DOMESTIC AIR TRANSPORT POLICY

- Introduction - Policy Guidelines for starting Scheduled/Non-Scheduled Air Transport Services 1. Categories of Air Transport Services 2. Foreign Equity Participation in Air Transport Services 3. Procedure for starting Scheduled / Non-Scheduled Air Transport Policy 4. Route Dispersal Guidelines 5. Import of Aircraft for Private use - Annexure: 1. Requirements for Scheduled Air Transport Operators Annexure-I 2. Requirements for Non-Scheduled Operators - Annexure-II 3. Requirements for Air Cargo Operators - Annexure-III 4. Guidelines for Foreign Equity Participation in the Domestic Transport Services - Annexure-IV 5. Route Dispersal Guidelines - Annexure-V 6. Application for Import of Aircraft for Private use - Annexure-VI Air

INTRODUCTION
[Back] On 28th May 1953 - with the enactment of the Air Corporations Act, 1953 - Government of India nationalised the airline industry. In accordance with this Act, two air corporations, viz. Indian Airlines Corporation and Air India International, were established and the assets of all the then existing air companies (nine) were transferred to the two new Corporations. The operation of scheduled air transport services was made a monopoly of these two Corporations and the Act prohibited any other person or their associates from operating any scheduled air transport services from/ to/ or across India.

However, on March 1, 1994 the Air Corporation Act, 1953 was repealed thereby ending the monopoly of the Corporations on scheduled air transport services. While the domestic air transport services were liberalised and private operators were permitted to provide scheduled air transport services, the Government has laid down a policy framework to ensure safety and security of operations as well as the orderly growth of air transport services keeping in view the infrastructure constraints at a number of airports.

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POLICY GUIDELINES FOR STARTING SCHEDULED/ NON-SCHEDULED AIR TRANSPORT SERVICES

[Back] CATEGORIES OF AIR TRANSPORT SERVICES Scheduled Air Transport Service: Scheduled Air Transport Service means an air transport service undertaken between the two or more places and operated according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, each flight being open to use by members of the public. Requirements to become Scheduled Air Transport Operators are given at ANNEXURE- I Non-Scheduled Services: Non-Scheduled Operation means an air transport service other than scheduled air transport service and that may be on charter basis and/or non-scheduled basis. The operator is not permitted to publish time schedule and issue tickets to passengers. Requirements for becoming Non-Scheduled Operator are at ANNEXURE-II. Air Cargo Services: An air cargo service means air transportation of cargo and mail. Passengers are not permitted to be on these operations. It may be on scheduled or non-scheduled basis. These operations are to destinations within India. For operations outside India, the operator has to take specific permission of DGCA demonstrating his capacity for conducting such operations. Requirements for becoming an Air Cargo Operator are at ANNEXURE-III. [Back]

FOREIGN EQUITY PARTICIPATION IN AIR TRANSPORT SERVICES [Back]

Foreign equity up to 49% and NRI investment up to 100% is permissible in the domestic air transport services through the automatic route; Equity from foreign airlines is not allowed, directly or indirectly, in the domestic air transport services.

The details on foreign equity participation are at ANNEXURE - IV PROCEDURE FOR STARTING SCHEDULED/NON-SCHEDULED AIR TRANSPORT SERVICES [Back] An Aircraft Acquisition Committee (AAC) considers proposals for grant of permission to operate scheduled/non-scheduled air transport services. The present composition of the Committee is: 1. 2. 3. 4. 5. Joint Secretary, Ministry of Civil Aviation - Convenor Financial Advisor, Ministry of Civil Aviation - Member Chairman, Airports Authority India - Member Director General of Civil Aviation - Member Commissioner of Civil Aviation Security, Bureau of Civil Aviation Security - Member

The three-stage clearance procedure laid down for starting Air Transport Services is as under: (1) Issue of NOC for Scheduled/ NonScheduled services - The competence and viability of the company to operate safe and reliable air transport service is considered at this stage. (2) Import permission for

