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DOMESTIC AIR TRANSPORT POLICY

- Introduction

- Policy Guidelines for starting Scheduled/Non-Scheduled AirTransport Services

1. Categories of Air Transport Services

2. Foreign Equity Participation in Air Transport Services

3. Procedure for starting Scheduled / Non-Scheduled AirTransport 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 ATransport Services - Annexure-IV

5. Route Dispersal Guidelines - Annexure-V

6. Application for Import of Aircraft for Private use - Annexure-VI

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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repealed thereby ending the monopoly of the Corporations on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.

[Back]

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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 serviceundertaken between the two or more places and operated according toa published time table or with flights so regular or frequent that theyconstitute a recognisably systematic series, each flight being open touse by members of the public.

Requirements to become Scheduled Air Transport Operators are given atANNEXURE- I

Non-Scheduled Services:

Non-Scheduled Operation means an air transport service other thanscheduled air transport service and that may be on charter basis and/ornon-scheduled basis. The operator is not permitted to publish timeschedule 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 onscheduled or non-scheduled basis. These operations are to destinations

within India. For operations outside India, the operator has to takespecific permission of DGCA demonstrating his capacity for conductingsuch operations.

Requirements for becoming an Air Cargo Operator are at ANNEXURE-III.

[Back]

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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 theautomatic 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 grantof permission to operate scheduled/non-scheduled air transportservices. The present composition of the Committee is:

1. Joint Secretary, Ministry of Civil Aviation - Convenor2. Financial Advisor, Ministry of Civil Aviation - Member3. Chairman, Airports Authority India - Member4. Director General of Civil Aviation - Member5. Commissioner of Civil Aviation Security, Bureau of Civil Aviation

Security - Member

The three-stage clearance procedure laid down for starting AirTransport Services is as under:

(1) Issue of NOC forScheduled/ Non-Scheduledservices - Thecompetence andviability of thecompany tooperate safe andreliable airtransport serviceis considered atthis stage.

(2) Importpermission for

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aircraft - Thedetails of specifictypes of aircraft,theirairworthiness,

seating capacity,mode of acquisition andarrangements ofsecurityprogramme,training facilitiesfor crew andengineers,OperationsManual,

maintenancefacilities, etc. arelooked into bythe Committee.

(3) Issue of permitforScheduled/Non-Scheduled airservices - Permitis issued byDGCA after

completion of allrequirementslaid down in theregulations/guidelines.

Applications for NOC tooperatescheduled/non-scheduled

air servicesas well asfor importof aircraft(by alloperators)are

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required tobesubmittedbyapplicants

in theprescribedforms.

On receipt,theapplicationsarescrutinisedin the DT(DomesticTransport)

Section ofthe Ministryfor any,prima-facie,deficiency.

After theapplicationis foundcomplete inall respects,it is

circulatedto theMembers oftheCommitteeforcomments.

Theapplicationsareconsideredin themeeting oftheCommittee,which isusually heldon a

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monthlybasis.

TheCommitteeis

empoweredto decide allapplicationsfor issue ofNOC fornon-scheduledservicesand forimport ofaircraft by

bothscheduled/non-scheduledoperators.In case ofNOC forscheduledservices,therecommend

ations of theCommitteearesubmittedto theSecretary(CivilAviation)forapproval.

The finaldecision is,thereafter,communicated to the

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applicantby theMinistry/DGCA.

NOC holder

forScheduled/Non-ScheduledOperationsis givenpermit byDGCA aftercompletionof allrequiremen

ts laid downin theguidelines /instructions.

ROUTE DISPERSAL GUIDELINES

[Back]

With a view to achieving better regulation of air transportservices and taking into account the need for air transportservices of different regions in the country, the Government videorder dated 1.3.94 have laid down Route Dispersal Guidelines.

According to these guidelines, all scheduled operators arerequired to deploy in the North Eastern region, Jammu &Kashmir, Andaman & Nicobar Islands and Lakshadweep(Category-II routes) at least 10% of their deployed capacity ontrunk routes (Category-I routes). Further, at least 10% of thecapacity thus required to be deployed on Category-II routes, isrequired 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 routesi.e. Category-III routes.

All airlines are free to operate anywhere in the country subject tocompliance with the Route Dispersal Guidelines.

The detailed Route Dispersal Guidelines are at ANNEXURE V.

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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

[Back]

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 ofbusiness within India;

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2. The Chairman and at least two-thirds of itsDirectors are citizens of India; and

3. Its substantial ownership and effective control is

vested in Indian nationals.

A fleet of minimum five aircraft of all-up-weight of aircraft morethan 5,700 kgs. each to be acquired in one years' time from thedate of securing operators' permit, if they meet airworthiness, airsafety and operational requirements for such operation, fulfil theroutes dispersal guidelines and all other requirements of ascheduled operator.

Not less than Rs.30 crores subscribed equity capital in respect ofoperators having aircraft or all-up-weight exceeding 40,000 kgs.and not less than Rs.10 crores for operators having aircraft of all-

up-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 outmaintenance of aircraft upto 500 hours inspection or Check 'B' forBoeing 737 aircraft.

