATC office.

Cargo

The Air Cargo Logistics Promotion Board (ACLPB) will submit a detailed action plan with the objective of reducing dwell time of air cargo from ‘aircraft to truck’ which should also ensure shift to paperless processing.
ACLPB will develop ‘service delivery modules’ for all elements of air cargo value chain.
Advanced Cargo Information system to be implemented by 1 April 2016.
ACLPB to propose specific action steps to promote transshipment.
ACLPB will work with AERA and AAI to ensure are competitive vis-à-vis competing aviation hubs.
ACLPB will lay down norms for time slots and parking for freighter aircraft.
Optimum use of 24×7 Customs operations to spread out cargo handling.
AAI to provide space on 10 year lease for express cargo and freighters.

Aeronautical ‘Make in India’

MoCA will be nodal agency for developing commercial aero-related manufacturing and its eco-system in India.
MoCA and MoD will work together to ensure that commercial aero-manufacturing is covered under defence offsets requirements.
Area where aero-manufacturing takes place will be notified as SEZ.