Government to put in place new civil aviation regulator

Published: 06th August 2012 08:29 AM  |   Last Updated: 06th August 2012 08:29 AM   |  A+A-

The aviation sector is all set to have a new civil aviation policy and a  new civil aviation authority on lines of other regulatory bodies that are already in place in different sectors. The absence of a civil aviation policy was not only impeding growth of the sector but was also leaving the industry in bit of disarray for want for policy direction.

The new framework will have extensive suggestions on policy for airports, airlines, connectivity, economic regulation, air-traffic management and environmental issues while the authority would then take over the role being taken care of by DGCA which is apex regulator for civil aviation safety.

The Ministry of Civil Aviation with its all-new team is working towards revising the existing Aircraft Act and put a new Bill in place all together.

In 1934, when the Aircraft Act was legislated, the major emphasis was on ‘Aircraft’ and the related issues only and till date continues to be the bible for aviation related rules in the country.  However, the current emphasis is on safe and secure, efficient and sustainable air transportation of passengers and goods.

“The Aircraft Act has a basic lacuna. Virtually all functions and powers are vested with the Union government and in turn delegated to DGCA. Even the safety audits carried out by ICAO and the Federal Aviation Authority, USA have pointed out that the power should be vested in an organisation and not an individual,” a senior ministry official said.

Hence the new civil aviation authority will be empowered for regulating the civil aviation sector. Civil Aviation Authority of India (CAAI) would regulate the aviation sector through the Aircraft Act, 1934 or the newly proposed Civil Aviation Act through a collective decision of its board.

“The new policy should set out both short and long term solutions to rationalise tax rates; initially classifying ATF as a ‘declared good,’ attracting a 4% tax rate, and eventually incorporating ATF into the goods and services tax. The high airport fees and add-on like land rent, throughput, taxes, and infrastructure fees should be reduced. Most foreign airlines are discouraged from fuelling in India owing to these reasons,” a representative from Nathan Economic Consulting India said. The consultant has submitted reports on ATF and fare regulation which is under ministry’s consideration.

KPMG has suggested that the maintenance, repair and overhaul division should be focused as the sector is expected to triple in size from `2,250 crore in 2010 to `7,000 crore by 2020. “India has the potential to be an MRO hub due to the growing aircraft fleet, location advantage and availability of talent. However, this future size may still be small compared to the present MRO industry size of other countries such as UAE (`8,000 crore per annum) and China (`10,000 crore per annum),” the consultants with the ministry submitted.

Eleven states have comparatively less air connectivity vis-a-vis population - Bihar, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Meghalaya, Odishsa, Punjab, Rajasthan, Uttar Pradesh and Uttrakhand. Their capitals are on airmap but other towns remain unconnected. “Airlines should be given incentives to start in such places and bring about a larger connectivity,” an AAI official said. While concerned stakeholders have submitted extensive suggestions on the new policy, Australian firm CAPA has suggested that the ministry should be restructured to allow it to lead and manage new thinking. “An interim council of full-time aviation experts should be appointed to support Joint Secretaries. Air India and AAI should be restructured with clear and immutable milestones,” they said.

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