Government New Aviation Policy- What You Should Know

The government of India recently released National Civil Aviation draft. This contains a lot of proposal for both airlines and customers.  I try to explain some points which can directly impact you as customers. Recently we have noticed a hike in prices for airline travel. Especially during festive seasons, customer were asked to pay four times the normal fare. The same situation occurs during travel to other nearby countries like UAE, Sri Lanka, Bangladesh, Nepal etc. This draft tries to address those problems also by allowing other airlines to operate through open sky policy. Let’s see some of the highlights mentioned in the draft:

  • Plan to build new infrastructure for Airports
  • Reducing the cost of airline ticket by creating No-Frills airport
  • Opening up Indian skies for open competition
  • Two percent cess on airline ticket to provide subsidy on non-viable routes
  • Capping air fares between smaller cities (Rs 2500 fixed for 1-hour flight)

For more detail list, read this article.

Let’s see now what it has for you as a customer –   More Airports – This draft will create more airports for smaller cities.This lead to better connectivity from smaller to the metro city. Creating more airports means people from the smaller city can travel with cheaper cost.

Low airfare – Creating No-frills airport will lower the cost of air tickets. No frills airport offer lesser prices by removing non-essential features like complimentary food, in-flight entertainment. They also put advertisement inside the flight to generate some income to cut cost. There will be only essential services at these airports. It will reduce prices for airport fee and taxes and ultimately air fares will be reduced.

More competition, lesser prices – Opening up skies for other countries will reduce the ticket prices as there will more competition. A domestic flight will have to now compete with other country low prices flight carrier and will be good for customers. This will also have an impact on international flight. Airfare for international flight will be reduced as domestic flight can share flight with international carrier and ticket prices will be reduced.

2 Percent cess- Well not a good news for air traveler. There is also a plan to flat add two percent cess on every air ticket. It is not much though, For example – If you spend 10000 rupees on a ticket, you need to pay 200 rupees on top of that. The government can use this money to provide the subsidy for low-cost airports.

You may have to pay little extra on airport for additional services – As they are a low-cost No-frill airport and do not have all ground handling services from Airport. Airlines have the freedom to charge for any additional services except check-in baggage and wheelchair assistant. For example if you need assistance with elder people, infant or a pregnant woman or need to transport sporting good; airline may charge extra for these services. Airport2

Here is a news coverage from Bloomberg TV India on this topic:

Conclusion – This policy is a mixed bag for Airline and travelers. For airlines, it is an opportunity to reach more customer through the low-cost airport. On the other hand by opening skies for foreign airlines, they also have to face competition. For customers, there will be an extra 2 percent cess but they can expect low-cost carrier and airfare and also small cities will get no-frill airport with low-cost airfare.If approved it may take Jan 2016 to come into effect I think it is a win-win situation for everybody. Definitely it is a positive move and I am looking forward to it. I hope this post have given you an idea about this draft. Please use the comments section to send your opinion about this topic.

  • >