The National Civil Aviation Policy (NCAP) completes a year on 15th June 2017. The policy which was announced amidst fanfare last year was the result of extensive consulting and feedback from general public resulting in multiple iterations leading to the final policy.
A year is too less to evaluate and look at the policy since the aviation business is capital and time intensive – both at the airline side in terms of fleet induction and at the airport side for infrastructure expansion and creation. While a few areas are yet to become operational, there are few points on which there already are some deviations.
The policy touches upon 22 parameters but the main ones centered around Regional Connectivity Scheme – christened as UDAN (Ude Desh ka Aam Nagrik), replacement of the famous 5/20 rule and Bilateral Traffic Rights or Air Services Agreement.
The revision of Route Dispersal Guidelines will come in effect from Winter Schedule of 2017 (October 2017) and with the congestion at metro airports – all of which are part of Category 1 routes, airlines will face tough times to re-jig and revamp their schedule to adjust to the new guidelines.
Touted as the flagship scheme the Regional Connectivity Scheme is still evolving. The initial round of bidding has seen 5 bidders – Air India Regional / Alliance Air, Spicejet and Trujet being the incumbent airlines and Air Deccan and Air Odisha as new players enter the market. This segment will see additional competition with IndiGo set to confirm order of its 50 ATR72 aircraft and Jet Airways not making up its mind on withdrawal or continuity of the ATR72 in its fleet.
Many in the fraternity have been skeptical but it is too early to decide if the scheme works out as planned or will require revisions in the next few years. A lot many airports would come on the civil aviation map of the country and could give boost to tourism across states.
Abolishment of 5/20
All eyes were on the 5/20 rule when the policy was to be declared last year. Every publication reported their scoop on what is expected. In the end, the requirement of five years of domestic operations with a fleet of 20 aircraft as eligibility criteria for starting International operations was done away with. The criteria which was in effect since October 2004, has been replaced with a requirement of 20 aircraft in fleet without any restriction on years of operation. However, the operator has to deploy 20% of total capacity (by seats, not ASKM) in domestic operations and adhere to the Route Dispersal Guidelines.
Two airlines – both from the TATA stable, Vistara (current fleet 14) and AirAsia India (current fleet 10) had lobbied hard for abolishment of 5/20 rule. While Vistara had ordered 20 aircraft and has so far taken delivery as per plan, AirAsia India had not placed any separate order for its operations. Vistara will complete 5 years in January 2020 while AirAsia India will complete five years in June 2019. Hopefully both the airlines will fly international before that to benefit from the changed regulations. A lot will indeed depend on the ICAO audit and India clearing that audit unlike the last time when International expansion of airlines from India was put on hold.
In the last one year, both Vistara & AirAsia India have inducted 4 aircraft each. Market leader IndiGo inducted 27 aircraft. Had IndiGo started a separate subsidiary, it would have been eligible to fly international by now! The incremental growth after these many planes, definitely, is easier for IndiGo than the newer players.
Air Services Agreement (ASA) / Bilateral Rights
This is one area which has seen a lot of flip-flops all along and the policy laid out some clear guidelines. However, this is also the area which has not seen strict adherence to the NCAP 2016.
The policy stated that the government would enter into “Open Skies” on reciprocal basis with countries located beyond 5000km from Delhi and with SAARC countries. Both of which have been non-starters. The policy also stated that negotiation for amendment of ASA will take place when Indian side reaches 80% of the total entitlement.
Interestingly, in case of Dubai – the bilaterals have not been amended even when both sides have reached 100% utilization. This delay seems to be on account of deliberations about combining India – UAE bilaterals and not signing deal specific to each emirate.
Oman saw an increase as per policy after which Oman Air has increased flights to India. Saudi Arabia saw an increase in seats with a provision that additional seats will come into effect only when Indian side reaches a quota of 80% while Malaysia saw a marginal increase in seats even when no carriers from India operate to Malaysia.
If latest news reports are to be believed, the bilateral could well be linked to the growth rate in travel and this will certainly be more favorable to carriers not based in India.
Three airlines shut shop during the last twelve months. Air Pegasus was first in July 2016, followed by Air Costa in February 2017 after 4 years of operations and lastly Air carnival in April 2017 within a year of starting operations. Air Costa had upgraded its regional permit into a National one but collapsed even before it could launch services under the new permit. On the other hand, only one new airline has started – Zoom Air.
While the policy talks about Airport development, there has not been any significant push to the much needed Navi Mumbai Airport. Attempts to privatize or partially privatize Ahmedabad and Jaipur airports have also hit a roadblock. Besides there has been limited progress on development of greenfield and brownfield airports. Only significant project to start was MOPA airport in Goa.
Challenges also remain for GAGAN which has a target of 1st January 2019. All aircraft registered after that will be required to have GAGAN. Airlines have opposed that .
There have been changes to the landscape over the last one year and areas not covered under the policy have also seen positive changes. The ministry came up with AirSewa portal to register and track complaints, stopped stamping of cabin baggage tags at 13 airports in two stages and airports (all private ones) have taken the next steps in global best practices in security and Information Technology. From self bag drop to automated boarding, the private players are leading the pack and its time state run Airports Authority of India catches up.
The year ahead will see additional routes under UDAN, expansion of Hyderabad and Delhi airports and possible positive news about Navi Mumbai Airport. Passengers are adjusting to cramped terminals, below par check-in and security experience and temporary boarding areas across airports in the country but lack of apron space for night parking, limited watch hours and constrained runway capacity has the potential to derail the ever growing traffic and hampering growth.