India aims to become the third-largest civil aviation market
by 2022 via a recently approved National Civil Aviation Policy that puts a
maximum fare on short domestic flights and eases rules on codesharing and
international operations by Indian carriers.
India's Ministry of Civil Aviation has capped regional
domestic flights of about an hour duration to 2,500 rupees, or about $37. If
those caps cause losses to an airline, the government will refund the carrier up
to 80 percent. "The government has proposed to take flying to the masses
by making it affordable and convenient," according to the policy.
"For example, if every Indian in the middle class income bracket takes
just one flight in a year, it would result in a sale of [350 million] tickets,
a big jump from [70 million] domestic tickets sold in 2014-2015."
The new policy also permits domestic carriers to codeshare
with foreign carriers to any destination in the country without government
approval. It removes an old rule requiring Indian carriers to fly domestic
routes for five years and maintain a fleet of 20 aircraft before being allowed
to fly internationally. Carriers now can begin international operations as long
as they deploy at least 20 aircraft or 20 percent of total capacity, whichever
is highest, for domestic flights.
Additionally, India now allows foreign investors
to fully own local carriers, according to a statement from Prime Minister
Narendra Modi's office. It had capped foreign investment at 49 percent, but now
the government can approve exceptions. Investment in Indian carriers by foreign
airlines, however, remains capped at 49 percent, however.