March Towards A Bright Future!

In early 2014, during the run up to the national elections, there was immense optimism in the civil aviation industry about the capability and intent of the Modi-led NDA Government if it came to power, to take decisive steps to revive this ailing and stagnant sector that has a crucial role in the well being of the national economy. However, by the end of 2014, there was widespread disappointment in the Indian civil aviation industry at the lack of action by the NDA Government and the consequent failure to deliver on the expectations generated earlier. The plan to build a large number of regional airports to enhance regional connectivity to provide the much needed impetus to regional aviation was placed on hold. Also, the controversial 5/20 rule defining the norms for flying on international routes by the newly established airlines seemed to have been relegated to the backburner.

The status quo was particularly agonising for the Indian civil aviation industry which, as per analysts and experts, possessed the attributes for emerging as the third largest aviation market in the world by 2030. The only significant achievement by the Indian civil aviation industry that was visible was the upgrade of India’s air safety rating to Category I status by the US Federal Aviation Administration (FAA). However, after 20 months of governance by the NDA Government, things appear to have begun to change. The Ministry of Civil Aviation (MoCA) has made major policy changes to make it easier for airlines to acquire aircraft. As per the existing procedure, the scheduled operators were required to obtain no objection certificate (NOC) from the MoCA for acquisition of aircraft. Burdened with bureaucratic impediments, this was a procedure of mind boggling complexity was a nightmare for the prospective buyer. In order to make the procedure for acquisition of aircraft by the carriers more business friendly, the MoCA has delegated the power to grant NOC to the Directorate General of Civil Aviation (DGCA). Prospective buyers are no longer required to obtain initial clearance from the MoCA. The Minister of Civil Aviation P. Ashok Gajapathi Raju has adopted a progressive approach to the industry. He believes that as the Indian civil aviation industry needs to induct a large number of airplanes to sustain a healthy rate of growth, his Ministry will do everything possible to eliminate red tape and thus make it easier for the airlines to conduct their business.

It appears that the move to scrap the highly restrictive 5/20 rule is gathering true momentum. Ashwani Lohani, the newly appointed Chairman and Managing Director (CMD) of Air India, has reversed the stance of his predecessor. Lohani is of the view that scrapping the 5/20 rule will introduce liberalisation in the norms for flying abroad for the newly established carriers that will help boost international traffic from India as well as encourage new airlines to foray into this arena. Reports indicate that the proposal to scrap the 5/20 rule has not only the backing of the Minister of Civil Aviation Gajapathi Raju who has been forcefully advocating this reform saying that this rule was damaging the nation’s reputation; but also of Prime Minister Narendra Modi. In an answer to Jayant Baranwal, Editor-in-Chief, SP’s AirBuz, during an exclusive rendezvous early this year, the Minister of Civil Aviation said “I think this (5/20 rule) is an impediment to the growth of Indian aviation”. (the excerpts appear on page 10 of this issue of SP’s AirBuz; the rendezvous with the Minister was first published by SP’s Aviation 1/2016 on page 12).

Assessment by the Centre for Asia Pacific Aviation is that the 5/20 rule in its present form is unlikely to find a place in the National Civil Aviation Policy (NCAP) 2015. The 5/20 rule is likely to be replaced by what is being projected as a more fair and just system based on accumulation by newly established carriers of points termed as domestic flying Credits (DFC). New airlines will earn DFC while flying on domestic routes, points earned being substantially higher if they opt to fly to the airports located in remote areas of the country. This is likely to encourage airlines to connect metro cities to secondary airports. DFC accumulated can be redeemed to fly in the international segment. The NCAP 2015 in draft form has been under circulation amongst all the stakeholders for about a year or so for their comments and suggestions and the policy should be finalised and hopefully implemented in the near future. In the Interview mentioned earlier, the Minister gave the assurance that the NCAP 2015 was in the final stages of processing and would be implemented soon. A policy evolved through a process of wide consultation amongst the stakeholders is likely to find better acceptance by the Indian civil aviation industry.

Finally, the Indian civil industry is receiving the attention from the government that it deserves for it to sustain its march to a bright future!