The long-awaited new National Civil Aviation Policy, in which regional connectivity is the central theme, is expected soon. Meanwhile, in recent months, crude oil prices have gone down considerably thus lowering airline operating costs significantly. However, the benefit has not been fully passed on to the passenger! Some policy changes such as increased level of foreign direct investment in civil aviation have also been introduced in the recent past. “India will be the third largest aviation market by 2024” has become more or less a slogan now raised at every public event that relates to aviation. However, the passion with which civil aviation stakeholders, be they scheduled and nonscheduled operators, airport operators, maintenance, repair and overhaul (MRO) agencies, cargo companies, travel agents, ground handling firms and bodies representing passenger interests, all gripe about the state of civil aviation is shrill in its audibility and plaintive in its content. The passion is vociferously disapproving of policies, infrastructure, regulatory framework, tax regimes and the fact that all of these reflect an establishment belief that civil aviation is a luxury which deserves to be milked for profit by the government despite gripe from stakeholders.

Scheduled Airlines

One long-standing wish of airlines is that aviation turbine fuel (ATF) be placed under the declared goods category so that a uniform, low rate of VAT/sales tax is applicable countrywide. As fuel costs account for around half of an airline’s operating costs, reduction in fuel prices would bring cheer to airlines, currently paying anywhere between four and 30 per cent VAT/sales tax depending on the state they are refuelling in. Related to this is the demand for rationalising fuel prices by removing the import parity pricing regime which imposes a duty on ATF as if it was being imported while in fact, India produces around double of its requirement and is an exporter. Then there is the high excise duty on ATF possibly for the same reason. Despite there being several vendors for ATF, the market is highly regulated and the cost of ATF in India is 58 per cent higher than the global average. If airlines were to be granted just one wish, it would be to reduce the price of ATF to international levels.

Other issues related to cost of operations are the tariff for aeronautical services, airport and user development fee and passenger service fees. These are monitored by Airports Economic Regulatory Authority but not to the satisfaction of the airlines which find these charges exorbitant and arbitrary. A proposal to cap air fares at Rs. 2,500 per hour has been dismissed by airlines as irrational.

Regional and remote area connectivity have been the bane of Indian carriers largely because of the way route dispersal guidelines (RDG) have been used since 1994 to browbeat airlines to fly unprofitable routes serving Tier-II/III cities. Instead, incentives to airlines flying to these airports would possibly have produced better results. To add to the undesirability of RDG is a related policy decision that prohibits airlines flying into any of these cities from withdrawing without prior permission from the Ministry of Civil Aviation (MoCA). Such permission is never granted even if the passenger traffic on the sector is consistently low. Airlines would be happy to see RDG go and let markets decide airline network planning.

The 5/20 rule, introduced vide Aeronautical Information Circular 2 dated January 21, 2005, specifies that “Scheduled Carriers having continuous operations of at least five years in the domestic sector on the date of application and having a minimum fleet size of 20 aircraft are permitted to operate on international routes.” Aviation watchers aver that the rule was introduced to thwart new airlines. There was also an infarction of 5/20 rule four months after it was promulgated, by Air India Express, which had been granted an independent Air Operator’s Permit and was permitted to fly international from the day it commenced operations. However, private airlines established after 2005 were forced to follow the rule despite persistent remonstrations. Meanwhile, Jet Airways which had been flying international since March 2004 and Air India continued to reap the benefits of the comparatively lucrative international sectors. Since their launch, Vistara and AirAsia India have been campaigning against the rule calling it unfair and without precedent. Ironically, the very airlines that opposed it tooth and nail during the years following its promulgation, now want it to continue so that newcomers suffer like they did. Thus on the issue of the 5/20 rule, the airline industry is divided. The alternative proposed by the government of airlines having to accumulate domestic flying credits (DFC) before being permitted to fly international has also not found favour amongst airlines. Related indirectly to the issues of 5/20 and DFC is that of bilateral rights which the government proposes to auction. Again there is protest by Indian airlines who would like to regain grounds inasmuch as foreign airlines now fly 70 per cent of international routes in and out of India.

