The government on Tuesday announced relaxation in foreign direct investment (FDI) norms for 15 sectors, including non-scheduled air transport service and ground handling service in the civil aviation sector. The FDI cap for non-scheduled airlines and ground services is proposed to be extended to 100% from the current 74% under the automatic route.
Non-scheduled airlines refer to those that do not follow the time-table established by the civil aviation regulator (DGCA) and can be used for charter services. Nearly 130 non-scheduled operators are believed to be registered with the DGCA and a sizeable chunk is estimated to be used for charter services.
Ground handling services include a wide range of services at an airport including check-in, luggage handling, aircraft cleaning, cargo handling and ramp handling. Currently, domestic airlines are allowed to use their own crew for ground handling services, however, the foreign carriers are required to rope in third-party agencies for the same.
The government, in 2011, had formulated a policy to restrict domestic airlines from employing their own ground handling services and had mandated that third-party service providers be selected through competitive bidding for six airports including the four privately-held ones at Delhi, Mumbai, Hyderabad and Bangalore. The decision was challenged in the apex court by private domestic airlines. Although a final verdict on the issue is awaited, the court has allowed domestic airlines to use their own ground-handling services in the interim.
CAPA has estimated that with air traffic in India projected to triple over the next decade, India was likely to become a $1 billion ground handling market by FY2023.