Union Cabinet clears civil aviation policy; airfares capped for 1-hour flights

The Union Cabinet on 15 June cleared the much-awaited Civil Aviation Policy and unveiled a handful of passenger-friendly measures, including capping airfares at Rs 2,500 for an hour-long flight.

The Civil Aviation Policy will include provisions of auctioning unilateral traffic rights and will address issues of regional connectivity.

The Ministry has also scrapped the five-year rule which required airlines to fly for at least five years and have a fleet of 20 aircraft.

The Civil Aviation Ministry had sent the proposed policy to the Cabinet for approval on 3 June.

The NDA government had for the first time unveiled the policy draft in November 2014, subsequently replacing it with another draft in October 2015.

Initially, the policy was expected to be finalised in the last financial year as certain proposals were to be implemented from 1 April, 2016.

Since then, the government has been moving back and forth on the matter, primarily to strike a balance between various stakeholders on their glaring differences over issues like the 5/20 rule that allows a carrier to fly abroad only if it has 20 aircraft and has flown domestic for five years.

The policy aims to bolster the domestic aviation sector by tapping its high growth potential with provisions such as capping airfares at Rs 2,500 for a one-hour flight, auctioning unilateral traffic rights, tax incentives for airlines, maintenance and repair works of aircraft besides mooting 2% levy on all air tickets to fund regional connectivity scheme and providing viability gap funding for airlines to encourage operate on regional routes.

--With PTI inputs