New aviation policy may let airlines fly abroad from day 1

This could be part of government's attempt to not stifle future growth plans of the two new Tata airlines - Vistara and AirAsia India. According to sources, the draft civil aviation policy may contain a provision which allows these airlines immediate rights to fly overseas. What's the catch?Any airline wanting to fly overseas must commit to earning 300 domestic flying credits (DFCs) within 12 months to remain eligible for overseas flying and to avoid any penal action. Remember, as of now, Vistara and AA India cannot fly overseas before the complete five years of domestic operations and have a fleet of 20 aircraft under the existing 5/20 rule.And DFCs can be earned by complying with a complicated formula for domestic connectivity to remote and regional areas.According to sources, there will be four (not three options as thought earlier) for airlines to give their opinion on when the draft civil aviation policy is put up for public consultation over the next few days. These options are:1. Let the 5/20 remain as it is2. Remove it totally3. Replace it with 300 DFCs' condition but here airlines must first accumulate these credits before becoming eligible to fly overseas 4. Let airlines fly overseas immediately as long as they commit to earning 300 DFCs within one yearSources said the Prime Minister, who heard out a three hour presentation on the draft policy earlier this week, does not want contents of the policy to be widely opposed. In fact, consensus building seems to be new buzz word at 7, Race Course Road, the official residence of the prime minister. This could be a by-product of the GST debacle, this could also be a way of pushing forward some decisions which may not seem of earth shattering importance. Either way, PM Modi seems to think wide ranging consultations, consensus building within the aviation industry is the only sensible approach going forward.Here's what else to expect from the draft policy:— There may be no clear roadmap laid out for the future of Air India even though an earlier draft had hinted at eventual privatisation of the state owned airline. Sources said the prime minister wants to take a decision on Air India's fate himself. It is interesting to note that Air India will soon see a change of guard when "turnround specialist" Ashwani Lohani takes charge as chairman and managing director next month.— In all likelihood, the policy may suggest open skies for areas beyond 5,000 km radius of India. This means India could allow unlimited civilian flights from countries that are more than 5,000 km or seven hours of flying time away. India may insist on reciprocity from countries with which it agrees to have an open sky policy. The proposal, if cleared, could prove to be a bonanza for European carriers. It will also open up the market for airlines from Australia, Africa and South America. The sources quoted earlier said Open Skies concept may be applicable only 3-5 years later.— On lowering ATF taxation, financial implications seem to have created a roadblock so the proposal may not get much weight in the upcoming draft policy. The Ministry of Civil Aviation had proposed a lowering of taxation by the Centre by bringing ATF under "declared goods"catgeory but this requires states to be on board which is why the prime minister seems to be hesitant on pushing this proposal forward.— The draft policy may also propose a 2 percent cess on all air tickets, money from which goes into a central fund maintained by the Airports Authority of India. This money will be used to enhance domestic connectivity to remote areas.