The Indian aviation industry is anticipating the accommodation of close to 367 million travelers by the year 2034; but, in order to do so, the IATA predicts the industry will need to undergo a major transformation.
The Ministry of Civil Aviation (MoCA) recently released a draft National Civil Aviation Policy (NCAP), which is a step in the right direction for the country’s air travel. Phee Teik Yeoh, CEO of the Indian airline Vistara, said, “The government is taking a consultative approach and interacting with all stakeholders, including the airlines to come up with the best solutions that would propel Indian aviation to become the third largest market in the world.” Yeoh continued, adding, “The new civil aviation policy draft reflects a more liberal regime and a pro-growth approach.”
The draft policy takes a more strategic approach to industry regulation. Under the proposed NCAP, airlines will be able to enter codeshares without MoCA approval; see a zero-rating service tax on maintenance, repair, and overhaul (MRO) services; and promote a sustainable aviation system, with clearer ground handling policies included. Amitabh Khosla, IATA’s Country Director for India, noted that the main focus of the NCAP is to expand India’s aviation market and more adequately address the challenges the industry is currently facing. Khosla emphasized that there are several gaps that need to be filled before the NCAP can create an efficient, sustainable air transport sector, and contribute to India’s overall growth and development.
Though many of the aims of the NCAP are to create lasting improvements to the industry for travelers, other provisions are pointed toward potential revenue. The policy discusses the auctioning of traffic rights, but does not provide any details of how this auctioning would work. No other country in the world has such a policy toward air traffic. Ujjwal Dey, Associate Director of the Federation of Indian Airlines, warns that implementing this auctioning measure could mean consequences like higher fares, market distortion, and less flexibility in handling customer demand.
The draft NCAP would also lessen the powers of the Airport Economic Regulatory Authority (AERA), which has been relatively successful in its oversight thus far. In the past, for example, the AERA has helped implement a 78 percent reduction in charges at Delhi Airport, in place of the 340 percent increase previously proposed.
Formalizing the NCAP would make India one of only a handful of countries with a national aviation policy. Whether or not India implements the NCAP, it must implement some sort of improvement to its aviation industry. These changes are essential not only for the aviation industry, but also for the country’s overall economic growth.
IATA’s Director General and CEO Tony Tyler said, “It is critically important to get it right. We have major concerns over the proposed policy. But, we are keen to engage the government to find win-win solutions that strengthen the Indian economy, comply with global standards, support the sector’s successful growth, and generate benefit to passengers.” For more information regarding the Formal Aviation Policy, [Click Here].
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