One other black wish most airlines harbour is for Air India to be privatised. The national carrier is a drain on the economy but, more importantly, for other carriers, it is not a level playing field. This relates to domestic and international operations as also in the ground handling domain wherein Air India has been pampered with an effectively monopolistic role.

General Aviation

As per Business Aircraft Operator’s Association (BAOA), general aviation which includes business aviation, would like to be seen as an enabler. Studies indicate that business and general aviation contribute to the national economy. However, in India, growth of this segment has been stunted as it continues to be the worst afflicted out of all segments of the industry. The first and foremost reason is that most regulatory framework is tailored for airlines and then modified somewhat unsatisfactorily, for general aviation. In July 2014 the Secretary MoCA had set up a committee to look into rationalisation. The committee is yet to submit its recommendations. Without suitable regulations in place, the concept of Scheduled Commuter Airlines envisaged in the new draft National Civil Aviation Policy for improved regional and remote connectivity would be still-born. Rationalisation of regulations for business and general aviation thus remains that sector’s first wish.

GENERAL AVIATION OPERATORS STRONGLY FEEL THAT THERE IS A NEED TO INCENTIVISE AIRCRAFT IMPORT AND ACQUISITION RATHER THAN TO STIFLE IT THROUGH TAXATION POLICIES

Another issue with regulatory mechanism is that the systems in place in the Directorate General of Civil Aviation (DGCA) and Bureau of Civil Aviation Security (BCAS), the two organisations that every aircraft operator must deal with regularly, are old-fashioned and bureaucratic. Files move laboriously from desk to desk in this age where information and communication technologies have coalesced to provide instant solutions to information interchange. Prime Minister Modi’s e-governance stays afar from civil aviation as of now. General aviation would like to see a transformation of what it sees as a manipulative system so that routine issues can be dealt with speedily without creating impediments. As an illustration, if today a business house decides to import an aircraft, it would have to go through a laborious process that would take over 18 months before the aircraft is available to it. Similarly, routine clearances and renewals, which can be processed electronically, are processed in multiple hard copies and much delayed approval.

In August 2013, the DGCA issued Air Operator’s Certification Manual CAP 3100 which mandates voluminous checks for certification of all operators, large and small, uniformly. It includes checks before issue of Certificate of Registration for a newly inducted aircraft. However, as it is basically designed for airline operations, it could take a general aviation operator months to satisfy that list, resulting in aircraft lying grounded causing huge losses. General aviation operators are small-sized and would like to see this process optimised so as to save time and money.

Currently, it takes a long time for approval of foreign MRO agencies to get requisite approvals from DGCA while India lacks such facilities for most aircraft used by general aviation. DGCA’s procedure for granting approval to MROs is complex and timeconsuming. General aviation would like to see a time-bound schedule for the process of granting approvals so as to prevent avoidable delays in maintenance activities and eliminate ground time for aircraft due for MRO.

The procedure for obtaining permission to fly abroad also needs to be streamlined and possibly replaced by an online system that facilitates quick departures at short notice for business trips out of India, a frequent requirement by business houses. Another painful issue for general aviation operators wanting to import a new type of aircraft is the burden of training a team of DGCA officials at the operator’s expense. This financial burden ought to be borne by the regulator as it is tasked with oversight of operations.

