Air Transport in India: Some Legal, Regulatory and Economic Issues

Abstract

Air transport in India is at the cusp of an unstoppable forward march towards reaching eminence in the aviation industry in the years to come. Although the turn towards liberalization of air transport came in 1990 with an open skies approach, the industry was beleaguered with restrictions on foreign investment, stringent regulation imposed on burgeoning carriers with regard to international operations, and a cumbersome bureaucracy. The inflexion point arrived in 2016 with the new National Civil Aviation Policy. This policy revolutionized the industry with the removal of foreign direct investment constraints hitherto imposed on the industry, as well as the regulation of airfares and ease of business concerning such commercial aspects as the provision of ground handling services and code sharing. Airports have been given a boost by the Policy with regard to the disposal of their non-aeronautical revenue with a ‘hybrid till’ approach. The policy has also enabled the welcome advent of low cost carriers and an overall environment conducive to fair and equal opportunity for carriers to compete. It has also infused a Keynesian flavour to governmental involvement with a regional connectivity scheme and a regional connectivity fund which stimulates the domestic industry. Additionally, a progressive open skies policy both regionally and internationally has opened out the air transport market. Foreign aircraft manufacturers have been given a welcome boost. With all this, there are still considerations that need to be looked at with a sense of purpose and direction. With global megatrends such as the economic shift from the West to the East, demographic change, and rapid urbanization, all of which can be seen within India, competition among Asian air carriers will be ominous, requiring vigilance and forward thinking on the part of the Indian government. This article looks at the legal, regulatory and economic factors driving air transport in India with an analytical look at its strengths, weaknesses, opportunities and threats.