Approval manuals for operations, training and quality control-cum-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 AviationSecurity and trained security personnel at all operating stations.

Scheduled operators of trunk routes are required to providecertain minimum capacity on various routes including North-Eastern region, Jammu & Kashmir, Andaman & Nicobar andLakshadweep in accordance with the Route Dispersal Guidelinesissued 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 monthson merits of each case. These period related restrictions apply inrespect of dry lease and outright purchase of aircraft as well.However, when the aircraft proposed to be imported is a new onewith a definite delivery schedule, extension of NOC is allowed forthe actual lead time of delivery, even if it exceeds the totalperiod of one and half year.

The import/acquisition of old aircraft is generally permitted

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subject to following age related restrictions:

Pressurized aircraft not to exceed 15 years of age or75% of its designated economic cycles or 45,000pressurization cycles, whichever is less;

Unpressurized aircraft normally not to be more than20 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 1st March 1994.( link to DGCA website)

[Back]

ANNEXURE-II

REQUIREMENTS FOR NON-SCHEDULEDOPERATOR:

[Back]

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, 1956having its principal place of business within India andwith or without foreign equity participation (excludingNRI equity) limited to 49%; or

The Central Government or State Government or an

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Undertaking owned or controlled by either of the saidGovernments.

Before issue of the permit, an applicant should be in possession

of a multi engine fixed wing aircraft and single or multiple enginehelicopter either by outright purchase or through lease andshould be registered in Indian under the normal passengercategory.

An applicant should either have his own maintenance and repairfacilities approved by the DGCA or should furnish proof ofavailability of such facilities and flight crew members and aircraftmaintenance engineers duly licensed by DGCA.

An applicant should conduct operations from approvedoperational and maintenance bases and should abide by theprescribed operational requirements.

An applicant should get their security programme approved byBureau of Civil Aviation Security before grant of permit.

The validity of NOC for operating air transport services is for oneyear. Extension of validity of NOC is granted up to a period of 6months on merits of each case. These period related restrictionsapply in respect of dry lease and outright purchase of aircraft aswell. However, when the aircraft proposed to be imported is anew one with a definite delivery schedule, extension of NOC isallowed for the actual lead time of delivery, even if it exceeds thetotal 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 or75% of its designated economic cycles or 45,000pressurization cycles, whichever is less;

Unpressurized aircraft normally not to be more than20 years of age;

Non-Scheduled Operator's Permit is renewable every yearagainst 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,

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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 Indiaand with or without foreign equity participation(excluding NRI equity) limited to 49%; or

4. The Central Government or State Government or anUndertaking owned or controlled by either of the said

Governments.

Air Cargo Operations shall be carriers of cargo, mail. Passengersare 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 benecessary demonstrating capability for conducting such

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operations. Before issue of Air Cargo Operators' Permit, an applicant should

be in possession of an aircraft with Certificate of Airworthiness inNormal Goods category.

An applicant should either have his own maintenance and repair

facilities approved by the DGCA or should furnish proof ofavailability of such facilities and flight crew members and aircraftmaintenance engineers duly licensed by DGCA.

An applicant should conduct operations from approvedoperational and maintenance bases and should abide by theprescribed operational requirements.

An applicant should get the security programme approved byBureau 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 monthson 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 onewith a definite delivery schedule, extension of NOC is allowed forthe actual lead time of delivery, even if it exceeds the totalperiod 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 29th August1997. ( link to DGCA website)

[Back]

ANNEXURE - IV

GUIDELINES FOR FOREIGN EQUITY

PARTICIPATION IN THE DOMESTIC AIR

TRANSPORT SECTOR

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[Back]

The Domestic Air Transport Policy approved by the governmentprovides for foreign equity participation up to 49% and investment byNon-Resident Indians (NRIs) up to 100% in the domestic air transportservices. Foreign airlines are, however, not permitted to pick upequity directly or indirectly.

i. Permission to operate scheduled services will be granted either:-

1. to a citizen of India; or2. to a company or a body corporate provided that;

a. It is registered and has its principal place ofbusiness within India;

b. Its Chairman and at least two-thirds of itsDirectors are citizens of India; and

c. Its substantial ownership and effective control isvested in Indian nationals.

ii. Foreign Financial Institutions and other entities thatseek to holdequity in the domestic air transport sector shall not have foreignairlines as their shareholders.

iii. An applicant shall be required to furnish full and detailedinformation with regard to the shareholding of any airline in theforeign investing institution/entity, if any, and composition of theBoard of Directors and senior management of the said foreigninvesting institution/entity.

iv. An applicant who seeks permission to operate air transportservices in the domestic sector shall be required to give adeclaration that no foreign airline is in financial or commercial tieup with him or has the management/ownership interest in him.

v. While the foreign investing institution/entity, which seeks to holdequity in the domestic air transport sector, may haverepresentation on the Board of Directors of the Company, such

representation shall not exceed 1/3rd of the total.vi. Any Foreign Financial Institution/entity, which seeks to makeinvestment in the domestic air transport sector, shall not be asubsidiary of a foreign airline. A leasing company leasing aircraftto an operator in the domestic air transport sector shall also notbe a part of an airline. However, wet leasing of an aircraft may beallowed from any source subject to the fulfilment of theguidelines issued by the Government/DGCA.