As for infrastructure, general aviation would like to see dedicated heliports, fixed base operators (FBOs) and possibly general aviation terminals that cater for their specific needs. General aviation would like to have new airports constructed with substantial infrastructure and rework existing agreements with private airports to do away with the clause forbidding airports within 150 km or at least obtain a dispensation for general aviation airports. This is especially a need for general aviation as the private metro airports have not given any thought to general aviation needs while concentrating on scheduled airlines that generate bulk of the revenue. Parking and related operational problems abound at metros, the worst being Mumbai which is particularly hostile to general aviation aircraft, even imposing daily curfew time during which general aviation aircraft cannot land or take-off. Penal charges are imposed for parking at Mumbai, even when additional parking is available, thus inhibiting movements of industry doyens into and out of Mumbai. General aviation aircraft wanting to bring an important personage to Mumbai on short visit are shooed out and asked to return when their passenger is ready to depart. In a way, this approach negates the very purpose for which business houses acquire aircraft, the flexibility to move quickly from one meeting to another at short notice in pursuit of business objectives. Possibly the push to develop more airports would partially redress this problem.

High fuel cost discussed in the context of airlines, has a similar debilitating effect on general aviation. Also, general aviation would like to use piston-engine aircraft for moving small payloads between small airstrips; but these use AVGAS and not ATF used by jet and turboprop aircraft. AVGAS availability is a problem as oil companies do not find it profitable to provide it at all airports due to miniscule demand. General aviation operators, especially those eyeing modern piston engine aircraft, would like to see more airports storing AVGAS.

The taxation and fee regime related to general aviation is also an area where the sector nurtures dreams. Import duty on aircraft, especially if procured for private or business purposes, is oppressively high and may be the single factor that has stunted the growth of general aviation in India. If levying import parity pricing on ATF is irrational, so is the levy of countervailing duty on aircraft when no civil aircraft is being manufactured in India. The current burdensome tax regime was suddenly put into place in 2007 just as civil aviation appeared to be blossoming in the wake of liberalisation. General aviation operators strongly feel that there is a need to incentivise aircraft import and acquisition rather than to stifle it through taxation policies. If this tax regime was to be revisited, general aviation entities aver that the enhanced direct tax collection as a result of increase in aircraft imports and usage would compensate for the loss due to rationalising the import duty structure. The charges by MROs, ground handling agencies and FBOs tend to be exorbitant largely due to the hefty royalties imposed by airport operators especially in Mumbai and Delhi. Recently in Delhi, general aviation operators have been issued with eviction notice for hangar space occupied by them for decades so as to make way for two firms being allowed an oligopolistic stranglehold over general aviation operators. Inevitably, the high royalties these firms will pay to the Delhi International Airport Limited (DIAL) will be passed on to the operators thereby raising cost of travel to the commercial passenger or the business traveller as the case may be. As can be expected, in this case general aviation is not content to just have another wish added to its unfulfilled list. BAOA, that has been spearheading the campaign to unshackle general aviation, has decided to file a writ petition in court against what it sees as an unfair move possibly bad in law but certainly bad for general aviation. The DIAL move could well be emulated by other airports in their pursuit for higher revenues. General aviation would also like to see hangar rentals regulated as aeronautical charges in accordance with provisions of AERA rather than arbitrary nonaeronautical charges levied by airport operators and increased periodically and unjustifiably.

General aviation sees itself as capable of making vital contribution to providing remote and regional air connectivity in India and has already provided MoCA with details of ten clusters with two airports each which could be promoted as general aviation hubs to improve connectivity in areas suffering from lack of it.

Finally, general aviation is clamouring for a Joint Working Group comprising AAI, DGCA and BCAS officials along with industry experts from BAOA and Rotary Wing Society of India (RWSI), which specialises in operational and safety issues related specifically to rotary-wing affairs, to go into the problems being projected constantly by BAOA on behalf of general aviation operators.

Rotary-Wing General Aviation

The first civil helicopter flew in India in 1953 and until the formation in 1986, of Helicopter Corporation of India (now Pawan Hans Helicopters Limited) Rotary Wing General Aviation remained limited to communication and crop spraying. Subsequently, it did grow; but in a rather malnutritive manner and currently is afflicted by all the problems discussed for general aviation in addition to some specific to rotary-wing operations.

