India’s new Aviation Policy came into force in June 2016, following a considered and successful consultation period.
With India as the world’s fastest-growing aviation market, and expected to become the third largest aviation market in the world before 2025, the new policy reflects that position and enables the country to work towards accelerating growth.
The Indian Government first released their draft policy in 2014, making revisions and gaining feedback from stakeholders throughout the two-year period to produce a well thought-out and integrated policy to encourage the development of the Indian Aviation market.
The vision is to make flying affordable for the masses. The Indian Government also aims to enable:
- 300 million domestic ticketing by 2022 and 500 million by 2027,
- international ticketing to increase to 200 million by 2027,
- and cargo volumes to increase to 10 million tonnes by 2027.
The new legislation will change the nature of the Indian aviation market; creating opportunities for both domestic and international businesses. It will make flying affordable and convenient for the masses by establishing an integrated system that concentrates on regional connectivity and enhances the ease of doing business in India. With fiscal support and infrastructure development, regional growth and connectivity will be enhanced, tourism and employment promoted, and business in India advanced with deregulation and simplified procedures in aviation.
There is now a real opportunity for airlines, operators and investors to make a difference and contribute to growth within the Indian aviation market.
Key features of the new policy:
Airport development
The new policy encourages development of airports though private sector, government funding or PPP route. Whether this is the modernisation of airports or upgrades, the Airports Authority of India will now be encouraged to contract out these development through Operation and & Management (O&M) contracts. This is a great opportunity for private operators.
Brownfield airports will now also be able to benefit from 100% Foreign Investment, as this has been extended from purely Greenfield airports.
Regional Connectivity
The new Regional Connectivity Fund (RCF), acquired through a levy on domestic flights, will revive underserved airports in India, including new infrastructure and roads. Airlines will also be able to bid for financial support through the Regional Connectivity Scheme.
International Services
The restrictive 5/20 rule is now replaced by the 0/20 rule, meaning that airlines can start international operations if they have a minimum of 20 aircraft or 20% of their total capacity is deployed in domestic operations. New domestic airlines in India will now be able to start international operations quickly, without having to fly for five years in a domestic capacity first.
The liberalisation of bilateral air service agreements (ASAs) will also help India’s connectivity through an open skies policy on a reciprocal basis. Airlines from European or Saarc countries will have unlimited access to Indian airports.
This is a great development for Indian aviation, and we look forward to seeing the results in this exciting market.
Image Source: By Himmat Rathore from New Delhi, India (Air India, Boeing 747-437) [CC0], via Wikimedia Commons