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aircraft - The details of specific types of aircraft, their airworthiness, seating capacity, mode of acquisition and arrangements of security programme, training facilities for crew and engineers, Operations Manual, maintenance facilities, etc. are looked into by the Committee. Issue of permit for Scheduled/NonScheduled air services - Permit is issued by DGCA after completion of all requirements laid down in the regulations/guid elines. Application s for NOC to operate scheduled/ nonscheduled air services as well as for import of aircraft (by all operators) are

required to be submitted by applicants in the prescribed forms. On receipt, the applications are scrutinised in the DT (Domestic Transport) Section of the Ministry for any, prima-facie, deficiency. After the application is found complete in all respects, it is circulated to the Members of the Committee for comments. The applications are considered in the meeting of the Committee, which is usually held on a

monthly basis. The Committee is empowered to decide all applications for issue of NOC for nonscheduled services and for import of aircraft by both scheduled/n onscheduled operators. In case of NOC for scheduled services, the recommend ations of the Committee are submitted to the Secretary (Civil Aviation) for approval. The final decision is, thereafter, communicat ed to the

applicant by the Ministry/ DGCA. NOC holder for Scheduled/ NonScheduled Operations is given permit by DGCA after completion of all requiremen ts laid down in the guidelines / instructions .

ROUTE DISPERSAL GUIDELINES [Back]

With a view to achieving better regulation of air transport services and taking into account the need for air transport services of different regions in the country, the Government vide order dated 1.3.94 have laid down Route Dispersal Guidelines. According to these guidelines, all scheduled operators are required to deploy in the North Eastern region, Jammu & Kashmir, Andaman & Nicobar Islands and Lakshadweep (Category-II routes) at least 10% of their deployed capacity on trunk routes (Category-I routes). Further, at least 10% of the capacity thus required to be deployed on Category-II routes, is required to be deployed for connectivity exclusively within these regions. 50% of the capacity deployed on Category-I routes is to be deployed on routes other than Category-I and Category-II routes i.e. Category-III routes. All airlines are free to operate anywhere in the country subject to compliance with the Route Dispersal Guidelines.

The detailed Route Dispersal Guidelines are at ANNEXURE V.

IMPORT OF AIRCRAFT FOR PRIVATE USE The application for import/acquisition of aircraft for private use is required to be submitted to the Director General Civil Aviation in the prescribed performa (ANNEXURE VI ) giving details of applicant, details of existing as well as proposed aircraft its maintenance arrangement, details of crew/engineers etc. The applications are considered by the Aircraft Acquisition Committee (AAC) with safety and security point of view and thereafter recommended by Director General Civil Aviation for permission to DGFT. [Back]

ANNEXURE-I REQUIREMENTS FOR SCHEDULED AIR TRANSPORT OPERATOR

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A Scheduled Operator's permit is granted to: A citizen of India, or A company or a body corporate provided that: 1. It is registered and has its principal place of business within India;

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The Chairman and at least two-thirds of its Directors are citizens of India; and Its substantial ownership and effective control is vested in Indian nationals.

A fleet of minimum five aircraft of all-up-weight of aircraft more than 5,700 kgs. each to be acquired in one years' time from the date of securing operators' permit, if they meet airworthiness, air safety and operational requirements for such operation, fulfil the routes dispersal guidelines and all other requirements of a scheduled operator. Not less than Rs.30 crores subscribed equity capital in respect of operators having aircraft or all-up-weight exceeding 40,000 kgs. and not less than Rs.10 crores for operators having aircraft of allup-weight not exceeding 40,000 kgs. Not less than three sets of flight crew and cabin crew per aircraft. An approved maintenance organization and facilities to carry out maintenance of aircraft upto 500 hours inspection or Check 'B' for Boeing 737 aircraft. Approval manuals for operations, training and quality controlcum-maintenance. Cells for pre-flight medical examination of crew, flight planning and dispatch, reliability analysis of aircraft components & systems, defect investigation, compliance of service bulletins & modifications and records of major components. Security programme approved by Bureau of Civil Aviation Security and trained security personnel at all operating stations. Scheduled operators of trunk routes are required to provide certain minimum capacity on various routes including NorthEastern region, Jammu & Kashmir, Andaman & Nicobar and Lakshadweep in accordance with the Route Dispersal Guidelines issued in this behalf (Annexure-V). The NOC for operating air transport services is valid for one year. Extension in validity of NOC is granted up to a period of 6 months on merits of each case. These period related restrictions apply in respect of dry lease and outright purchase of aircraft as well. However, when the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC is allowed for the actual lead time of delivery, even if it exceeds the total period of one and half year. The import/acquisition of old aircraft is generally permitted

