New Aviation Policy Caps Fares for 1-Hour Flights at Rs 2,500
Jet Airways, InterGlobe Aviation (IndiGo) and SpiceJet stocks surged after the news.
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- To boost regional connectivity, airfares fixed at Rs 2,500 for one-hour long flights and Rs 1,200 for a 30-minute flight.
- Airlines like Vistara and AirAsia can now fly on foreign routes without completing 5 years of domestic operations.
- Airline stocks such as Jet Airways, InterGlobe Aviation (IndiGo) and SpiceJet surged after the announcement.
The Union Cabinet cleared the much-awaited national civil aviation policy on Wednesday.
The policy which seeks to strengthen regional connectivity and tap the sector’s high-growth potential, has also come as a relief for frequent flyers.
The new policy has put a cap on the cost of small duration flights – Rs 2,500 for a 1-hour-long and Rs 1,200 for a 30-minute flight.
Airlines will get tax incentives for operating on unserved routes even as fliers will have to pay additional levy towards regional connectivity fund, under the policy.
5/20 Norm Scrapped
The government has scrapped the controversial 5/20 norm, which allowed only local airlines having at least five years of operational experience and a fleet of minimum 20 aircraft to fly overseas.
This will allow new airlines like Vistara and AirAsia to fly abroad as long as they deploy 20 planes or 20 percent of their total capacity for domestic operations, without having to complete 5 years of domestic operations.
A Probable Game Changer?
Talking about the new policy, Civil Aviation Secretary RN Choubey has said that the “aim is to ensure affordable, convenient and cheap flying for the people.”
Calling the policy a “game changer,” Civil Aviation Minister Ashok Gajapathi Raju tweeted that the country’s aviation sector is poised to become the world’s third largest by 2022.
Airlines Stock Surge
Airline stocks climbed up to 5 percent after the national civil aviation policy was cleared by the Union Cabinet.
Shares of Spicejet soared by 5.22 percent, InterGlobe Aviation rose by 4.32 percent and Jet Airways gained 2.91 percent on BSE.
The policy has been finalised after nearly eight months since the Ministry came out with the revised draft in October 2015.
The Civil Aviation Ministry has assured of more initiatives like development of new airports, separate regulations for helicopters and measures to boost skill development in the aviation sector.
India’s domestic air traffic market logged the fastest growth in the world for the 13th consecutive month in April. The market grew at nearly 22 percent during the month.
(With agency inputs.)
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