There are, at present, 2 Scheduled and Non-Scheduled/Air Taxi Operators in the private sector and companies hold NOC to operate air transport services (List at Annexure - VIII).

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The details of the existing Fleet  of Scheduled private operators are at Annexure-IX .

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The passengers carried by private airlines & Indian Airlines since 1990 is shown at Annexure-X.

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• With a view to achieving better regulation of air transport services and taking into account the need for air transport services of different regions in the country, the Government vide order dated 1.3.94 have laid down route dispersal guidelines. (Annexure - XI).
• According to these guidelines, all scheduled operators are required to deploy in the North Eastern region, Jammu & Kashmir, Andaman & Nicobar Islands and Lakshadweep (category-II routes) at least 10% of their deployed capacity on trunk routes (category-I routes). 1% capacity is to be deployed exclusively within Category-II stations.
• 50% of the capacity provided on category-I routes is to be provided on routes other than category-I and category-II routes (category-III routes).

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BEGINNING OF AIR TAXI SCHEME & CURRENT POLICY:

A. OBJECTIVES OF AIR TAXI SCHEME,1986 (AIC No.26/198 dated 14.11.1996)

• Boost tourism

• Augment domestic air service

Operations restricted to

• Maximum 10 seater aircraft manufactured abroad & 19 seater aircraft   manufactured in India

• Notified airports only

• Two hours before/after schedule time of national carrier

• No import of aircraft permitted

• Fares not less than Vayudoot

B. CHANGES IN THE AIR TAXI SCHEME IN 1989-90 (AIC 9/1989 dated 9.8.1989)

• Maximum seating capacity increased to 50

• Import of aircraft permitted only to NRI's

• 55 airports notified for air taxi operations

C. CHANGES IN THE AIR TAXI SCHEME IN 1990-91

Extensive liberalisation was announced by Minister of Civil Aviation in Parliament

May 1990

• Minimum 15 seats and ceiling on maximum seats removed

• Fare restriction abolished

• Time restriction withdrawn

• Flights permitted to all airports open to scheduled operations

• Permitted on non-charter basis also

• Prior approval of flights by DGCA dispensed with.

  December 1990

  The eligibility conditions include :-

  1. Citizen of India
  2. Group of Indian nationals including NRI
  3. Public sector undertaking of Central or State Government  
• Stipulation of maximum seating capacity removed
• Operation of one flight below 700 km for each flight of more than 700 kms.
• 93 Airports notified for air taxi operations

November 1992

• Indian nationals permitted to import aircraft subject to clearance by RBI/Ministry of Finance (liberalised Exchange Rate Management System)

February 1993

• Operator to obtain NOC from national carrier if employment to be given to any of its employee

25th February 1993

• Upto 40% foreign equity participation under Air Taxi Scheme on a case by case basis approved.

POLICY LIBERALISATION IN 1994

• With effect from 1.3.1994 Air Taxi Scheme was liberalized after the repeal of Air Corporations Act 1953.
• Restriction for operating scheduled air transport services other than national carriers removed

3.8.1994

• Ceiling of 30 seats for new entrants announced by Minister in Parliament.

8.12.1994

• Extension of 40% foreign equity participation applicable in air taxi scheme extended mutatis mutandis for scheduled air transport services, on a case by case basis.

8th March 1995(AIC No.3/1995)

1. Eligibility conditions:-

• Citizen of India
• a Non-Resident Indian/OCB (predominately owned by NRIs with at least 60% equity of NRI) allowed 100% equity.
• a company registered under the Companies Act, 1956 with or without foreign equity participation excluding NRI equity) limit to 40%;
• Central Government or State Government or an Undertaking owned/controlled by such Government.
  • Under normal passenger category the aircraft to be multi-engined fixed wing and single or multiple engine helicopter.
  • For imported pressurized aircraft not to exceed 15 years of age or 75% of its designated economic cycles or 45,000 pressurization cycles, whichever is less; unpressurized aircraft normally not to be more than 20 years of age.

8.12.1995

• ATOs required to obtain prior clearance of DGCA only if they operate on sectors where there is already a daily service by 2 or more scheduled operators.
• ATOs permitted to operate on a sector of scheduled operators if this happens to be less than half of a multi-sector routes.

12.9.1996

• Ceiling of 30 seats enhanced to 50 by a statement made by the Minister in Parliament.

