New Delhi: Last week, the government published a draft of the new civil aviation policy. The overall thrust of the draft has been well received, both by industry experts and investors, who bid up the prices of the two listed domestic airlines. The main thrust of the policy is to significantly expand the space for new capacity to enter. Outside a radius of 5,000 km, an open skies approach is proposed, which will remove all restrictions on the number of flights to and from destinations pretty much all over the world. Within that radius, which covers West and South Asia as well as the countries to the east, flying rights will be auctioned. This will allow, particularly, the West Asian carriers, which have been aggressively expanding into India, to continue to do so - but with the payment of the licence fee, which will accrue to the government. Further, the current cap on 49 per cent on foreign direct investment is proposed to be eventually raised to above 50 per cent, paving the way for strategic investment by foreign carriers.
The benefits of further capacity expansion will be significant. Notwithstanding the massive expansion in the airline industry over the past decade, there are still challenges to commercial viability, as well as policy-related restrictions on expanding capacity. The proposed measures pave the way for a significant expansion in capacity along with a potential rationalisation between domestic and international routes, which will provide much more convenient access to a much larger number of domestic destinations.
01/11/15 Business Standard
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The benefits of further capacity expansion will be significant. Notwithstanding the massive expansion in the airline industry over the past decade, there are still challenges to commercial viability, as well as policy-related restrictions on expanding capacity. The proposed measures pave the way for a significant expansion in capacity along with a potential rationalisation between domestic and international routes, which will provide much more convenient access to a much larger number of domestic destinations.
01/11/15 Business Standard
