Aviation policy draws flak from CAPA

NCAP doesn't provide the sector with the institutional infrastructure required for long term growth, says CAPA

Consultancy firm Centre for Asia Pacific Aviation (CAPA) criticised the government’s civil aviation policy, saying the policy does not provide the sector with a long-term growth plan.

“India needed an aviation policy which is strategically aligned and supportive of Prime Minister Narendra Modi’s inspiring vision for the Indian economy.  Unfortunately, the National Civil Aviation Policy doesn’t provide the sector with the institutional infrastructure required for long term growth,” CAPA said in its report.

The Union Cabinet on Wednesday cleared the new civil aviation policy, paving the way for better regional connectivity and making it easier for new airlines to fly abroad by amending the controversial 5/20 rule.

According to CAPA, partial abolition of the 5/20 rule was a serious compromise and the new 0/20 rule will not have the intended effect on the sector. “It will not help new carriers like Vistara and Air Asia significantly and India will continue to a foreign airline driven International traffic regime. Fast tracking expansion by Air Asia and Vistara will not be feasible given the initial capitalization has exhausted, operations continue to be loss making and fast tracking will mean more cash burn," it said.

It also said that the government’s ambitious regional connectivity scheme will not evince from the private players saying that the previous UPA government’s similar plan did not show any results. “Regional aviation policy- don’t expect private capital to invest in loss making projects.The dynamics are completely different for under 30 seater operation and for 50 plus seater operation – both in capitalization and business model,” it said.