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The Cabinet on Thursday gave its in-principle approval to the civil aviation ministry’s proposal to set up an autonomous body, the Civil Aviation Authority (CAA), to replace the Directorate General of Civil Aviation (DGCA). The Bill to establish the body is likely to come up in the monsoon session of Parliament.
Unlike DGCA, which functions under the aegis of the ministry, the proposed authority will have administrative and financial freedom to meet the functional requirements for an effective aviation safety and oversight system. Besides, it will also have enough teeth to exercise economic and environmental regulations and protect consumers’ interests. However, the jury is still out on whether the move will mean a curtailment of the ministry’s authority or change in its role after the new structure comes up.
CAA, like DGCA, will also deal with matters relating to financial stress on safety of air operations, as seen in connection with the closure of Kingfisher Airlines last year.
Civil Aviation Secretary K N Shrivastava said: “The annual fund requirement of DGCA is Rs 97-98 crore. It is sanctioned by the ministry. It is estimated that CAA will annually require Rs 112 crore, which will be generated internally.” CAA will primarily get revenues from three sources: First, the Airports Authority of India (AAI) will share a portion of air navigation service charges, bringing to CAA around Rs 32 crore annually. Second, fees for licensing of air traffic control services will bring in around Rs 40 crore a year. And, third, a surcharge of Rs 5 per passenger will be levied to add about Rs 50 crore to the resources of CAA.
Besides, CAA will establish a separate fund, the Civil Aviation Authority of India Fund, which will be used for all expenses of the authority.
With estimated annual earnings of over Rs 120 crore a year, CAA will be financial independent to hire employees and decide on their emoluments. At present, the appointments to DGCA are done by the Union Public Service Commission through a process that is time-consuming. As a result, many vacancies stay unfilled for long. “The sanctioned strength of DGCA is 950. Nearly, 30 per cent of these posts, mostly in the technical cadre, are vacant,” Shrivastava said.
The authority will have a chairperson, a director-general (equivalent of a chief executive), and a panel.
A committee headed by the Cabinet secretary will appoint the chairperson, the director-general and the five whole-time members. The chairperson will be appointed for a fixed term of five years and will need to have requisite experience in aviation law or management.
However, experts seem to be divided on whether the creation of the new authority will help the airline industry. Bird Group Executive Director Ankur Bhatia says: “With this move, the Indian aviation industry will come on a par with the UN’s International Civil Aviation Organisation (ICAO) and in line with aviation regulators in other countries — such as the Federal Aviation Administration of the US and CAA of the UK. The move has been long-pending and will facilitate meeting the demands of a dynamic and fast-changing aviation scenario in India.”
Amber Dubey, partner & head (aerospace and defence) at global consultancy firm KPMG, says the decisions by CAA should be transparent. “Adequate checks need to be put in to ensure that CAA undertakes decisions in a transparent and time-bound manner. Some regulatory authorities frustrate the industry concerned by taking too long to decide and then come up with populist decisions that are ultimately decided in the courts of law.”
Some aviation experts are of the view that the new authority will change the power equation between the regulator and the ministry. “The ministry’s power might come down because CAA can independently frame regulations on issues within its mandate, while this power was earlier with the ministry,” says an aviation analyst. A top executive of an airline, however, says: “I don’t think it will make any substantial difference in the power equation. The ministry still will control all the key issues.”
