The Union Cabinet passed the new civil aviation policy on Wednesday, capping airfares for hour-long flights at Rs 2,500 and simplifying rules for airlines to fly overseas. The Civil Aviation Ministry hopes its new measures will boost air travel in the country, and lead to the sale of Rs 30 crore air tickets per year in the domestic sector by 2022 and 50 crore by 2027.
The ministry's new policy also aims to improve regional connectivity. In addition to the cap of Rs 2,500 on hour-long regional flights, 30-minute flights will cost no more than Rs 1,200. Minister of State for Civil Aviation Mahesh Sharma had first mentioned the proposal in the Lok Sabha on May 3. The new policy also proposes that the Centre will refund 80% of the losses airlines may incur because of the fare caps.
Apart from Mumbai-Delhi flights, the Cabinet has shot down the proposed 2 per cent cess on all regional flights. The cess was proposed for the improvement of regional infrastructure.
The policy also scraps the 5/20 rule, which allows a carrier to fly abroad only if it has 20 aircraft and has flown domestic routes for five years. It will be replaced by the new 0/20 rule. This means, a new airline that has a fleet of 20 aircraft can start flying abroad.
Other proposed changes include auctioning of unilateral traffic rights, tax incentives for airlines and the maintenance and repair of aircraft. The NDA government had unveiled the policy draft for the first time in November 2014. It came up with a revised draft in October 2015.