A slew of changes, sops and benefits are on the anvil for air travellers, airline operators and affiliated companies operating in the Indian aviation sector as the Union Cabinet has approved the New Civil Aviation Policy on Wednesday (June 15), official sources said.
A formal announcement is expected at the Cabinet Briefing to be chaired by the Union Telecom minister Ravi Shankar Prasad and the Civil Aviation Minister Ashok Gajapathy Raju later in the afternoon.
The draft new civil aviation policy was unveiled in November 2015 after taking feedback and suggestions from the stakeholders. The main highlights of the draft policy included boost to regional air connectivity by capping the fare at Rs 2,500 for one-hour flights and Rs 1,200 for 30-minutes flights. Other changes proposed including tax sops for airlines, imposing a 2 per cent levy on all air tickets to fund regional connectivity schemes, providing viability gap funding for airlines and boosting maintenance, repair and overhaul business.
The new policy is expected to do away with the 5/20 rule, that allows a carrier to fly abroad only if it has 20 aircraft and has flown domestic for five years. This is expected to be replaced by 0/20 rule. The issue of international flying norm or the 5/20 rule has witnessed extensive debate, with legacy carriers opposing any changes to the rule, while start-up airlines frantically demanding its scrapping.
The civil aviation minister has already spelled out some incentives that will be provided to the air travellers including a cap on the cancellation charges which may not exceed the basic fare going forward. Upon cancellation of air tickets, the Airport development fees levied across airport like Delhi's IGI Airport, Hyderabad, Mumbai etc. will have to be returned to the passenger. The civil aviation ministry has also said that it will be strict with airlines if passengers are denied boarding despite having valid tickets due to overbooking. In such an instance, the airline will have to organise a flight in next one hour or compensate the passenger with a whopping 200 per cent of one way basic fare and airline fuel charge. And if the erring airline fails to arrange an alternate flight within 24 hours the compensation charge will be an even steeper 400 per cent.
Raju had told reporters last week: "These measures are passenger centric. We have kept passenger welfare in mind while coming up with these proposals".
Another grey area has been extra baggage. There has been lobbying by the airlines to decrease the free baggage limit or worse abolish it. But the ministry has kept a mandatory 15 kg free baggage that a passenger can carry. And if the baggage is anything between 15 to 20 kgs, the passenger will only have to shell out a mere Rs 100 per extra kg. Though after 20 kgs of baggage, airline is free to charge the way they want. Aviation Secretary Rajeev Choubey termed this rule as 'vital' since a lot of passengers used to end up paying a hefty amount for just a kilo of two extra.
Initially, the policy was expected to be finalised in the last financial year as certain proposals were to be implemented from April 1, 2016. Since then, the Government has been moving back and forth on the matter, primarily to strike a balance between various stakeholders on their glaring differences over issues.
BW Reporters
Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
