Reconsider fare cap for regional routes, says CAPA

Lack of emphasis on Air India, fiscal reform surprising

Centre for Asia Pacific Aviation (CAPA) has criticised the draft civil aviation policy for overlooking overhaul of key aviation bodies, lack of fiscal emphasis on fiscal reform and ignoring the future of Air India.

CAPA has further said the proposed price cap of Rs 2,500 as a part of regional connectivity scheme may not be viable as it can not meet the operating costs of smaller aircraft. It has asked the government to reconsider the fare cap and timeline for implementation of regional connectivity scheme from next April is too ambitious.

The government released the draft policy on October 31 aimed at encouraging regional connectivity, MRO and cargo sector and promoting open skies.

"A complete overhaul of DGCA is necessary. This process would culminate in transition to Civil Aviation Authority (CAA). We were surprised by the absence of any reference to the CAA. We would have like to see much more emphasis on negative fiscal environment which airlines face - sales tax on ATF, service tax on fares, TDS on service tax etc. There is no reference in the policy on the future of Air India. Government's ownership of Air India can not go on indefinitely and it is appropriate to develop a plan for future. Air India needs to be privatised or atleast prepared for privatisation," CAPA has said in its analysis on the policy.

The emphasis on regional connectivity and spreading traffic beyond metros to small towns is an important objective. However with all the significant concessions that have been proposed the target fare of Rs 2500 fare may not be feasible. It is not possible to expect that this fare level can be achieved across all aircraft types carrying 9-100 passengers," CAPA has said.