All eyes set on Civil Aviation Policy: Cabinet to meet on Wednesday

The Union Cabinet will meet on Wednesday and most likely will clear the air on the much awaited Aviation policy which is making headwinds in the recent days.

The issue to set up a new aviation policy started as there was a constant debate since the policy suggests a 5/20 rule for international flying. According to this rule the carrier which is in the business for 5 years will be allowed to fly internationally with 20 aircrafts.

The old guards are resisting any changes in the current policy but the new entrants want the policy to be scrapped as the policy is unfair to them.

The following is the agenda which will be discussed today;
1.Modification of 5/20 rule
2.Capping airfare to Rs 2500 for an hour's flight.
3.Will propose to give MRO (Maintenance Repair Operation) infrastructure status.

If the 5/20 rule is reframed it will help the new entrants like Vistara and Air Asia, however the established players like Spice Jet, Jet Airways, which had waited 5 years to fly abroad will be hesitant against the policy.

The policy will also take a toll on the market share of the established players if new entrants get a free hand to fly overseas.

Meanwhile the domestic flyers will have a lot of things to cheer as the domestic air fares  will be lower as the regional flights will be exempt from service tax. Funding will be provided only to states that reduce value added tax levied on aviation turbine fuel (ATF) to 5 percent or below.

However, a 2 per cent cess could be levied on passengers taking commercial flights.