3 - Ministry of Civil Aviation

operations, foreign investment (including investment by foreign airlines) should be allowed up'to 100%. The government should pursue liberalisation of the international air transportsegment in two phases. In the first phase, private airlines based in India — including theexisting domestic private airlines — should be allowed to provide international air transportservices to and from India. In the next phase, the government should seek more liberalarrangements under the bilaterals and enhance full-access to wider market segments by joininga regional or a plurilateral group of countries with a similar agenda of liberalisation.With a view to benefit consumers, enhance tax revenues for the government and give afillip to the retail travel trade, the Committee strongly recommends further liberalisation of airchartered services. Specifically, the Committee recommends relaxation of restrictions pertainingtoy frequency and foreign ownership norms for chartered operators. In addition, the Committeesuggests that tourist charters should be allowed to take Indian Passport holders on board andalso to carry a mix of foreign and Indian passengers on domestic tourist circuits.As regards Indian Airlines and Air India, given the dire need to rapidly improveefficiency, and to 'augment investment and limit government interference, government shouldexpedite the process of privatisation and transfer management control to strategic privateinvestors. Towards this end, government may consider private placement of shares of IA and AI(after independent valuation) with domestic financial institutions (FIs) and foreign institutionalinvestors (FIIs). This consortium should be allowed to appoint a management team of theirchoice and exit at their volition.The Committee is of the view that Pawan Hans Helicopters Limited, which caters mainlyto the needs of the oil sector and charter services, has no justification to be in the public sector.Accordingly, the Committee recommends that the Government should disinvest in PHHL byinducting a strategic partner and, thereafter, go in for an Initial Public Offer.These recommendations relating to Indian Airlines, Air India and Pawan HansHelicopters will be in tune with the perspective that the Government should focus on .policymakingfunctions and distance itself from the role of an operator.The Committee recommends that regional air services should be encouraged by reducingroute navigation and landing charges for aircraft and helicopters having a maximum certifiedcapacity of less than 8o seats. The Committee also recommends that helicopter operations andgeneral aviation should be incentivised through reduced navigation and landing charges,rationalisation of sales tax on ATF and AVGAS to bring it at par with Central Sales Tax, waiverof the proposed sector-specific cess for subsidising essential air services, lower hangar chargesat airports, , etc. Furthermore, in order to encourage helicopter operations, the Committeesuggests that the DGCA should develop appropriate procedures for regulating such operationsand that separate areas including helipads should be developed at major airports.As regards regulation, the current safety oversight regime under the aegis of the DGCAshould be reformed to incorporate a mandatory consultative process with key stakeholders. Inorder to monitor and checkmate anti-competitive practices by airlines, competition laws (andthe Competition Commission of India) should be relied upon.52