subject to following age related restrictions: Pressurized aircraft not to exceed 15 years of age or 75% of its designated economic cycles or 45,000 pressurization cycles, whichever is less; Unpressurized aircraft normally not to be more than 20 years of age;

Scheduled Operator's Permit shall not be transferable. A Scheduled Operator's shall be renewable every year.

Detailed requirements are specified in Civil Aviation Requirements (CAR) Section 3 Air Transport Series C Part II dated 1 st March 1994. ( link to DGCA website)

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ANNEXURE-II REQUIREMENTS FOR NON-SCHEDULED OPERATOR:

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A Non-Scheduled Operator's permit can be granted to: Citizen of India; or A Non-Resident Indian (NRI); or A Company, registered under the Companies Act, 1956 having its principal place of business within India and with or without foreign equity participation (excluding NRI equity) limited to 49%; or The Central Government or State Government or an

Undertaking owned or controlled by either of the said Governments.

Before issue of the permit, an applicant should be in possession of a multi engine fixed wing aircraft and single or multiple engine helicopter either by outright purchase or through lease and should be registered in Indian under the normal passenger category. An applicant should either have his own maintenance and repair facilities approved by the DGCA or should furnish proof of availability of such facilities and flight crew members and aircraft maintenance engineers duly licensed by DGCA. An applicant should conduct operations from approved operational and maintenance bases and should abide by the prescribed operational requirements. An applicant should get their security programme approved by Bureau of Civil Aviation Security before grant of permit. The validity of NOC for operating air transport services is for one year. Extension of validity of NOC is granted up to a period of 6 months on merits of each case. These period related restrictions apply in respect of dry lease and outright purchase of aircraft as well. However, when the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC is allowed for the actual lead time of delivery, even if it exceeds the total period of one and half year. The import/acquisition of old aircraft is generally permitted subject to following age related restrictions: Pressurized aircraft not to exceed 15 years of age or 75% of its designated economic cycles or 45,000 pressurization cycles, whichever is less; Unpressurized aircraft normally not to be more than 20 years of age; year

Non-Scheduled Operator's Permit is renewable every against payment of a fee of Rs.5,000/-. A Non-Scheduled Operator's Permit is not transferable.

Detailed requirements are specified in Civil Aviation Requirements (CAR) Section 3 Air Transport Series C Part III dated 8th October 1999 and Part V dated 17th May 2000 for passenger and Charter operations ,

respectively. ( link to DGCA website) [Back]

ANNEXURE-III REQUIREMENTS FOR BECOMING AIR CARGO OPERATOR

[Back] An Air Cargo Operator's (ACO) Permit can be granted to:1. Citizen of India; or 2. A Non-Resident Indian (NRI); or 3. A Company, registered under the Companies Act, 1956 having its principal place of business within India and with or without foreign equity participation (excluding NRI equity) limited to 49%; or The Central Government or State Government or an Undertaking owned or controlled by either of the said Governments.

