The document discusses key enablers to develop India's air transport sector. It outlines factors that can facilitate business, trade and tourism through air transport. These include increasing air travel affordability, adopting no-frills airports, regulatory reforms, and tax incentives. Developing India's cargo industry potential through automation, making it a trans-shipment hub, and reducing dwell times are also outlined. The document also discusses how India can become a leader in aircraft maintenance through supportive policies, joint ventures, and abolishing import duties on spare parts.

1. Air Transport
Amit Kumar Anand
www.amitkanand.com
September 12, 2016
1 Role of Air Transport
• facilitates the growth of business, trade
and tourism, with significant multiplier
effects across the economy.
• reliable and faster mode of transport ser-
vices to move products and personnel
across long distances.
• High value to weight products industries
largely depend on air transport such as
pharmaceuticals, office equipments and
electronics.
• Crucial for tourism industry.
• Air transport penetration is directly core-
lated to economic development. China’s
domestic air traffic is 5 times of India in-
spite of having only 10% larger popula-
tion.
2 Key Enablers for Air
Transport
1. Holistic support from state govern-
ments for positioning India as a
global hub: Symboitic relationship with
trade and tourism. Connectivity to hin-
terland. Multi modal connectivity, utili-
ties, security and lower VAT on ATF.
2. Enhancing penetration of air travel
among the middle classes: Need to
make air travel affordable to general
masses.
3. Adopting ‘No-frills’ airport model:
to lower fixed costs.
4. Encouraging global aviation assign-
ments: creating opportunities for other
Indian companies.
5. Reforms regarding policy and reg-
ulations: stable, transparent, and pre-
dictable regulatory regime with time
bound resolution of issues to create a
sense of certainty in the sector.
6. Provisioning all-weather operations
and night landing facilities: impe-
tus for greater tourist traffic and devel-
opment of air-connectivity especially to
the hill regions.
7. Evolve innovative funding solutions:
tax free infrastructure bonds, ECB, Facil-
itating Airport Development Fee (ADF)
for pre funding of airports.
8. Facilitation by government: faster
clearnaces of projects.
9. Tax incentives: to promote greater in-
vestments.
3 Key Enablers for India’s
Cargo Industry
1. Higher Automation: Poor cargo
handling infrastructure at airports
leads to spoilage & pilferage, increased
turnaround times and degradation in
the quality of items causing perception
issues for Indian exports.
2. India as a trans-shipment cargo
hub: Given its geographic location, In-
dia can aspire to become an international
cargo hub.
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2. 3. Dwell time reduction: Cargo dwell
times for large Indian airports currently
range from 3 to 5 days as compared to an
average of 4 to 12 hours at leading global
airports.
4. 24x7 Customs operation: Need to re-
duce time for custom clearance.
5. Establishment of Air-Freight Sta-
tions (AFS) in the hinterland: To
avoid congestion at airport by doing Cus-
toms check, X-ray screening, palletiza-
tion, etc. at a remote place.
4 Key Enablers for Mainte-
nance, Repair and Over-
haul (MRO) Industry
India has the potential to be an MRO hub due
to the growing aircraft fleet, location advan-
tage and availability of talent.
1. Supportive Taxation Policy: In-
verted tax structure inhibits growth of
this sector.
2. Abolition of import duties for spare
parts: to allow MRO to ensure high lev-
els of inventory and faster service.
3. Impetus on MRO joint ventures:
Three way joint ventures between air-
port, airline and MRO service provider
for assured business.
5 National Civil Aviation
Policy 2016
5.1 Introduction
• India has an ideal geographical location
between the eastern and western hemi-
sphere, a strong middle class of about 30
crore Indians and a rapidly growing econ-
omy.
• Desite this air transport sector has not
realized its potential.
• Potential to be in top 3 nations in terms
of passenger traffic compared to current
10th rank.
• Multiplier effect on economy. Output
multiplier and employment multiplier of
3.25 and 6.10 respectively. (Interna-
tional Civil Aviation Organistion (ICAO)
study. )
5.2 Vision
• Make flying affordable.
• Enable 30 crore domestic ticketing by
2022 and 50 crore by 2027.
• Increase cargo volumes to 10 million
tonnes by 2027.
5.3 Mission
• Provide safe, secure, affordable and sus-
tainable air travel for passengers and air
transportation of cargo with access to
various parts of India and the world.
5.4 Objectives
1. Establish an integrated ecosystem pro-
moting civil aviation sector, tourism and
increasing employment leading to bal-
anced regional growth.
2. Use of technology for safety, security and
sustainability of civil aviation sector.
3. Enhance regional connectivity.
4. Ease of doing business through dereg-
ulation, simplified procedures and e-
governance.
5. Promote the entire aviation sector chain
in a harmonised manner covering cargo,
MRO, general aviation, aerospace manu-
facturing and skill development.
5.5 Regional Connectivity
• Inflation indexed indicative airfare of Rs.
2500 of RCS routes of travel time 1 hr.
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3. • Revival of unserved under served air-
ports.
• VGF
• RCS operational only in those states
which reduce VAT to 1% or less on ATF.
• Free land by state government with
multi-modal hinterland connectivity
(rail, road, metro, waterways etc.) as
required.
5.6 Modification in 5/20 rule
• airlines can commence international op-
erations provided that they deploy 20 air-
craft or 20total capacity (in term of av-
erage number of seats on all departures
put together), whichever is higher for do-
mestic operations.
5.7 Open Sky Policy
• ‘Open sky’ policy on a reciprocal ba-
sis with SAARC countries and countries
with territory located entirely beyond a
5000 km radius from New Delhi.
5.8 PPP/AAI
• Encourage development of airports by
AAI, State Governments, the private sec-
tor or in PPP mode .
• Increase non-aeronautical revenue by
better utilisation of commercial opportu-
nities of city side land.
• AAI to be compensated in case a new
greenfield airport is approved in future
within a 150 km radius of an existing un-
saturated operational AAI airport.
5.9 MRO
The MRO business of Indian carriers is
around Rs 5000 crore, 90% of which is cur-
rently spent outside India.
• State government to be persuaded for
zero VAT on MRO activities.
• No airport royalty and additional charges
on MRO service providers for period of 5
years.
5.10 Aviation Education and Skill
Building
• All training in non licensed category will
conform to National Skill Qualification
Framework standards.
• Full support to the Aviation Sector
Skill Council and other similar organisa-
tions/agencies for imparting skills for the
growing aviation industry .
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