MODIFICATIONS IN THE GUIDELINES (Effective 24.1.1997)

• Barrier to entry and exit to/from this sector removed;
• Only pre-entry scrutiny of applications;
• Freedom to choose any type and size of aircraft given to the operator;
• Shareholders fund enhanced from Rs.5.00 crores to Rs.10.00 crores and from Rs.1.00 crore to Rs.30.00 crores for aircraft all-up-weight below 40,000 Kgs. and above 40,000 Kgs. respectively.
• Induction of total capacity to be pre-determined on the basis of traffic growth projections;

• In distribution of pre-determined capacity while preference would be given to Indian Airlines, subject to its ability, there would not be any such restriction on the induction of capacity by private operators.

(Effective 1.4.1997)

• Foreign equity upto 40% and NRI/OCB investment upto 100% is permissible in the domestic air transport services;
• Equity from foreign airlines is not allowed directly or indirectly, in the domestic air transport services; and
• The existing companies operating in the domestic air transport sector in which equity is held by foreign airlines, directly or indirectly, were advised to disinvest equity held by foreign airlines within a period of six months.
• On 17.7.1998, vide AIC No. 4/1998, DGCA has issued a set of comprehensive guidelines in this regard (Anexure IV)

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The main features of the recently approved policy framework for domestic air transport services are as follows;-

A.  As approved on 24.1.1997:

1. Barriers to entry and exit from this sector should be removed. There should only be a pre-entry scrutiny of applications to verify the financial soundness, maintenance, security and safety aspects of operations and human resources development proposed to be undertaken by the applicant.
2. Choice of the aircraft type and size should be left to the operator.
3. To eliminate non-serious entrepreneurs and to achieve economies of scale, the minimum fleet size for a scheduled operator should be raised from the existing three (3) to five (5) aircraft and the minimum amount of the shareholders funds should be enhanced from existing Rs.5.00 crores to Rs.10 crores for aircraft of all-up-weight below 40,000 kgs and from Rs.10 crores to Rs.30 crores for aircraft of all up weight exceeding 40,000 kgs.
4. Induction of total capacity in the air transport sector should be predetermined on the basis of trend growth of traffic and projections made for at least a period of five years on annual basis. This information should be widely publicised to enable the entrepreneur to take investment decisions.
5. In the distribution of this predetermined capacity for induction, while preference will be given to Indian Airlines according to its fleet augmentation plan subject to its ability to do so, to meet a share of additional capacity that would emerge each year, there would not be any pre-determined restriction on the induction of capacity by private operators.
6. The present policy of route dispersal guidelines be retained and strictly enforced. According to these guidelines, all scheduled operators are required to deploy in the North-East, Jammu & Kashmir, Andaman Nicobar Islands and Lakshadweep 10% of their capacity deployed on the specified trunk routes.

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B. As approved on 1.4.1997:

7. Foreign equity upto 40% and NRI/OCB investment upto 100% is permissible in the domestic air transport services;
8. Equity from foreign airlines is not allowed, directly or indirectly, in the domestic air transport services; and
9. The existing companies operating in the domestic air transport sector in which equity is held by foreign airlines, directly or indirectly, would be advised to disinvest equity held by foreign airlines within a period of six months.

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File No.26/14/98-IR

The following guidelines for foreign equity participation in the domestic air transport sector are issued for information, guidance and necessary action.

This supersedes AIC 2/1998 dated 11.06.98.

  H.S.KHOLA

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The Domestic Air Transport Policy approved by the government provides for foreign equity participation upto 40% and investment by Non-Resident Indians(NRIs)/Overseas Corporate Bodies (OCBs) upto 100% in the domestic air transport services. Foreign airlines are, however, not permitted to pick up equity directly or indirectly. It has, therefore, become necessary that guidelines for interpretation of indirect investment by foreign airlines, which are in conformity with the provisions of the Aircraft Rules, 1937 and the existing Domestic Air Transport Policy, are promulgated. Accordingly, the following guidelines are issued with the approval of the Government:

1. Permission to operate scheduled services will be granted either:-

1. to a citizen of India; or
2. to a company or a body corporate provided that;

1. It is registered and has its principal place of business within India;
2. Its Chairman and atleast two-thirds of its Directors are citizens of India; and
3. Its substantial ownership and effective control is vested in Indian nationals.