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Air Cargo Operations shall be carriers of cargo, mail. Passengers are not permissible in cargo operations. It can be scheduled or non-scheduled operations. Operations would be to destinations within India. For operations outside India, specific permission of the DGCA would be necessary demonstrating capability for conducting such

operations. Before issue of Air Cargo Operators' Permit, an applicant should be in possession of an aircraft with Certificate of Airworthiness in Normal Goods category. An applicant should either have his own maintenance and repair facilities approved by the DGCA or should furnish proof of availability of such facilities and flight crew members and aircraft maintenance engineers duly licensed by DGCA. An applicant should conduct operations from approved operational and maintenance bases and should abide by the prescribed operational requirements. An applicant should get the security programme approved by Bureau of Civil Aviation Security before grant of ACO permit. The NOC for operating air transport services is valid for one year. Extension of validity of NOC is granted up to a period of 6 months on merits of each case. These period related restrictions apply in respect of dry lease and outright purchase of aircraft as well. However, when the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC is allowed for the actual lead time of delivery, even if it exceeds the total period of one and half year. Air Cargo Operators' Permit is renewable every year. An Air Cargo Operators' Permit is not transferable.

Detailed requirements are specified in Civil Aviation Requirements (CAR) Section 3 Air Transport Series C Part IV dated 29 th August 1997. ( link to DGCA website)

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ANNEXURE - IV GUIDELINES FOR FOREIGN EQUITY PARTICIPATION IN THE DOMESTIC AIR TRANSPORT SECTOR

[Back] The Domestic Air Transport Policy approved by the government provides for foreign equity participation up to 49% and investment by Non-Resident Indians (NRIs) up to 100% in the domestic air transport services. Foreign airlines are, however, not permitted to pick up equity directly or indirectly. i. Permission to operate scheduled services will be granted either:1. to a citizen of India; or 2. to a company or a body corporate provided that; a. It is registered and has its principal place of business within India;

b. Its Chairman and at least two-thirds of its Directors are citizens of India; and c. ii. iii. Its substantial ownership and effective control is vested in Indian nationals.

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Foreign Financial Institutions and other entities that seek to hold equity in the domestic air transport sector shall not have foreign airlines as their shareholders. An applicant shall be required to furnish full and detailed information with regard to the shareholding of any airline in the foreign investing institution/entity, if any, and composition of the Board of Directors and senior management of the said foreign investing institution/entity. An applicant who seeks permission to operate air transport services in the domestic sector shall be required to give a declaration that no foreign airline is in financial or commercial tie up with him or has the management/ownership interest in him. While the foreign investing institution/entity, which seeks to hold equity in the domestic air transport sector, may have representation on the Board of Directors of the Company, such representation shall not exceed 1/3rd of the total. Any Foreign Financial Institution/entity, which seeks to make investment in the domestic air transport sector, shall not be a subsidiary of a foreign airline. A leasing company leasing aircraft to an operator in the domestic air transport sector shall also not be a part of an airline. However, wet leasing of an aircraft may be allowed from any source subject to the fulfilment of the guidelines issued by the Government/DGCA.

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A domestic sector air transport operator shall not have agreements such as shareholders agreements etc. with a foreign airline, containing provisions/arrangements empowering such foreign airlines or others on their behalf to have effective control in the management of the domestic airline. A domestic air transport operator shall not enter into an agreement with a foreign airline, which may give such foreign airline the right to interfere in the management of the domestic operator. A domestic air transport operator may enter into financial arrangements with a bank and/or other financial institutions for the purpose of lease finance, hire purchase or other loan arrangements, but such a tie up shall not be permitted with a foreign airline. Management contract with a foreign airline shall also not be permitted to a domestic air transport sector operator. Marketing arrangements such as ground handling, general sales agency, code sharing, interlining will, however, be permitted. A domestic air transport sector operator will also be permitted to get maintenance, overhaul, repair works done and training of pilots/engineers conducted either at the facilities available with other airlines or those certified by the Director General of Civil Aviation on such terms as may be prescribed. A domestic air transport sector operator may be permitted to employ foreign pilots/engineers till he is able to train his own manpower. This shall, however, be permitted with the express approval of the competent authority and for such period and terms as may be prescribed by the said authority. An applicant who seeks permission for domestic air transport operations will be required to give a declaration that he fulfils all the requirements mentioned in the above guidelines and in case of any change, he shall notify the competent authority within one month of such change. In addition, the applicant will be required to furnish such a declaration every year. A domestic air transport operator, who furnishes wrong information in respect of any of the above prescribed guidelines at any stage, shall be liable for suspension/cancellation of his operating permit.

