The new civil aviation policy of the Government of India introduces welcome changes. Some of them are major, some minor. The most-criticised ‘S/20’ clause has been done away with. Steps should be taken to abolish the requirement for having operated for five years to fly overseas or having at least 20 aircraft to be able to offer such services. The two clauses in question enabled existing private airlines to operate where new entrants could not. The policy also tries to improve regional connectivity to help domestic consumers. Minister of Civil Aviation Gajapathi Raju rightly calls it the “centre-piece of the new policy”. But there still are a lot of drawbacks. The government has rightly decided to invest in developing 50 no-frills airports to serve “unserved” areas mostly flying planes linking up 2-tier and 3-tier cities to promote connectivity. But there is a price ceiling of Rs 2,500 for a one-hour flight. The government has offered to subsidise private airlines if the fare exceeds the fixed ceiling. The subsidy can come only from a fresh cess imposed by the government. Investments in infrastructure are welcome but not arbitrary price curbs and bureaucratic interference.
What the government should do is to clear the way for entrepreneurs to move into the civil aviation sector removing all manner of hurdles. Steps should be taken to minimise anti-competitive practices among individual airlines. The government has gone a few steps forward but there is still a long way to go to remove all shortcomings.
