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Prime Minister Narendra Modi said that the financial aspects of various proposals being included in the civil aviation policy must be considered before making them a part of the policy so that the exchequer is not burdened.
At an over three-hour meeting chaired by Modi on the civil aviation policy here on Tuesday night, there was also consensus among those present on working out the financial impact of any proposal before incorporating it in the policy.
Among the issues which could have a financial impact, include offering infrastructure status to the aviation sector which will ensure credit at lower rates of interest to the sector, and the issue of viability gap funding where the state will make funds available for airlines to operate on certain unviable routes.
The draft civil aviation policy talks about reducing the cost of operations for domestic airlines by looking at various issues, including taxation on aviation turbine fuel, airport costs and enhancing regional air connectivity.
Modi has also called for evolving a consensus among the various stakeholders before the government takes a final view on the 5/20 rule. The rule stipulates that a domestic airline must have completed five years of domestic operations and have a fleet of 20 aircraft before it is considered eligible to fly abroad.
At the meeting it was suggested that stakeholders’ views be sought on whether they want the policy to remain, be removed or be replaced by domestic flying credits (DFCs) which require airlines to operate more flights to remote areas in India to become eligible to fly abroad.
The issue of 5/20 has divided the domestic aviation industry. Several existing players including IndiGo and SpiceJet have indicated that the rule should not be reviewed while new entrants like Vistara, the brand name of the airline jointly promoted by Tata Sons and Singapore Airlines, and AirAsia have been calling for its removal.
Finance Minister Arun Jaitley who attended half the meeting was among the Prime Minister’s cabinet colleagues present.
Civil Aviation Minister Ashok Gajapathi Raju, Minister of State Mahesh Sharma, and Shipping Minister Nitin Gadkari were among those present.
The issue of drawing up a time line for finalising the civil aviation policy was not discussed at the meeting.
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