Global consultancy firm KPMG has for long been advocating a clear and transparent policy on civil aviation in the country and had also sent its recommendations to the ministry while the National Civil Aviation Policy (NCAP) was being drafted. In an e-mail interview with BusinessLine, Amber Dubey, Partner and India Head of Aerospace and Defence at KPMG, shared his views on the new policy, and whether it will work in the long run.
The controversial 5/20 rule has been dropped but one part of it has been retained. Do you think the policy should have completely done away with the norm itself?
The change in 5/20 is cosmetic. Though it is termed 0/20 it is effectively 3/20 since any new airline will take at least three-four years to build a fleet of 20 aircraft. The illogical, discriminatory and anti-competition 5/20 rule of 2004 should have never been there in the first place. It also shows the pitfalls of a bad law — it takes 12 years to even modify it partially. No other country has it. The share of Indian carriers in the global traffic to and from India is less than 30 per cent. Blocking new Indian carriers from flying abroad allows global carriers to continue their domination. One hopes that as the Indian aviation industry matures, the 20 aircraft rule will also get abolished. Airlines should be left free to fly when and where they fly.
Critics say only a few airlines will benefit from the new policy. Also, that the policy lacks infrastructure framework for long-term growth. How do you view these flaws in the policy?
The NCAP aims at a massive expansion of India’s flyer base by a slew of reforms. These will aid affordability and connectivity. Domestic traffic is expected to nearly quadruple from 81 million to over 300 million by 2022. The tax benefits to MRO, cargo, ground handling, ATF etc will help airlines too. The landmark decision on 30 per cent “hybrid till” approach for airport tariffs will bring in more investors in the airport sector. It’s a bit unfair to say that NCAP will help “only a few” airlines.
17/06/16 K Giriprakash/Business Line
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The controversial 5/20 rule has been dropped but one part of it has been retained. Do you think the policy should have completely done away with the norm itself?
The change in 5/20 is cosmetic. Though it is termed 0/20 it is effectively 3/20 since any new airline will take at least three-four years to build a fleet of 20 aircraft. The illogical, discriminatory and anti-competition 5/20 rule of 2004 should have never been there in the first place. It also shows the pitfalls of a bad law — it takes 12 years to even modify it partially. No other country has it. The share of Indian carriers in the global traffic to and from India is less than 30 per cent. Blocking new Indian carriers from flying abroad allows global carriers to continue their domination. One hopes that as the Indian aviation industry matures, the 20 aircraft rule will also get abolished. Airlines should be left free to fly when and where they fly.
Critics say only a few airlines will benefit from the new policy. Also, that the policy lacks infrastructure framework for long-term growth. How do you view these flaws in the policy?
The NCAP aims at a massive expansion of India’s flyer base by a slew of reforms. These will aid affordability and connectivity. Domestic traffic is expected to nearly quadruple from 81 million to over 300 million by 2022. The tax benefits to MRO, cargo, ground handling, ATF etc will help airlines too. The landmark decision on 30 per cent “hybrid till” approach for airport tariffs will bring in more investors in the airport sector. It’s a bit unfair to say that NCAP will help “only a few” airlines.
17/06/16 K Giriprakash/Business Line
