Anurag Jain's Blog
Tuesday, December 09, 2003

Aviation Sector Reforms

Naresh Chandra Committee has presented its eagerly-awaited first report to the government. The second part of the report which would look more at the avaition infrastructural issues is due in next eight weeks' time. The first report which was presented yesterday, recommends:

- High level of Inland Air Travel Tax and a host of other levies on air travel should be abolished and replaced by a lower ad valorem cess at 5 per cent of airfare. Doing this, the cost of flying within the country could come down around 25 per cent.
- Government should allow for 49% foreign direct investment (FDI) in domestic airlines, and lift the ban on foreign airlines investing in domestic airlines.
- Scrapping of the route disbursal guidelines, which stipulate mandatory operations by domestic carriers to service remote areas like the Northeast.
- Reduction of various taxes like inland air travel tax (IATT) and foreign travel tax (FTT). The total taxation should not exceed 5% of the airfare and the sales tax on aviation turbine fuel (ATF) should be capped at 4%.
- Privatisation of Pawan Hans which runs helicopter operations.
- Allow 100% FDI in companies running copter operations. (Copter operations are seen to be high potential one)
- Privatisation of all airports. The committee has also favoured separation of air traffic control (ATC) services from the Airport Authority of India (AAI), which owns all airports in the country. ATC services should be handled by a separate government-owned.
- Setting up an independent regulator, Aviation Economic Regulatory Authority, to regulate airport charges.
- Regional operations by small aircraft, with a seat capacity of 80 and less, should be encouraged by scrapping landing and parking charges.

This all sounds good but when (and if at all) would this be implemented? I hope sooner than later. Its hightime that we had a boom in civil aviation for all the socio-economic strata of populace. Here's one to low-cost aviation.

PS: More on state of ATF in India's aviation scene tommorrow.

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