The Union Cabinet has finally passed much-awaited civil aviation policy.
The Union Cabinet has passed the new civil aviation policy on Wednesday. The draft of the new civil aviation policy was made public for the first time in November last year and the final draft was submitted to the Cabinet on June 3.
Commenting on the new policy announcement, Civil Aviation Minister Ashok Gajapathi Raju tweeted:
The archaic 5/20 rule which required airlines to fly for atleast five years and have a fleet of 20 aircraft has been partially done away with. However, the 20 aircraft rule has been retained.
This means, a new domestic player in the aviation sector can go international in the first few months if it has a fleet of 20 aircraft. Other norms for domestic carriers to go international have also been simplified.
While this will be a reason to cheer for new players in the domestic market, like AirAisa and Vistara, it will make the established ones like Jet Airways, SpiceJet and IndiGo, who were forced to adhere to the 5/20 rule, squirm.
One of the main focus points in the civil aviation policy for the ministry was regional connectivity. 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.
However, a cess of 2% has been levied on Mumbai-Delhi flights.
Too boost regional connectivity, the proposal of a cap of Rs 2,500 on one-hour long regional flights has been approved by the cabinet. Which means all flights tickets with a air time of one hour or less, will not go beyond Rs 2,500. Fares for 30-minute flights have been capped at Rs 1,500.
The Civil Aviation Ministry will be holding a press conference about the new policy at 4 pm.
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