Admitting that the finalisation of the civil aviation policy is behind schedule, civil aviation minister Gajapathi Raju on Wednesday said that it would be brought before the Cabinet for approval by the end of the month. The policy, which primarily seeks to take a decision on scrapping the 5/20 rule has seen the incumbent carriers and the newer ones sparring with the former wanting its retention and the latter, removal.
Additionally, the civil aviation secretary allayed fears of a fare hike on account of increase in the excise duty –from 8% to 14% — on the aviation turbine fuel (ATF) proposed in the Budget. “Considering that the ATF price has fallen by 35% over the last few months, airlines should be able to absorb a 6% increase in excise duty without having to pass it on to the consumers,” RN Choubey, aviation secretary said.
Meanwhile, the association of scheduled carriers, Federation of Indian Airlines, has alleged that the oil companies had hiked ATF prices for March without any explanation, a move that lacked transparency as the quantum of hike couldn’t be justified even after factoring in the excise duty hike due to steep decline in crude prices over the last two months.
“In March 2016, FIA members have been informed of a 12% increase in prices without any explanation. No response has been received from oil companies regarding this price revision and oil pricing continues to be non-transparent,” FIA wrote to petroleum minister Dharmendra Pradhan on Wednesday.
Further, the FIA demanded rollback of price revision and appointment of an independent price regulator, failing which, the association will refer the matter to Competition Commission of India (CCI).
Commenting on the ongoing tussle between the ministry and FIA, Choubey dismissed the latter’s claim that government hadn’t given them a proper hearing and said that airlines had at least two consultative meetings with ministry officials in December. He added that the government was working to ensure that any change in the 5/20 rule will balance concerns on level playing field and capacity expansion.
On the aviation policy front, Choubey said that the government would need to raise funds to support regional connectivity scheme (RGS) using viability gap funding but it hadn’t finalised the method for raising money. The draft aviation policy had suggested levying a 2% cess on metro routes to fund RGS.