Aviation faces wider regulation

Airport economic regulatory authority to be formed

The government is likely to constitute the Airport Economic Regulatory Authority to regulate air tariffs and performance standards for the domestic aviation sector. A proposal to this effect will be made in the proposed civil aviation policy.

According to civil aviation ministry officials, the move is aimed at setting up a regulatory mechanism to monitor the operations of various airlines and prescribe norms for operation of airports.

To start with, the government has already taken steps to prevent predatory pricing by domestic airlines.

The proposed regulator will be different from the Director General of Civil Aviation (DGCA), which currently regulates the sector. However, it is yet to be decided whether to merge DGCA with the proposed regulatory body.

Besides, the civil aviation policy will also have provisions to permit restructuring of airports under Airports Authority of India (AAI) to ensure improvement of infrastructure.

The proposed policy will also lay down principles to remove price monopolies regarding the pricing of aircraft turbine fuel (ATF).

"The government wants to ensure that air fares are not completely driven by the price fluctuations of ATF. Besides, the policy will also suggest measures to ensure that domestic carriers have the flexibility to rely on certain sources for fuel," said a civil aviation ministry official.

Sources also said the proposed policy would look at liberalising the air services agreement between India and various countries to ensure better usage of air capacity between them.

Besides, the policy will also have measures to ensure integrated development of airports and airport complexes.

Sources also said that the government is contemplating steps to provide fiscal incentives at par with other infrastructure projects such as exemptions from customs and excise duties and other tax holidays to airport projects.

The policy will also aim at utilising the country's air services entitlements by strengthening the national carriers and allowing private airlines to operate on more international routes.

The government proposes to allow domestic carriers to fly to Asean as well as other global destinations.

"The basic thrust of the policy is to liberalise bilateral rights so that it becomes easier for the Indian carriers to fly abroad. We also want India to become a global civil aviation hub," said a source.

As a part of the overall development of the Delhi and Mumbai airports, the government is proposing metro rail connectivity to the two airports from the city centres and developing them on the basis of some of the best airports across the globe.

Laying the rules

Move aimed at setting up a regulatory mechanism to monitor the operations of airlines

Steps to prevent predatory pricing by domestic airlines have already been taken

Policy will lay down principles to remove price monopolies relating to pricing of aviation turbine fuel

The setting up of an essential air services fund has been proposed

Policy will also have measures to ensure integrated development of airports and airport complexes

Govt is thinking of providing tax holidays to airport projects