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vii. A domestic sector air transport operator shall not haveagreements such as shareholders agreements etc. with a foreignairline, containing provisions/arrangements empowering suchforeign airlines or others on their behalf to have effective controlin the management of the domestic airline.

viii. A domestic air transport operator shall not enter into anagreement with a foreign airline, which may give such foreignairline the right to interfere in the management of the domesticoperator.

ix. A domestic air transport operator may enter into financialarrangements with a bank and/or other financial institutions forthe purpose of lease finance, hire purchase or other loanarrangements, but such a tie up shall not be permitted with aforeign airline.

x. Management contract with a foreign airline shall also not bepermitted to a domestic air transport sector operator.

xi. Marketing arrangements such as ground handling, general salesagency, code sharing, interlining will, however, be permitted.

xii. A domestic air transport sector operator will also be permitted toget maintenance, overhaul, repair works done and training ofpilots/engineers conducted either at the facilities available withother airlines or those certified by the Director General of CivilAviation on such terms as may be prescribed.

xiii. A domestic air transport sector operator may be permitted toemploy foreign pilots/engineers till he is able to train his ownmanpower. This shall, however, be permitted with the expressapproval of the competent authority and for such period and

terms as may be prescribed by the said authority.xiv. An applicant who seeks permission for domestic air transport

operations will be required to give a declaration that he fulfils allthe requirements mentioned in the above guidelines and in caseof any change, he shall notify the competent authority within onemonth of such change. In addition, the applicant will be requiredto furnish such a declaration every year.

xv. A domestic air transport operator, who furnishes wronginformation in respect of any of the above prescribed guidelinesat any stage, shall be liable for suspension/cancellation of hisoperating permit.

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

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ANNEXURE-V

ROUTE DISPERSAL GUIDELINES

PROVISION OF SERVICE IN DIFFERENT

CATEGORIES OF ROUTES

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CATEGORY-I

Routes connecting directly

MUMBAI-BANGALORE CALCUTTA-DELHI

MUMBAI-CALCUTTA CALCUTTA-BANGALOREMUMBAI-DELHI CALCUTTA-CHENNAI

MUMBAI-HYDERABAD DELHI-BANGALORE

MUMBAI-MADRAS DELHI-HYDERABAD

MUMBAI-TRIVANDRUM 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 ofthe routes under Category-I, shall be required to provide such service

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in Categories-II & III as indicated below:

The operator will deploy on routes in Category-II at least 10% of thecapacity he deploys on routes in Category-I and of the capacity thus

required to be deployed on Category-II routes, at least 10% would bedeployed on service or segments thereof operated exclusively withinthe North-Eastern region, Jammu & Kashmir, Andaman & Nicobar andLakshadweep.

The operator will deploy on routes in Category-III, at least 50% of thecapacity he deploys on routes in Category-I.

Note 1: A service operated on a Category-I route as a part ofinternational air service will not be reckoned for the abovepurpose.

Note 2: Capacity deployed will be reckoned in Available SeatKilometres (ASKM).

Note 3: On multiple sector routes like Delhi-Calcutta-Guwahati-Imphal, the capacity provided on Delhi-Calcuttasector will count towards Category-I that provided onCalcutta-Guwahati sector will count towards Category-II andthe capacity on Guwahati-Imphal sector will count towardsservice exclusively within Category-II.

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ANNEXURE-VI

APPLICATION FOR IMPORT/ACQUISITION OF

AIRCRAFT FOR PRIVATE USE

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Part I general Information

1. Name and address of the Applicant

2. Name(s) of Directors of the firm/Company

3. Existing fleet strength, type-wise and their seating capacity

4. (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) Maintenance and operational base of the proposed aircraft.

5. Source of crew and their names

(a) for existing fleet

(b) for proposed fleet

6. Arrangement for training of crew

7. Source of engineers/technical staff and their names

(a) for existing fleet

(b) for proposed fleet

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8. Arrangement/level of readiness for maintenance of aircraft

Part II Details of the Aircraft

a) Type and Make of the aircraft:

b) Nationality and Registration of the aircraft:

c) Year of manufacture of the aircraft:

d) Name of manufacturer of the aircraft:

e) Serial number of the aircraft:

f) No. of passenger seats/weight of cargo permissible as per type

certificate of the aircraft/helicopter

g) Maximum certified take off mass:

h) Engine type mounted on aircraft:

i) Number of hours flown since new:

j) Number of landing since new:

k) Number of pressurisation cycles since new:

l) Last major check done and number of hours since flown:

m) Next major check due:

n) Name of the company from which the aircraft/helicopter is being taken

on lease:

o) Previous history of aircraft with details of any incident/accidentinvolving structural damage:

p) Name of the Authority and country which issued the last Certificate of

Airworthiness:

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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/AuthorisedSignatory)

Printable version

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