I INTRODUCTION

The Indian civil aviation industry is a promising sector owing to increased demand from upper midde-class, higher disposable incomes, favourable demographics and rapid economic growth. It has the prospect of becoming the third-largest aviation market by 2020 and reaching the zenith by 2030. The industry is following a progressive trajectory, paving the way for a new wave of growth and expansion with a substantial focus on low cost carriers, modern airports, foreign direct investment (FDI) in domestic airlines, information technology developments and regional connectivity. The Indian civil aviation industry is among the top 10 in the world with a value of around US $16 billion[1], which only forms a fragment of the latent potential and capabilities of the industry. With the National Civil Aviation Policy 2016, which came into effect on 15th June, 2016 r, it is necessary to analyse the current framework of the aviation sector.

The Ministry of Civil Aviation (MoCA) is responsible for the administration of the aviation industry in India. It plays a significant role in the formulation of national policies and programmes for development and regulation of civilian aviation, and for devising and implementing schemes for methodical and efficient growth of civilian air transport. The MoCA also ensures the implementation of the Aircraft Act 1934.

The following are the principal regulatory authorities of the civil aviation industry functioning under the authority of the MoCA in India: Directorate General of Civil Aviation (DGCA); Airports Authority of India (AAI); and the Airport Economic Regulatory Authority (AERA).

The DGCA is the principal establishment tasked with the responsibility of regulating civil aviation in India, including air transport services, enforcement of civil air regulations, air safety and airworthiness standards. It also coordinates all regulatory functions with the International Civil Aviation Organisation (ICAO).[2]

The AAI is a nodal organisation entrusted with the responsibility of creating, upgrading, maintaining and managing civil aviation infrastructure, both on the ground and in the country’s air space. Its responsibilities include passenger services, air navigation services, security services and managing aerodrome facilities.[3]

AERA was established in 2008 to regulate the tariff for aeronautical services rendered at major airports in India. The authority also monitors the performance standards of the established airports as set out by the central government or any other body authorised by it.[4] Its primary responsibility is to set aeronautical charges on a five-year cycle, taking into account the economic viability of an airport, in line with ICAO principles of transparency, cost-relatedness, non-discrimination and user consultation.[5]

Some of the prominent features of the civil aviation sector in India include a large number of consumers (passengers and cargo), a relatively small number of airlines with significant market share, high cost barriers to market entry, differentiated services and competitive firms affecting each other’s business decisions. These market characteristics indicate that India’s civil aviation sector has an inherent oligopolistic market structure.[6] Read More…

 

 

[1] FICCI-KPMG, Hyderabad, ‘India Aviation Report 2016’, 5th International Exhibition & Conference on Civil Aviation; India Brand Equity Foundation. Available at: http://www.ibef. org/industry/indian-aviation.aspx

[2] For the functions of the DGCA, see the Organisation Manual of the Office of the Director General of Civil Aviation (8 December 2015); http://dgca.nic.in/dgca/func-ind.htm.

[3] Organisation, Airports Authority of India; www.aai.aero/public_notices/aaisite_test/orign.jsp.

[4] Objectives and Functions, The Airports Economic Regulatory Authority; http://aera.gov.in/content/innerpage/objective–and-functions.php.

[5] Vital Role for the Airports Economic Regulatory Authority, Centre for Asia Pacific Aviation (April 2009); www.capaindia.com/PDFs/AERA per cent20April per cent2009.pdf.

[6] Report of the Committee constituted for the examination of the recommendations made in the study report on the Competitive Framework of Civil Aviation Industry in India, MoCA (June 2012); http://civilaviation.gov.in/sites/default/files/moca_001870_0.pdf.