3 - Ministry of Civil Aviation

Committee endorses the recent government decision to do away with the earlier proposal of notallowing greenfield airports within, an aerial distance of 150 kilometres of an existing airport.The Committee, however, suggests that central, and state governments may refrain fromextending concessions in general and subsidies in particular to greenfield airports in closeproximity to the existing airports, which might impinge on the viability of existing airports.Ministry of Home Affairs: At international airports, the operators must ensureavailability of more space so as to enable the Ministry of Home Affairs to locate additionalcounters and deploy more immigration officers. The computer systems at airports should beupgraded within a one year time-frame and the government should ensure that all passportsare machine-readable. Furthermore, the paperwork involved in immigration should be reducedin line with international practices. There should be a dedicated cadre of specially trainedofficers under the direct control of Ministry of Home Affairs for providing immigration services.As aviation and airport security are sovereign responsibilities, they should be taken over andfunded by the Ministry of Home Affairs.Ministry of Defence: In order to optimise the use of air space, the Committeerecommends that the government may consider the model followed in the U.S. and many othercountries, wherein air space is permanently made available for civil aviation and segments ofair space are re-vested and made available to defence on request. Furthermore, the defenceservices should be required to pay user charges as mutually agreed upon for facilities such asrunways. To facilitate effective co-ordination of air space and cost-sharing, civil and defenceATCs may be co-located where feasible.7.3 Air Transport ServicesIn the domestic air transport segment, route dispersal guidelines should be abolishedand airlines should be allowed to service the routes of their choice based upon commercialconsiderations. Simultaneously, the government should provide explicit subsidy support —preferably from the general exchequer and. supplemented by a sector-specific cess of 5% onairfare and proceeds from the privatisation of airports — for providing essential, butuneconomical services, and award it through a system of minimum subsidy bidding. Towardsthis end, a non-lapsable Essential Air Services Fund (EASF) should be established outside theConsolidated Fund of India and its management should be vested with an independent board.The government should fully harness the scope for recovering the cost of EAS operations, as faras possible, through direct user charges. Furthermore, the state governments may contribute tothe lowering of the net cost of EAS through fiscal concessions, as for example, by exempting theEAS operations from high incidence of sales tax on ATF. In addition, the Committeerecommends that requirements regarding fleet size and equity capital should be removed, so asto encourage entry (and greater competition) and allow operators and their financiers to makedecisions based on commercial considerations. Finally, foreign equity investment normspertaining to both domestic and international scheduled air transport services should be furtherliberalised, to allow up to. 49% foreign investment. As regards investment by foreign airlines,investment up to 49% may be allowed with the approval of Foreign Investment PromotionBoard (FIPB). In all other air services, i.e., non-scheduled services such as helicopter