Detailed guidelines are specified in AIC 2/2004 dated 1 st March 2004 issued by the DGCA. ( link to DGCA website) [Back]

ANNEXURE-V ROUTE DISPERSAL GUIDELINES PROVISION OF SERVICE IN DIFFERENT CATEGORIES OF ROUTES

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CATEGORY-I
Routes connecting directly MUMBAI-BANGALORE MUMBAI-CALCUTTA MUMBAI-DELHI MUMBAI-HYDERABAD MUMBAI-MADRAS MUMBAI-TRIVANDRUM CALCUTTA-DELHI CALCUTTA-BANGALORE CALCUTTA-CHENNAI DELHI-BANGALORE DELHI-HYDERABAD DELHI-CHENNAI CATEGORY-II Routes connecting stations in North Eastern region, Jammu & Kashmir, Andaman & Nicobar and Lakshadweep. CATEGORY-III Routes other than those in Category-I and Category-II Any one who operates schedule air transport service on one or more of the routes under Category-I, shall be required to provide such service

in Categories-II & III as indicated below: The operator will deploy on routes in Category-II at least 10% of the capacity he deploys on routes in Category-I and of the capacity thus required to be deployed on Category-II routes, at least 10% would be deployed on service or segments thereof operated exclusively within the North-Eastern region, Jammu & Kashmir, Andaman & Nicobar and Lakshadweep. The operator will deploy on routes in Category-III, at least 50% of the capacity he deploys on routes in Category-I. Note 1: A service operated on a Category-I route as a part of international air service will not be reckoned for the above purpose. Note 2: Capacity deployed will be reckoned in Available Seat Kilometres (ASKM). Note 3: On multiple sector routes like Delhi-CalcuttaGuwahati-Imphal, the capacity provided on Delhi-Calcutta sector will count towards Category-I that provided on Calcutta-Guwahati sector will count towards Category-II and the capacity on Guwahati-Imphal sector will count towards service exclusively within Category-II.

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ANNEXURE-VI APPLICATION FOR IMPORT/ACQUISITION OF AIRCRAFT FOR PRIVATE USE

[Back] Part I general Information 1. 2. 3. 4. Name and address of the Applicant Name(s) of Directors of the firm/Company Existing fleet strength, type-wise and their seating capacity (a) Aircraft type, number configuration and other technical details in respect of the aircraft proposed to be imported/acquired (Details of the aircraft proposed to be imported/acquired to be furnished as per format given below in part II) (b) 5. Maintenance and operational base of the proposed aircraft.

Source of crew and their names (a) for existing fleet (b) for proposed fleet

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Arrangement for training of crew Source of engineers/technical staff and their names (a) for existing fleet (b) for proposed fleet

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Arrangement/level of readiness for maintenance of aircraft

Part II Details of the Aircraft a) b) c) d) e) f) g) h) i) j) k) l) m) n) o) p) Type and Make of the aircraft: Nationality and Registration of the aircraft: Year of manufacture of the aircraft: Name of manufacturer of the aircraft: Serial number of the aircraft: No. of passenger seats/weight of cargo permissible as per type certificate of the aircraft/helicopter Maximum certified take off mass: Engine type mounted on aircraft: Number of hours flown since new: Number of landing since new: Number of pressurisation cycles since new: Last major check done and number of hours since flown: Next major check due: Name of the company from which the aircraft/helicopter is being taken on lease: Previous history of aircraft with details of any incident/accident involving structural damage: Name of the Authority and country which issued the last Certificate of Airworthiness:

UNDERTAKING It is confirmed that the aircraft after registration in India shall be maintained, operated and de-registered (if required) in accordance with the Indian rules, regulations, procedures and any condition specified by DGCA, India and there is no binding or limitation of any kind in this regard in the lease agreement for the acquisition of the aircraft.

(Signature of the Applicant/Authorised Signatory)

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