Ministers Discuss Draft Aviation Policy

A group of ministers on Thursday discussed the draft aviation policy including the existing norm for international flying by domestic carriers and the proposed options at a meeting chaired by Home Minister Rajnath Singh.

The dozen odd-ministers, including Finance Minister Arun Jaitley and Civil Aviation Minister Ashok Gajapathi Raju, held extensive discussions on the norm for international flying by domestic carriers and regional air connectivity, sources said.

"After the detailed discussions on the 5/20 issue, the decision (whether to continue with the existing rule or tweak it or scrap it altogether) has been left to the Civil Aviation Ministry," they said.

The decade-long rule, popularly known as 5/20, allows only those Indian airlines which have a 20-aircraft fleet and have operated in the domestic sector for five years to fly abroad. However, two startup carriers -- Vistara and AirAsia India -- are lobbying for its removal, but the established airlines want the status quo to be maintained.

The draft aviation policy, rolled out last October, contains several provisions like two per cent levy on all air tickets to fund regional connectivity and tax sops, among others, which would have financial implications when the policy comes for implementation.

The meeting, chaired by Rajnath Singh, was attended by Civil Aviation Minister Ashok Gajapathi Raju his deputy Mahesh Sharma, Finance Minister Arun Jaitley, Defence Minister Manohar Parrikar, Railway Minister Suresh Prabhu, Power Minister Piyush Goyal and Skill Development Minister Rajiv Pratap Rudy besides Civil Aviation Secretary R.N. Choubey, official sources said.

"It was quite a good meeting. Most of the issues in the draft civil aviation policy were discussed during the meeting," sources privy to the meeting said.

Significantly, the meeting comes a day after domestic airlines body Federation of Indian Airlines (FIA) sought Prime Minister's Office (PMO) intervention in incorporating some of its concerns while finalising the draft civil aviation policy.

Lobbying By Airlines
A delegation of airlines operators, under the FIA banner, representing four private carriers -- Jet Airways, IndiGo, SpiceJet and Go Air -- had yesterday called on Minister of State in PMO Jitendra Singh and submitted a memorandum, which included issues such as FIA's opposition to the removal of 5/20 norm, auctioning of additional seats to foreign players and the issue of substantial ownership and effective control, among others.

This was the first ministerial-level consultation on the draft policy document after its roll out. So far discussions were held between the Ministry of Civil Aviation and the stakeholders in the sector like airlines, airport operators, among others.

The draft policy proposes various tax sops and over 50 per cent FDI for Indian carriers besides setting up of no-frills airports and providing viability gap funding for airlines for regional connectivity, capping of airfares at Rs 2,500 for one-hour flight under regional connectivity scheme for places that are unserved currently as well as auctioning of bilateral rights.

At present FDI limit in aviation is 49 per cent.

Under open skies policy, foreign airlines can operate unlimited number of flights into and out of India.

In a memorandum submitted to the minister, the airline operators demanded that they should also be kept on board as stakeholders during the consultations before finalizing the new policy.

The memorandum claimed that the FIA represents 90 per cent of the Indian air industry and therefore "their views deserve to be heard before finalizing any policy."

"They complained that while no other country in the world allows substantial ownership and effective control of its Airlines to be taken over by foreign Airlines, India has permitted some airlines to operate despite being effectively controlled by their foreign parent," an official release had said.

The memorandum also drew attention to the fact that while, for the already operating domestic airlines, the condition laid down by the Civil Aviation Ministry is to serve for at least 5 years and own at least 20 aircrafts before applying for rights to fly abroad, it had said.

(But) the new policy is said to exempt the new airlines from this obligation which will amount to injustice towards the already operating airlines," it added.

(PTI)