The Ministry of Civil Aviation plans to replace the DGCA with CAA. DGCA is a regulatory body governing the safety aspects of civil aviation in India. The CAA on the other hand, will have complete financial autonomy being financed by a fund known as the Civil Aviation Authority of India Fund. The Fund will be established by levying a fee on passengers in addition to the budgetary allocation by the government. The estimated cost of setting up CAA will be INR 1120 million. The CAA shall be responsible for air safety, airspace regulation, setting of aviation standards, licensing of pilots and consumer protection. The powers of CAA will include: (a) regulating air safety and ensuring better management of civil aviation; (b) conducting investigations, seize and punish; and (c) issuing licenses, permits, directions under the Aircrafts Act, 1934.
PSA View – The civil aviation industry in India is in dire need for an overhaul and replacing the DGCA with CAA may be the first step. The reasons for replacement of DCGA are: (a) the shortage of trained manpower; (b) DGCA's inability to retain manpower due to structural problems; and (c) DGCA's limited financial power and its inability to meet the demands of the civil aviation sector. With the establishment of the CAA, the ministry hopes it will be able to handle all such lacunas.
Air Asia- first foreign carrier to spread its wings in India!
Pursuant to the revised Foreign Direct Investment norms introduced by the Indian government in September 2012 allowing up to 49% stake in Indian airlines, Air Asia, the Malaysian budget carrier, becomes the first foreign airline to venture into the Indian aviation space. The Foreign Investment Promotion Board recently approved the proposal of Air Asia to establish a new airline in India in a Joint Venture with Tata Sons and Telestra Tradeplace. According to the proposal, the Malaysian airlines will have operational control at 49%, Tata Sons will have 30% stake and the minority investor Telestra Tradeplace will have 21% holding. The airline will be based out of Chennai, Tamil Nadu and cater to tier-2 and tier-3 cities. The operations are expected to begin by the end of this year provided all the approvals are in place.
PSA View – Air Asia's arrival signals the beginning of a new aviation chapter in India, which will also encourage several other foreign airlines to follow suit. Air Asia's entry will also augment competition in the domestic budget carrier segment as it will cut into the space of the other existing low-cost carriers, currently dominated by Indigo and Spice Jet. In all, the travelers will benefit due to greater choices, and, hopefully, better services and travel experiences. However, for the moment, it is important to see if Air Asia is able to smoothly steer through the procedural maze before it finally takes off in India.
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