India releases draft civil aviation policy, seeks to reduce ATF costs, to corporatise AAI

India's Civil Aviation Ministry released (10-Nov-2014) the Draft Civil Aviation Policy, with Civil Aviation Minister Shri Ashok Gajapathi Raju Pusapati stating: "It is a step towards making civil aviation a vibrant sector in our country, to rise to its full potential...it aims to develop a transparent policy in which regulations for the Civil Aviation sector would be more meaningful". The new Civil Aviation Policy is expected to be in place by Jan-2015. The draft has been released for consultation with public and stakeholders within three weeks, after which six to seven groups of experts would be constituted to interact with stakeholders and review the inputs received during the process. The new draft policy on civil aviation proposes enhanced regional air connectivity, rationalisation of jet fuel costs along with broader institutional reforms such as the corporatisation of the Airports Authority of India (AAI) and development of a road map for Air India's future. Details include:

• Airports: The Draft notes that "airports are to be designed as integrated multi-modal hubs, so that they provide the best possible service levels as well as potential for growth. An integrated multi-modal hub should include rail, metro, bus and truck connectivity as well as accommodation and other services". While developing airports, it was noted that it is equally essential to ensure that related sectors such as access to manufacture, business, tourism and pilgrim centres are developed, with the Ministry also noted that this needs to be done in association with other Central Government Departments as well as the State Government/Union Territory. The six metropolitan airports at Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad would be developed as major international hubs and would in future be the main access points for international travel to and from India. In future a "hub-and-spoke" model would be followed, which would also facilitate the development of regional networks and air connectivity as a whole;
• Bilateral: The existing bilateral agreements with foreign bilateral agreements will be designed in such a way as to facilitate the hub-and-spoke model;
• ATF: The Draft puts emphasis on rationalising the cost of Aviation Turbine Fuel (ATF). The Ministry notes that due to high rates of taxes, the cost of ATF in India is 40 to 45% higher than the international costs. Steps will be taken in association with the Ministry of Finance and State Governments to rationalise the rate of taxes so that costs are competitive;
• Cargo: The Government proposes to substantially develop the transport of cargo by air for which there is considerable potential. To achieve the objective, the six metro airports will be developed as regional cargo hubs, integrating multi-modal transport facilities, cold chains and other commodity specific requirements. The turnaround time for cargo will be upgraded to international standards. Air freight stations will be developed in different parts of the country to streamline customs clearance and to reduce congestion in the airports;
• Air India: An Expert Committee will be constituted to develop a future roadmap for Air India;
• AAI and Pawan Hans Ltd listing: AAI will be corporatised, followed by listing in the Stock Exchanges, in order to improve efficiency and transparency. Pawan Hans Ltd will be listed in the Stock Exchanges with the same objective. A mission mode project will be set up to ensure that organisations under the Ministry are competitive in terms of efficiency and costs;
• Air Connectivity: The government's objective will be to provide optimum air connectivity to all regions, subject to commercial viability. A special package will be developed for the North-Eastern Region to improve air connectivity and provide linkages to remote locations. The Route Dispersal Guidelines will be reviewed with the objective of encouraging Indian carriers to enhance regional connectivity through deployment of small aircrafts and code sharing arrangements. The 5/20 guidelines will be reviewed with a view to encouraging the entry of new Indian carriers;
• ATM: For development of the civil aviation sector, provision of Air Navigation Services (ANS) of international standards is essential. The Airports Authority of India has taken several initiatives in this direction. These would be intensified with the objective of reducing flying time, elimination of crowding at airports, direct routing of aircraft from destination to destination and enhancing communication and navigation services to international standards;
• Helicopter Aviation: The Ministry noted that this is a segment that has considerable potential for growth in areas such as reducing congestion in the big cities, medical evacuation, relief operations, law and order and oil exploration. Heliports and helipads will be developed in locations with sufficient potential. It is also proposed to provide suitable incentives to helicopter operators in respect of operational costs in the airports;
• Online: The functioning of Ministry of Civil Aviation and the offices under the Ministry will be digitised to improve efficiency and transparency. The service and clearances to be given by different agencies will be made online. Electronic procurement systems will be strengthened to ensure transparency and accountability. [more - original PR - PR] [more - original PR - Draft Policy]