The aviation sector is abuzz with action. After clearing the national civil aviation policy, the government has relaxed foreign direct investment (FDI) norms, allowing 100 per cent FDI in scheduled domestic carriers - up from 49 per cent. The policy aims to make India the third-largest aviation market by 2022. It also replaced the 5/20 rule (five years of domestic experience and minimum 20 aircraft) to settle for the 0/20 rule for international operations and put a Rs 2,500 cap on per-hour flights on specific routes.
This is the first time an integrated civil aviation policy has been brought out in India. Nevertheless, there are some misses. For instance, the prime minister could have demonstrated his commitment to "minimum government, maximum governance" by reducing the government's involvement in the sector.
At present, there are multiple government agencies regulating the sector. The Directorate General of Civil Aviation (DGCA), for instance, is responsible for air safety and standards and crew training, while Airports Economic Regulatory Authority (AERA) regulates tariff and other charges. There are various other authorities under the aviation ministry, too.
In fact, most airlines have found it difficult to deal with the various layers of government agencies. DGCA is guilty of functioning at a slow pace. The launch of Vistara, the Tata-Singapore Airlines airline, for instance, was delayed by four months. Recently, its new plane couldn't fly for 15 days after landing at New Delhi airport as DGCA did not give it the airworthy approval.
The policy should also have taken cues from global trends. Big aviation markets across the world, including the US, China and the UK, do not have dedicated aviation ministries. In the US, a much larger aviation market with a commercial aircraft fleet of 6,871 as compared to India's 450, aviation matters are entirely handled by one agency - the Federal Aviation Administration (FAA). Setting up an independent authority along the lines of FAA would have been a good idea.
The policy also did not mention the government's intent for Air India, despite the fact that the draft policy released in 2014 had talked about forming an expert committee to build a roadmap for the loss-making airline. The carrier was given a package of Rs 30,000 crore in 2012, but its performance has barely improved. The recent uptick in performance - the government says that Air India is set to make an operating profit in 2015/16 - can be largely attributed to low prices of aviation turbine fuel. Even the relaxation of the 5/20 rule does not make much difference. If an airline places an order for 20 aircraft today, the delivery of the last plane will happen four years down the line due to the huge order book of Boeing and Airbus.
There are no doubts that the government's interference in Indian aviation is less compared to other industries, but the new policy should have liberalised the sector more.