Senior Supreme Court lawyer and ORF trustee Lalit Bhasin moots a comprehensive law to replace the obsolete Aircraft Act of 1934
Experts have sought a new, comprehensive law to replace the obsolete Aircraft Act 1934, which still controls the civil aviation sector in India. This suggestion was first voiced by Mr. Lalit Bhasin, a senior Supreme Court lawyer while initiating a discussion on "Civil Aviation in India: Challenges and Prospects" organised by Observer Research Foundation in New Delhi on December 23, 2008. “It’s (Aircraft Act) an obsolete piece of legislation. The sooner it is replaced with a comprehensive Act, the better," Mr. Bhasin said, adding though the DGCA (Directorate General of Civil Aviation) controls everything in the civil aviation sector, there is no mention of the word DGCA in the entire Act. Saying DGCA has its own vested interests, Mr. Bhasin, also a Trustee of ORF suggested that various functions of the DGCA should be separated to make them effective. He said the role of the Airport Authority of India, which is a virtual monopoly now and levies extraordinary rates on licensees, required an in-depth study. Mr. Bhasin also stressed the need to have a complete re-look into the various laws, especially the labour laws which still cover even highly paid engineers and pilots who come under the definition of workmen. "The government has to change its mindset," Mr. Bhasin, who had represented various civil aviation players in courts, said. The need for a new comprehensive law was underlined by former Director Generals of DGCA, Mr. H.S. Khola and Mr. Satinder Singh and other participants. Mr. Khola blamed the unplanned growth in the sector for all the ills prevailing now, from increasing costs to lack of infrastructure. He also impressed on the need for regulations on air routes as well as economic front. "The industry is in the ICU and on oxygen. But it may not be able to survive," Mr. Khola remarked. He said there is a need for multiple airports in big cities and multiple runways. He suggested a mechanism like an advisory body which consists of users as well. Suggesting a change in the Government policy, Mr. Satinder Singh said focus should now be given to creating hubs with smaller planes and small airport, instead of the highly capital intensive bigger airports and big planes. He said incentives should also be offered to these small players who can create lots of employment and earn sufficient revenue. Prof. Senguttuvan, Head of Planning and Research, GMR Group (Delhi Airport), blamed the unplanned growth and the present ills to lack of enough research and development in the sector. Saying there was no proper model, he underlined the need for technological upgradation in all spheres, including ATC. Mr. Kapil Kaul, CEO Asia Pacific, CAPA demanded a right policy frame work which is transparent. Saying the present policy was not in the national interest, he demanded industry friendly regulations. He also called for restructuring of the present "negative" taxation system. Saying there is lack of vision on the present aviation taxation policy, Mr. Pratik Jain, Executive Director KPMG, also suggested restructuring of taxation structure to make airlines more economically viable. Mr. Kapil Arora, Ernst and Young partner, suggested allowing 26 per cent FDI in the civil aviation sector, like in the defence sector, to ensure free flow of capital. He said revenue share needed to be more balanced. He also stressed the importance of helicopter industry and alternate airport. Mr. Mark Martin, Senior Consultant KPMG, said there was a need for integrating aviation training and pilot schools to college curriculum. He suggested Aviation University and also IIMs launching aviation management courses. The discussion was based on a study made by Observer Research Foundation. Going into details of the present situation in the sector, the study has made various recommendations, including ensuring a level playing field providing various tax reductions and concessions. "India’s international airlines should get ATF at the same price at which foreign airlines get it in India," the report said noting that what the government gains through higher taxes on ATF for India’s airlines is more than offset by the loss to the country through Indian passengers flying on foreign carriers as their fare money is repatriated. It also recommends, among other things, that Government should allow India’s domestic airlines to operate international services without further delay, as elsewhere in the world, airlines are allowed to launch international operations from day one. The report notes that there is only one independent MRO facility able to take up third party work in India. Most airlines have their work done abroad. However, with the entry of major foreign players in to the Indian market, Indian MRO facilities should team up with one of the foreign companies, if these are to survive. It suggested that Government should scrap the Route Dispersal Guidelines for the cooperation of Tier II and Tier III routes, as it is causing more harm than good. Instead, regional airlines should be encouraged – even subsidized – to serve such routes.
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