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The cabinet today gave in-principal approval to the proposal of the ministry of civil aviation 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 CAA is likely to come up in the monsoon session of the Parliament.
Unlike the DGCA, which functions under the aegis of the ministry of civil aviation the proposed authority would have administrative and financial freedom to meet the functional requirements for an effective aviation safety and oversight system. Besides, it would also have teeth to exercise economic and environmental regulations and protect interests of consumers. However opinion is divided on whether the move will reduce the teeth of the aviation ministry, or change its role after the new structure comes up.
The CAA, like the DGCA, would also deal with matters relating to financial stress on safety of air operations, as witnessed in connection with the closure of Kingfisher Airlines last year.
K N Shrivastava, secretary, Ministry of Civil Aviation said, “Currently, the annual fund requirement of the DGCA is around Rs 97-98 crore. It is sanctioned by the ministry. It is estimated that the CAA would require revenues of Rs 112 crore per annum, which would be generated internally.”
The CAA would largely gain revenues from three sources - the Airports Authority of India (AAI) would share a proportion of air navigation service charges amounting to around Rs 32 crore annually. While fees for licensing air traffic control services would bring in around Rs 40 crore a year, a surcharge of Rs 5 per passenger would be levied to pool in about Rs 50 crore to the resources of the new aviation regulator. The CAA would establish a separate fund, the Civil Aviation Authority of India Fund, which would be used for all expenses of the authority.
With estimated annual earnings of over Rs 120 crore a year, the CAA would be financial independent to hire its employees and decide on their emoluments. Currently, the appointments in DGCA are made by the Union Public Service Commission (UPSC), which is a time-consuming process as a result of which many vacancies are still not filled. .
“The total sanctioned strength of the DGCA is currently 950 employees. Nearly 30 per cent of these posts, largely in the technical cadre, which are vacant. Unlike the DGCA, the CAA would have powers to recruit directly at market determined rates which would help address issues over shortage of staff”, Shrivastava informed.
The proposed authority would have a Chairperson, a Director General (equivalent to a chief executive), not less than seven members but not more than nine members. A committee headed by the Cabinet Secretary would appoint the Chairperson, the Director General and the five whole-time members. The Chairperson would be appointed for a fixed term of five years and would need to have requisite experience in aviation law or management.
However opinion is divided on whether the new move will help the airlines indsutry. Ankur Bhatia, executive director, Bird Group said, “ With this move the Indian aviation industry will be at par with UN's International Civil Aviation Organisation (ICAO) and in line with aviation regulators in other countries like the Federal Aviation Administration of the US and the UK's CAA. This move has been long pending and will facilitate meeting the demands of a dynamic and fast-changing aviation scenario in India.”
However that 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 by taking too long to decide and then come up with populist decisions that are ultimately decided in the courts of law" says Amber Dubey, Partner and Head-Aerospace and Defense at global consultancy KPMG.
However some aviation expert say that this could change the power equation between the DGCA and the ministry. " The ministries power might come down because CAA can frame regulations independently on issues within their mandate, which earlier with the ministry" said an aviation analyst. However a top executive of an airline said: "I don't think it will make any substantial different in the power equation. The ministry still will control all the key issues".