2. Foreign Financial Institutions and other entities who seek to hold equity in the domestic air transport sector, shall not have foreign airlines as their shareholders.
3. An applicant shall be required to furnish full and detailed information with regard to the shareholding of any airline in the foreign investing institution/entity, if any, and composition of the Board of Directors and senior management of the said foreign investing institution/entity.
4. An applicant who seeks permission to operate air transport services in the domestic sector shall be required to give a declaration that no foreign airline is in financial or commercial tie up with him or has the management/ownership interest in him.
5. While the foreign investing institution/entity which seeks to hold equity in the domestic air transport sector may have representation on the Board of Directors of the Company, such representation shall not exceed 1/3rd of the total.
6. Any Foreign Financial Institution/entity which seeks to make investment in the domestic air transport sector shall not be a subsidiary of a foreign airline. A leasing company leasing aircraft to an operator in the domestic air transport sector, shall also not be a part of an airline. However, wet leasing of an aircraft may be allowed from any source subject to the fulfillment of the guidelines issued by the Government/DGCA.
7. A domestic sector air transport operator shall not have agreements such as shareholders agreements etc. with a foreign airline, containing provisions/arrangements empowering such foreign airlines or others on their behalf to have effective control in the management of the domestic airline.
8. A domestic air transport operator shall not enter into an agreement with a foreign airline which may give such foreign airline the right to interfere in the management of the domestic operator.
9. A domestic air transport operator may enter into financial arrangements with a bank and/or other financial institutions for the purpose of lease finance, hire purchase or other loan arrangements, but such a tie up shall not be permitted with a foreign airline.
10. Management contract with a foreign airline shall also not be permitted to a domestic air transport sector operator.
11. Marketing arrangements such as ground handling, general sales agency, code sharing, interlining will, however, be permitted.
12. A domestic air transport sector operator will also be permitted to get maintenance, overhaul, repair works done and training of pilots/engineers conducted either at the facilities available with other airlines or those certified by the Director General of Civil Aviation on such terms as may be prescribed.
13. A domestic air transport sector operator may be permitted to employ foreign pilots/engineers till he is able to train his own manpower. This shall, however, be permitted with the express approval of the competent authority and for such period and terms as may be prescribed by the said authority.
14. An applicant who seeks permission for domestic air transport operations will be required to give a declaration that he fulfills all the requirements mentioned in the above guidelines and in case of any change, he shall notify the competent authority within one month of such change. In addition, the applicant will be required to furnish such a declaration every year.
15. A domestic air transport operator, who furnishes wrong information in respect of any of the above prescribed guidelines at any stage shall be liable for suspension/cancellation of his operating permit.

REQUIREMENTS TO BECOME SCHEDULED AIR TRANSPORT OPERATOR

• A Scheduled Operator's permit is granted to:

• a citizen of India, or
• a company or a body corporate provided that
• it is registered and has its principal place of business within India;
• the Chairman and at least two-thirds of its Directors are citizens of India; and
• its substantial ownership and effective control is vested in Indian nationals.

• A fleet of minimum five aircraft of all-up-weight of aircraft more than 5,700 kgs. each to be acquired in one years' time from the date of securing operators' permit. if they meet airworthiness, air safety and operational requirements for such operation, fulfil the routes dispersal guidelines and all other requirements of a scheduled operator.
• Not less than Rs.30 crores subscribed equity capital in respect of operators having aircraft or all-up-weight exceeding 40,000 kgs. and not less than Rs.10 crores for operators having aircraft of all-up-weight not exceeding 40,000 kgs.
• Not less than three sets of flight crew and cabin crew per aircraft.

• An approved maintenance organization and facilities to carry out maintenance of aircraft upto 500 hours inspection or Check 'B' for Boeing 737 aircraft.

• Approval manuals for operations, training and quality control-cum-maintenance.
• The permit is not transferable
• Cells for pre-flight medical examination of crew, flight planning and dispatch, reliability analysis of aircraft components & systems, defect investigation, compliance of service bulletins & modifications and records of major components.
• Security programme approved by Bureau of Civil Aviation Security and trained security personnel at all operating stations.

