Draft Civil Aviation Policy 2015

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In an effort to take air travel to the masses, the Union government, in October 2015, came out with its new draft civil aviation policy.

Highlights of the Policy:

• The policy proposes to cap small town route fares at Rs. 2,500 per flying hour per ticket and imposes a 2% cess on all domestic trunk route tickets as well as international tickets.
• The revised policy has floated the concept of Scheduled Commuter Airlines (SCAs), which would have relaxed norms and those entities would not be liable to pay airport charges for operations under the RCS.
• The policy suggests a number of incentives for the Maintenance, Repair and Overhaul (MRO) sector, including service tax waiver, with an aim to develop India as an MRO hub in Asia.
• It has proposed that MRO, ground handling, cargo, and ATF infrastructure located together at an airport will also get infrastructure status with benefits under Section 80-IA of the Income tax Act, among others.
• The draft also proposes open skies policy for countries within 5,000 km with effect from April 1, 2020.

While the draft has come out with some positive, forward-looking directions such as regional and remote connectivity, it has also made some issues more retrograde than necessary. Two such matters that stand out are:

1. The indecision on the 5/20 rule.
2. The proposed new ground handling policy.

1. 5/20 Rule:

Under the 5/20 rule local airlines can fly overseas only after they have five years’ operational experience and a fleet of at least 20 aircraft.

• This imposes an artificial barrier on Indian airlines to utilize India’s portion of bilateral rights to foreign countries due shortage of aircrafts. A final decision on the 5/20 rule will be taken by the Cabinet.
• The civil aviation ministry is deliberating whether there should be a complete abolition or a replacement in lieu of the said eligibility norms for domestic carriers to start international flights.

Four alternates to this rule— complete abolition of the 5/20 norm, continuation of the 5/20 norm, replacing 5/20 with a domestic flying credits formula (DFC requires airlines to accruing miles by flying domestic which can be redeemed for overseas flying rights), and an option for domestic airlines to start flying international from the first day on a written assurance that they would meet the DFC threshold within 18-24 months of start of operations.

 

2. Ground Handling:

What is it? Ground handling at an airport involves all aspects of management of an aircraft between the time it arrives and takes off—cleaning, passenger and cargo handling, cabin service, catering service, ramp service, guiding aircraft into parking slots, lavatory cleaning, air conditioning, airstart services, baggage handling, etc. Clearly, speed, efficiency, security and accuracy are important in these services.

Changes in the ground handling policy in the proposed draft:

• Each airport operator must have at least three GHAs, of which one will be Air India through its subsidiary or its JV but there will be no upper limit of GHAs at an airport.
• All domestic airlines and charter operators will be free to carry out self-handling through themselves or their own subsidiaries and are permitted to ground handle another airline. This means that any Indian airline or its subsidiary automatically qualifies to become a GHA.
• Airlines or their subsidiaries are allowed to take contract employees with a contract of at least one year (This is against the labour laws).

How these proposals differ from previous norms?

• The existing policy of the Airports Authority of India (AAI) based on ground handling regulations of 2007 along with amendment of 2010, permit three GHAs per airport, of which two were selected through competitive open global bidding process (the third being a subsidiary of Air India or its JV), and thereby ensure the best handling agencies selected through a proper process.
• The 2007 policy allowed only bona fide whole-time employees of GHAs to be deployed at airports, thereby eliminating casual manpower. Further, only Indian airlines were allowed self-handling, not foreign airlines.
• The selected GHAs were given a 10-year period at the airport so that they may bring in the expensive equipment needed for efficient ground handling—a period which ends around 2018-19 (with provision of extensions) and recruit and train a permanent skilled manpower.

Issues associated with the current proposals:

Productivity: It has been documented that productivity decreases in proportion to the growing number of ground handlers. More the GHAs, more space for parking their equipment is needed. The pooling of equipment has been suggested but it is found impractical due to competition.

Skill: Another aspect of ground handling is the use of skilled whole-time bona fide manpower and restricting its number. Since efficiency and high skills are essential for a good and quick turnaround of aircraft, the labour needs to be highly trained and motivated.

Security: Airport security is an issue which is paramount for Indian airports. The more the ground handlers, the more will be the manpower and, therefore, the greater is the security risk. The risk becomes much higher when the labour component is casual and not permanently employed by GHAs or a self-handling airline. In India, there is a tendency to use labour contractors for ground handling. This is a dangerous security issue because police verification and on-ground vigilance of such a large and changing workforce cannot be done in a short period of time, and will never be as good as a permanent workforce permitted inside the airport by the Bureau of Civil Aviation Security.

These proposed changes to the ground handling policy could easily lead to chaos and a security issue.

Conclusion:

Aviation is a key engine for the socio-economic growth of the country and harnessing the untapped potential of the Indian aviation market will immensely benefit the economy, boost tourism, generate employment opportunities and ultimately benefit the customer, too. The final document needs to contain crystal clear and unambiguous directions on how civil aviation needs to move ahead so that future decisions use this document as a touchstone for validity and applicability.