New aviation policy: Here’s what’s going to ‘prompt’ people to fly

By: and |
New Delhi | Updated: June 18, 2016 7:41:29 AM

A day after the first comprehensive national civil aviation policy was cleared by the Union Cabinet, civil aviation minister Ashok Gajapathi Raju told Bilal Abdi and Sumit Jha...

The government in its wisdom has decided that this is not the right time to increase FDI in the aviation sector, said Ashok Gajapati Raju.The government in its wisdom has decided that this is not the right time to increase FDI in the aviation sector, said Ashok Gajapathi Raju.

A day after the first comprehensive national civil aviation policy was cleared by the Union Cabinet, civil aviation minister Ashok Gajapathi Raju told Bilal Abdi and Sumit Jha that the policy formulation process involved substantial churning and the final results would ensure that the recent growth momentum in the sector is sustained. Excerpts:

What kind of response did you get after the release of draft civil aviation policy?

The whole policy got a good response from all stakeholders. I am sure some people may still have problems but you can’t do much about that as you can’t please everybody. The whole point of coming out with the policy was to try and sustain the growth and keep the momentum going and of course, the regional connectivity. We are a big country so regional connectivity is an extremely important factor. In fact, it is a commitment of the government and the BJP manifesto talks about regional connectivity and how to make that a reality.

With the aviation sector witnessing rapid growth, what steps is the ministry taking to handle such growth in passenger traffic?

We have 30-31 airports which are non-operational. So these become low hanging fruits. With the viability gap funding we are hoping that such airports will bounce back, it is almost ready infrastructure. The finance minister while presenting his Budget expressed the intention of putting up 50 airports. These are the no-frills airports we have been talking about.

What has been the feedback of states with respect to lowering taxes for regional connectivity scheme (RCS) and maintenance, repair and overhaul (MRO) companies?

The states have shown interest in the RCS. They have shown willingness but there is another angle to it. Wish list is different from willingness. Actually, giving up taxes is not such a burden as the ready but idle infrastructure which you have is not giving you any gains.

The draft aviation policy talked about auctioning of unused bilaterals which was discarded in the final policy? What was the rationale behind it?

We were thinking of unilaterally auctioning such bilaterals in a transparent manner but this idea had implications with other departments like external affairs. The best way to go about this was to transfer this responsibility to the cabinet secretary. They are in a better position to coordinate with other departments and find a solution.

Could you elaborate on RCS, especially on the working of the Rs 2,500/hour fare?

Even though the Rs 2,500 figure is a bit arbitrary, but we figured that this price is probably the tipping point which will prompt them to travel. This scheme has excited the imagination of a lot of people. We are coming out with the details of the scheme in a few days. India is a big country and the RCS routes need to be equally distributed. Some of the states are already giving differential subsidies.

Will hybrid-till method of fixing airport charges be applicable to all the airports?

Hybrid-till will be restricted to green field airports. Non-aeronautical revenues are used to subsidise aeronautical revenues and is a prevalent model everywhere in the world. If you are able to keep your aeronautical revenues low, your commercial activity increases.

Hike in FDI was not considered as part of the policy? what is the rationale behind it?

The government in its wisdom has decided that this is not the right time to increase FDI in the aviation sector. The ministry was in favour of it but this issue can be tackled outside the policy too and hence it was kept out of the policy ambit.

Has the proposal to convert the safety regulator DGCA into an overarching Civil Aviation Authority been scrapped?

DGCA is the safety regulator of the government of India. DGCA was downgraded at a point of time but as we rectified our shortcomings, the regulator regained its status. We have addressed most of the problem and what we need is DGCA to work in a transparent manner.

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