For the sake of air safety, DGCA's institutional design needs an overhaul

We should channel our collective national grief over the recent air disaster into introspection about the state’s capability for regulating air safety.

 

From first principles, we know that there are market failures that motivate state intervention. There may be a problem of market power in a small oligopoly of airlines. Some airlines, to maximise profits, may cut corners on safety expenditures. Passengers cannot reasonably be expected to judge the safety of an airline because of information asymmetry. Plane crashes impose negative externalities upon many parties. We, therefore, need a government agency that intervenes in the airline industry to address these market failures. At present in India, some of this intervention —including air safety — is done by the Directorate General of Civil Aviation (DGCA). 

 

Regulatory theory teaches us a lot about how such an organisation should be structured. It requires arm’s-length operations from the executive government, a reservoir of specialised expertise, and the ability to act swiftly and decisively. It must be legislatively empowered to regulate the domain, be autonomous and adequately resourced, with mechanisms for finance, human resources (HR) and procurement that are fit for purpose and not drawn from government department designs. We must recall that one reason for creating Statutory Regulatory Authorities (SRA) is to have specialised skills, workforce, and processes that differ from mainline government.

 

How does the present DGCA fare? It has a sound organisational culture, with dedicated individuals striving to uphold safety standards. But its institutional design lacks many required elements.

 

The powers of the DGCA are largely through executive notifications and rules under a pre-Independence-era Act and a supplementary Act of 2024. It does not have clear objectives and autonomy derived from a modern, comprehensive, and specific Act of Parliament that clearly defines its powers, independence, and governance structure. It functions as a subordinate office under the direct administrative control of the Ministry of Civil Aviation. Decisions on budgets, policy directives, and even staffing often flow from the ministry. This impedes the development of agency capability. 

 

The DGCA uses conventional civil service recruitment processes for its HR. This makes it difficult to attract and retain seasoned pilots, aircraft maintenance engineers, air traffic control experts, and accident investigators,  given the more lucrative opportunities available in airlines, MROs (maintenance, repair, and overhaul organisations), or international aviation bodies.

 

As a subordinate office of the ministry, the DGCA’s financial resources are subject to annual budgetary allocations, often competing with other ministerial priorities. This can lead to underfunding, limiting its ability to invest in state-of- the-art investigative tools, advanced simulation and training facilities, or crucial IT infrastructure required for sophisticated data analytics in safety oversight. Resource constraints and limitations in procurement hinder the rapid acquisition and deployment of such technologies.

 

Operating within a traditional government departmental structure inevitably entails multiple layers of approval and slower decision-making processes. In aviation, where situations can evolve rapidly, such delays hinder the effectiveness of the agency.

 

These structural and operational limitations collectively contribute to problems such as a perceived lack of credibility in the regulator’s independence, potential for regulatory capture, and slow adoption of best practices and innovation in safety management. Ultimately, they can compromise the ability of the DGCA to achieve its primary mission.

 

What do we see with similarly placed government agencies in advanced economies? In the US, the Federal Aviation Administration (FAA) is an analogous agency. It regulates the design, manufacturing, maintenance, and operation of aircraft. This includes certifying all civil aircraft, pilots, mechanics, and airlines to ensure they meet rigorous standards. In the spirit of regulatory theory, it has an operational arm — the Air Traffic Organisation (ATO) — which manages the airspace. The FAA has its own personnel and procurement systems that are separate from the rules that govern most federal agencies.

 

The analogous agency in the UK is the Civil Aviation Authority (CAA). It regulates the design, manufacturing, maintenance, and operation of aircraft. This includes certifying all UK-registered aircraft, pilots, air traffic controllers, and airlines to ensure safety compliance. In line with regulatory theory, and taking the separation of regulator and service provider a step further, the operational management of airspace is handled by an entirely separate entity: NATS (formerly National Air Traffic Services), which operates as a public-private partnership. This structural separation dictates their administrative autonomy. The CAA, as a public corporation, is not bound by UK Civil Service rules and thus develops its own personnel policies and manages its own procurement processes, separate from the government. NATS, being a private company, operates with full commercial freedom, setting its own distinct procurement rules and employment terms completely outside of public sector frameworks.

What is the way forward?

A new, comprehensive Act of Parliament is urgently required to establish an Aviation Safety Authority (ASA), which is grounded in modern Indian thinking on SRAs. A clean, modern, and well-drafted law, comparable to the draft Indian Financial Code, is required.

 

The new organisation must be operationally autonomous with its own governing board, clearly defined powers, and a mandate that prioritises safety above all else. The composition and role of the board is key to achieving state capability. The board must hold the management team accountable, and the entire working of the organisation must be conducive to transparency and accountability.

 

It should have financial autonomy, perhaps funded through a dedicated cess on air travel or a specific allocation that is ring-fenced and not subject to annual governmental vagaries. This will enable it to invest in necessary infrastructure, technology, and human resources. It must be empowered to develop its own human resource policies, allowing for flexible recruitment, competitive compensation, and the creation of a specialised aviation safety professional cadre.

 

Contracting is increasingly a critical choke point for complex technical problems. The new organisation needs to draw upon the new body of knowledge that has been created on government contracting in the last five years.

 

India’s ambition to become a leading global economy and a major aviation hub calls for a safety regulatory framework that is world-class, autonomous, and uncompromised. 

 

 

The author is an honorary senior fellow at the Isaac Centre for Public Policy, and a former civil servant