The high cost of ATF pinches helicopters the most as fuel makes a much higher dent into direct cost of operations for rotary-wing operations as compared to fixed-wing. The government has reduced sales tax on turboprop aircraft for regional airlines, but rotary-wing operators, who have been clamouring about their craft being turboshaft engines driving a rotor system are denied that benefit. Considering the fact that most of their non-off-shore flights are into regional and remote areas, this demand sounds reasonable and worthy of consideration. There is no customs duty on helicopter spares; but if the OEM or a vendor supplies spares from stock held in India, sales tax is levied. Helicopter operators would like to see this sales tax on non-custom duty spares removed.

The inherent flexibility of a helicopter is often negated by the cumbersome practices involved in flying to a helipad which is not in regular use. RWSI has prepared a draft SOP to expedite these clearances and to eliminate frequent delays and cancellations.

One painful gripe of helicopter operators is a set of fees such as route navigation facility charges (RNFC) and terminal navigation & landing charges (TNLC) levied by AAI on helicopter flights even when no such services are provided. RNFC charges are being levied for each helipad visited even though radio navigation services cannot be availed of in hilly terrain due to the visual flight rules (VFR) flights undertaken by helicopters. Even elsewhere charges are very high. A Bell 407 carrying six passengers from Delhi to Jaipur will typically charge Rs. 69,000 for a one-way trip; but pay around Rs. 31,000 to Delhi airport/AAI. In effect, a little less than half of what the passengers are paying goes to AAI. Helicopter operators would like to see these charges reduced so that operations can become profitable and attractive to customers. Ground-handling charges at some airports are extortionate not just because of their magnitude but also because ATC clearance for departure from the airport is predicated to payment, usually in cash. Even if a helicopter does not use any service, it ends up paying a five-figure charge before its hostage status is lifted. In short, the helicopter operators’ wish list looks for freedom from an oppressive regime of unwarranted charges and fees. Because of their comparatively short sector lengths, the impact of sundry charges for helicopter flights tend to be high as a proportion of charter costs as compared to fixedwing aircraft. Helicopter operators would like to see this arithmetic factored into the charges levied.

There is also a need felt by helicopter operators for a rotarywing division in AAI to specifically address issues related to helicopter operations, helipads, heliports along with allied issues like weather reporting, refuelling, safety services, ground handling, etc. This step will also move ATC practices away from treating helicopters like fixed-wing aircraft thus restricting their utilisation and causing delays and unsafe situations. Some Aeronautical Information Publication supplements laying down routing instructions for helicopters flying into Mumbai and Delhi are frequently ignored by ATC as they are difficult to dovetail into routine fixed-wing operations controllers are more familiar with.

Helicopter operators would like to hark back to the recommendations of MoCA Committee Report on Civil Helicopter Operations (October 2008) and also to the 169th Report of Parliamentary Standing Committee on Safety of Helicopter Operations in India (August 2011). Many of the recommendations of these two path-breaking reports continue to be disregarded. Implementing them would probably prune the helicopter wish list considerably.

Airports

As far as airports are concerned, the top wish is that licensing norms for small airports be lower than those for metros and big stations. Low-cost airports are a part of low-cost airlines’ aspirations; but as far as airports are concerned, this is a low priority for them as revenues from such airports would be lower.

THE AIR CARGO SECTOR FEELS THAT REGULATORY FRAMEWORK HAS BEEN DRAWN UP WITHOUT ADEQUATE INPUTS FROM THE INDUSTRY ITSELF

While on airports, some would like to see airport security taken away from the rather expensive Central Industrial Security Force (CISF) deployed under BCAS. The system is bureaucratic and manpower-intensive and in some instances, the costs are disproportionate to the benefits. The airport at Shimla is visited by hardly any aircraft; but BCAS deploys 60 CISF personnel for its security. As an aside, 16 AAI personnel are also stationed there. On an average, ten passengers use the airport every day, but the cost of CISF personnel and their expensive equipment is prohibitive. Airports would like to see that, at small airports and airstrips, 24 x 7 guarding by CISF be replaced by state police except for entry points into airside. Also expensive equipment could be replaced by manual frisking and baggage examination.

