The NDA government’s new draft policy on civil aviation proposes enhanced regional air connectivity, rationalisation of jet fuel costs along with broader institutional reforms like corporatisation of the Airports Authority of India (AAI) and development of a road map for Air India’s future.
The policy, unveiled by Civil Aviation Minister Ashok Gajapathi Raju here on Monday, proposes listing AAI and Pawan Hans Helicopters on stock exchanges.
The markets reacted favourably to the proposals with stocks of Jet Airways and SpiceJet surging to 6.82 percent and 5.02 per cent respectively.
Mr. Raju, while clarifying that national carrier Air India would not be privatised anytime soon, did not rule out the move for the future.
An expert committee will be constituted to develop a road map for Air India,” the draft policy says. According to it, airports in Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore are to be developed into “major international hubs” to serve as the main access points for international travel.
More airports to be developed in PPP mode
The Modi government, with a strong focus on infrastructure development, will be developing more airports in the Public Private Partnership (PPP) mode. The airports in Chennai, Kolkata, Ahmedabad and Jaipur are to be developed in the first phase.
Currently, the Delhi, Mumbai, Bangalore and Hyderabad airports are being operated in the PPP mode as joint ventures with private companies.
Noting that high tax rates have pushed Aviation Turbine Fuel costs 40 to 45 per cent higher than international levels, the draft civil aviation policy says the Ministry will be undertaking rationalisation of ATF costs, in consultation with the Finance Ministry and State governments.
India currently has 132 airports, of which 46 domestic and 15 international airports are run by the AAI; 31 are not operational while the remaining are civil enclaves in defence or customs airports.
The policy hints at a special package to boost air connectivity in the North-Eastern region, along with enhancing regional air connectivity across the country in general.
Another significant area the policy aims to address is attracting investment to the $700 million Maintenance, Repair and Overhaul (MRO) industry by providing land and other incentives.
According to the International Civil Aviation Organization (ICAO), every 100 rupees spent on air travel results in benefits worth Rs. 325 while a 100 jobs in the aviation sector create 610 jobs in the economy overall.
