India's New Civil Aviation Policy Promises Better Connectivity, Cheaper Fares, Easier Travel

15/06/2016 5:27 PM IST | Updated 15/07/2016 8:27 AM IST
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TOPSHOT - An airliner of India's IndiGo carrier flies over the setting sun in New Delhi on February 10, 2016. AFP PHOTO / Prakash SINGH / AFP / PRAKASH SINGH (Photo credit should read PRAKASH SINGH/AFP/Getty Images)

A raft of new aviation rules could make air travel cheaper and open up more airline options for international travel, while boosting domestic, regional air travel, the government has announced.

The government has scrapped the controversial '5/20' aviation rule that restricted domestic airlines to operate on international routes. According to the rules of the new National Civil Aviation Policy, any airline that has a fleet of over 20 aircraft or deploys 20 per cent of its capacity on domestic routes can now fly overseas.

The Union cabinet Wednesday cleared a number of new measures sought in the new policy, sending a the stocks of several airlines soaring. Civil Aviation Minister Ashok Gajapati Raju, who called the move a "game changer", announced the following measures among others:

• Airfares will be capped at ₹1,200 for 30 minutes, and ₹2,500 for hour-long flights.

• An increased focus on regional connectivity. A "small levy" will be charged on all domestic flights for a egional connectivity fund.

Airlines will be required to serve more flights to North East India and island territories. The minister said that airlines any cancellations of routes in the North East will have to notify the ministry.

• The '5/20' rule is going away: All airlines that have a fleet of over 20 aircraft can fly overseas immediately as long as they have an air operator license or deploy 20 per cent capacity for domestic operations. The 5/20 rule had prevented Indian airlines from flying overseas unless they have operated for at least five years and have a fleet of 20 aircraft. Details were not immediately available ahead of a planned government briefing.

• On bilateral traffic rules: The government is going to be “progressive” on this front, he said, adding that India will seek a reciprocal ‘open sky’ policy with SAARC countries and countries that are more than 5,000 kms away from India. For countries located within 5,000 kms from India, the methodology for additional entitlements for domestic carriers will be worked out. India has bilaterlal traffic or air service agreements with 109 countries.

• Domestic airlines will not require prior approval before entering code share agreements with other airlines.

• All domestic airlines can now do self-handling without beaching security. As costs of outsourcing reduce, the ticket prices should come down, according to him. In general, the ground handling policy “should be such that brings down the operational cost of airlines,” he said.

• There will be separate rules for helicopters. India will look at four heli-hubs and introduce helicopter emergency services.

Airlines have been divided on the rule change with incumbents like Etihad-backed Jet Airways, InterGlobe Aviation's Indigo Airlines and SpiceJet opposing it.

Tata Group's two recent ventures - Vistara, in partnership with Singapore Airlines, and AirAsia India, a venture with Malaysia's AirAsia Bhd - are in favour.

Shares in Jet Airways, InterGlobe and SpiceJet rose on news that the policy had been approved in a move that, analysts said, would boost the overall aviation market.

With Reuters and PTI inputs

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