Air Cargo

In the last decade, there has been only one cargo airline Blue Dart effectively operating in India; the others having wound up. QuikJet has just embarked on a rejuvenation path. To fill the air cargo gap, nearly all airlines carry cargo in the belly. With the unbundling of air tickets and the consequent fees introduced by domestic airlines on checked-in baggage exceeding 15 kg, and on hand baggage over seven kg, the passenger baggage volume has shrunk further thus making more space available for cargo. However, air cargo companies have suggestions for making carriage of cargo, domestic and international, more beneficial for them as well as for the consignors and consignees.

The air cargo sector seeks infrastructure status for air cargo if collocated with airports so that tax relief under Section 80 IA is admissible on income. This sector longs for simplification of procedures and looks forward to a regime of paperless transactions for key documents, for example, invoices and packing lists, using electronic data interchange which has been adopted successfully elsewhere in the world. Related improvements would be electronic signatures and electronic data storage. Cargo villages in the vicinity of airports and cargo communities are what they would ideally like to have although the cost of setting up the former is high and possibly not justified by the cargo volumes in India. Improvements in cargo handling in terms of storage, cargo terminals, automated screening and capacity augmentation especially at the regional level with interconnectivity to the cargo gateway hubs. A single-window system for approval from regulators involved is another wish air cargo sector has. It would also like to have direct subsidy schemes for flying to regional and remote airports. Also desirable are promotion of free trade & warehousing zones, air freight stations and policies providing for long-term lease at airports to express cargo companies. Reduction in dwell time with 24 x 7 processing and handling of cargo is seen as a corollary to these steps. With the surge of e-commerce and Goldman Sachs’ prediction of Indian online retail market touching $100 billion by 2020, air cargo processes need to be speeded up to enhance customer experience and to make air cargo more profitable. Finally, the sector feels that regulatory framework for air cargo has been drawn up without adequate inputs from the industry itself with no transparency in the thought processes. Thus its wish is for the regulations to be rationalised and made user-friendly.

MRO

Aircraft operators would like to see Indian MRO costs come down so that they can stop going out of the country for major servicing, engine changes and painting of aircraft, etc. MRO players would also like to see some changes so that a mutually beneficial environment exists for aircraft operators and MROs. These changes are envisaged in the draft National Civil Aviation Policy which expresses a desire to develop India into an MRO hub for Asia. Towards this objective, service tax on MRO services is planned to be removed, aircraft maintenance tools and tool kits would be exempt from customs duty, the process for import clearance of aircraft parts would be simplified by allowing for self-attestation by the MROs, spare parts imported for MROs would be permitted to be stored tax free for three years for providing exchange of unserviceable parts, the current procedure would be modified to enable advance export of serviceable parts, airport royalty and additional levies on MRO service providers would be rationalised, provision for adequate land for MRO service providers would be made in all future airport projects and state governments would be persuaded to remove VAT on MRO services. This last wish has very low probability of fruition as successive central governments have been unable to convince state governments to de-clutch ATF price control and place it under declared goods category. These inclusions in the draft National Civil Aviation Policy essentially embody the MRO wish list for Indian aviation.

Concluding Remarks

The aspirations of only the major civil aviation stakeholders have been discussed above. The nature of communication between these stakeholders and the establishment is often perplexing with these groups’ iterations largely plaintive about how aviation is being stifled and the establishment glibly reiterating growth strategies and progressive improvements in civil aviation. Both appear to be animated in different planes that are close to each other, but never meet. The foregoing addresses pipe dreams of various stakeholders in civil aviation. The moot point is whether MoCA considers itself as a stakeholder or not. If so, the new draft National Civil Aviation Policy could be the starting point of MoCA playing a coordinating role with Ministries of Finance, Tourism, Environment, Petroleum and Commerce as also state governments, so that they collectively produce policies, rules and regulations intent on not only fulfilling the wishes enumerated above; but also to propel civil aviation to a place of pride in the Indian economy.