3 - Ministry of Civil Aviation

CHAPTER- 1INTRODUCTIONThis Committee was set up by the Ministry of Civil Aviation to prepare a road map fordeveloping a world-class civil aviation sector capable of meeting the requirements of a rapidlygrowing and modernizing continental size economy. The Terms of Reference to the Committeeare detailed in Appendix 1. The broad context of the Committee's exercise and the perspectivesenvisioned by it were given in the introductory Chapter of Part-I of the Committee's Report.(This is given at Annex 1 to the present volume for ready reference).Recommendations covering a broad sweep of policy issues had been made in Part-I ofthe Report (These are included in Annex 2 of this volume). The Committee notes withsatisfaction that the Government has already taken some steps in line with theserecommendations. The Excise Duty on Aviation Turbine Fuel (ATF) has been reduced, InlandAir Travel Tax and Foreign Travel Tax have been abolished, Landing and Route NavigationFacility Charges (RNFC) have been lowered, Charter Policy has been liberalized and the processof restructuring Delhi and Mumbai International Airports has been initiated.On the other hand, the Committee notes with concern 4-1 at the Government has nowdecided to withdraw the exemption from tax on remittance of lease rental of aircraft with effectfrom April, 2005. The Committee feels that this measure would act as a disincentive for plansto set up regional airlines to connect small towns. Air connectivity to small towns, especiallythose of touristic importance, should be a major thrust area in the coming years. Typically,these regional airlines would be small operations using small aircraft taken on lease. TheCommittee, therefore, recommends that the exemption from tax should not be discontinued.The Committee would like to reiterate that all new initiatives in the Civil. Aviation sectorshould be formulated giving the highest priority to the needs of the traveling public and otherusers. This would mean lowering the costs, encouraging competition, eliminating the hassles atairports consistently with the need of ensuring safety and security. It is well recognized nowthat in a modern economy air travel is not an elitist luxury but an essential requirement forLonduct of efficient business and commerce. The multiplier effects of an efficient civil aviationsector can be tremendous.In his address on the occasion of JRD Tata Birth Centenary in August 2004, the Hon'blePrime Minister observed as follows:"The trend of globalization is an irreversible one. We cannot shy away from it. We mustprepare ourselves for greater integration with the evolving world economy To enablethis we must create world-class infrastructure. Over a decade after we first launchedeconomic reforms, we still cannot say we are proud of our roads, our airports, our seaports, our power supply, our railways, our urban infrastructure. There has been a grossneglect of the basic infrastructure of modern industrial development. This we arecommitted to reversing. In each of these areas we require public-private partnerships.1