New civil aviation policy will take 'flying to the masses': all you need to know

The Union Cabinet approved the new civil aviation policy on Wednesday. The new policy focuses on taking "flying to the masses" and making it "affordable, convenient, cheap."

The long-awaited policy will make it simpler for new domestic airline companies to start flying international routes, will make short-span travel cheaper, focus on improving regional connectivity, develop chopper and charter operations, and lots more. 

The final draft of the civil aviation policy was sent to the cabinet on June 3. However, it was first made public in November and has been held up since as the stakeholders of the aviation industry battled it out on key issues they disagreed on. In that, the yester-year 5/20 rule took the podium. The final policy was deferred for months as the ministry took its time to decide on the rule that mandated new airlines to fly domestic routes for atleast five years and have a fleet of 20 aircraft before they can go international. This rule has been tweaked in the new policy. 

Here's all you need to know about the new civil aviation policy: 

1) Archaic 5/20 rule is now 0/20

The 5/20 rule was a huge hurdle for new domestic airline companies that wanted to expand their wings and go international. While the civil aviation ministry pondered upon the fate of the rule, Indian carriers were divided into two parties -- the 'keep' camp and the 'scrap' camp. The 'keep' camp included airlines that have been flying for some time now, which means they were forced to adhere to the 5/20 rule before they could even consider going international -- viz. Jet Airways, SpiceJet, Indigo, Air India. They wanted the rule to stay in the new policy too, saying that doing away with it with only give undue advantage to new players. The 'scrap' camp included the newbies in the industry like AirAsia and Vistara which would get a chance to fly international if it was done away with. 

The new aviation policy has partially done away with the rule. It has scrapped the 5-year rider and kept the 20-aircraft requirement -- ie 5/20 is now 0/20. This means, a new airline regardless of how long it has been in operation, can go international once it has a fleet of 20 aircraft. 

Other rules to allow domestic airlines go international have also been made simpler. 

One of the mandates, however, says that carriers will have to deploy atleast 20% capacity for domestic operations even after it goes overseas.

2) A cap on short duration flights -- Air travel to get cheaper

With the country's population of nearly 1.3 billion, only 0.08 billion fly by air annually, Civil Aviation Minister Ashok Gajapathi Raju tweeted recently. This means, there is huge potential for the domestic aviation sector to grow and prosper.

For this, the cabinet has approved a cap on short-span flights. It has capped the flight ticket rates for journeys with 30-minute air time at Rs 1,500 and the ones with one-hour air time at Rs 2,500.

To make this possible, the new policy will aim at bringing down tax-based cost for airlines. All the states will be required to bring down VAT on ATF to 1%, and a viability gap funding will be provided by the government to help it cut ticket cost. 

3) Regional Connectivity Scheme 

India's 35-crore strong middle class only flies once in four years. To correct this, the government has identified 350 unused airstrips and airports. They will be revived in a phased manner, depending on the demand. A regional connectivity fund will be set up with a levy per departure on domestic flights. This will not include the flights that cater to north east and island.

4) Cancellation fees

The policy will put a cap on cancellation fees. Under the new policy, it will not go beyond the basic fare. 

5) Refunds

Getting refunds for cancelled tickets or flight will be made easier. The sector will work upon giving the refund within 15 days of the cancelled ticket or flight. Even cancellation of special and promotional fare tickets will be eligible for refunds, which was not the case so far. 

The compensation for  cancelled flights has also been hiked under the new policy. 

5) 2% cess on regional flights scrapped

The government wants to tap the large population that still doesn't fly and bring them in, to boost the sector. For this, the earlier proposed 2% cess on all regional flights has been done away with. The cess was proposed to collect funds to improve regional infrastructure.

6) Excess baggage fee reduced 

While the baggage allowance hasn't been hiked, the policy mandates a cut in the excess baggage fees from the current Rs 300 per extra kg to Rs 100 per extra kg over and above the permissible 15 kg up to 20 kg. 

7) Bilateral traffic rights

India currently has bilateral traffic rights with 109 countries. Under the new policy, India will have a the bilateral traffic rights on a reciprocal basis for countries beyond 5000 km those countries. Which means, if they have "open sky" for India, Indian skies will be available to them. This will ensure unlimited access for Indian carriers abroad. 

8) Fillip to chopper operations 

A different regulatory framework for choppers will be formed and separate chopper requirements will be issued by DGCA. For airspace under 5000 ft and outside prohibited air space, choppers will now not require huge clearances. This will help chopper services land and take off at construction and accident sites easily. 

9) Charter flights

The policy proposes to make charter flights easier for both, passengers and operators. The details of this were not revealed in the press conference.

10) Maintenance, Repair and Operations (MRO)

The government wants to make India into a MRO hub. For this, some concessions were announced in the Budget by Finance Minister Arun Jaitley. Most of the Rs 5,000 crore MRO business goes out of the country because of taxation issues and charges that airport operators levy on MRO. To change this, the policy mandates airport operators to bring down airport charges and royalty for MRO. They will have to reduct VAT on MRO and also provide adequate land for MRO. There will only be a single point certification and the processes to bring in imported items and tools will be made simpler to promote MRO.

11) Make unemployed Commercial Pilot Licence holders employable

The slowdown in the aviation sector has rendered thousands of CPL holders unemployed. They have been forced into odd jobs. To make them employable, the policy mandates setting up simulators for type rating of CPL holders so that their job prospects improve within the country or outside it. 

(With inputs from announcements made in the civil aviation policy press conference)