• Scheduled operators of trunk routes are required to provide certain minimum capacity on various routes including North-Eastern region, Jammu & Kashmir, Andaman & Nicobar and Lakshadweep. A copy of route dispersal guidelines is enclosed Annexure-XII.
• The validity of NOC for operating air transport services is for one year. Extension of validity of NOC is granted upto a period of 6 months on merits of each case. This restrictions applied both in respect of dry lease and outright purchase of aircraft. However, when the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC is allowed for the actual lead time of delivery, even if it exceeds the total period of one and half year.
• For import of aircraft:

• pressurized aircraft not to exceed 15 years of age or 75% of its designated economic cycles or 45,000 pressurization cycles, whichever is less;
• Unpressurized aircraft normally not to be more than 20 years of age;

• Scheduled Operator's Permit shall not be transferrable.
• A Scheduled Operator's shall be renewable every year

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REQUIREMENTS TO BECOME NON-SCHEDULED (AIR TAXI) OPERATOR:

• A Non-Scheduled (Air Taxi) Operator's permit can be granted to:-

• citizen of India or
• a non-resident Indian (NRI) or
• a Company, registered under the Companies Act, 1956 having its principal place of business within India and with or without foreign equity participation (excluding NRI equity) limited to 40%; or
• the Central Government or a State Government or an Undertaking owned or controlled by either of the said Governments.

• Before issue of the ATO's permit, an applicant should be in possession of a multi engine fixed wing aircraft and single or multiple engine helicopter either by outright purchase or through lease and should be registered in Indian under the normal passenger category.
• An applicant should either have his own maintenance and repair facilities approved by the DGCA or should furnish proof of availability of such facilities and flight crew members and aircraft maintenance engineers duly licenced by DGCA.
• An applicant should conduct operations from approved operational and maintenance bases and should abide by the prescribed operational requirements.
• An applicant should get their security programme approved by Bureau of Civil Aviation Security before grant of ATO permit.
• The validity of NOC for operating air transport services is for one year. Extension of validity of NOC is granted upto a period of 6 months on merits of each case. This restrictions applied both in respect of dry lease and outright purchase of aircraft. However, when the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC is allowed for the actual lead time of delivery, even if it exceeds the total period of one and half year

• For import of aircraft:

• pressurized aircraft not to exceed 15 years of age or 75% of its designated economic cycles or 45,000 pressurization cycles, whichever is less;

• Unpressurized aircraft normally not to be more than 20 years of age;

• Air Taxi Operator's Permit shall be renewable every year against payment of Rs.5,000/-.
• An Air Taxi Operator's Permit shall not be transferrable.

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REQUIREMENTS FOR BECOMING AIR CARGO OPERATOR

An Air Cargo Operator's Permit can be granted to:-

1. citizen of India or
2. a non-resident Indian (NRI) or
3. a Company, registered under the Companies Act, 1956 having its principal place of business within India and with or without foreign equity participation (excluding NRI equity) limited to 40%; or
4. the Central Government or a State Government or an Undertaking owned or controlled by either of the said Governments.

• Air Cargo Operations shall be carriers of cargo, mail. Passengers are not permissible in cargo operations.
• It can be scheduled or non-scheduled operations.
• Operations would be to destinations within India.For operations outside India, specific permission of the DGCA would be necessary demonstrating capability for conducting such operations.
• Before issue of Air Cargo Operators' Permit, an applicant should be in possession of an aircraft with Certificate of Airworthiness in Normal Goods category.
• An applicant should either have his own maintenance and repair facilities approved by the DGCA or should furnish proof of availability of such facilities and flight crew members and aircraft maintenance engineers duly licenced by DGCA.
• An applicant should conduct operations from approved operational and maintenance bases and should abide by the prescribed operational requirements.
• An applicant should get the security programme approved by Bureau of Civil Aviation Security before grant of ACO permit.
• The validity of NOC for operating air transport services is for one year. Extension of validity of NOC is granted upto a period of 6 months on merits of each case. This restrictions applied both in respect of dry lease and outright purchase of aircraft. However, when the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC is allowed for the actual lead time of delivery, even if it exceeds the total period of one and half year.
• Air Cargo Operators' Permit shall be renewable every year.
• An Air Cargo Operators' Permit shall not be transferrable.

NAMES OF PRIVATE SCHEDULED/ NON-SCHEDULED (AIR TAXI) OPERATORS AND DATE ON WHICH PERMIT WAS ISSUED TO THEM.

LIST OF NOC HOLDERS FOR SCHEDULED/AIR TAXI OPERATIONS

ANNEXURE IX

FLEET OF PRIVATE SCHEDULED OPERATORS

ANNEXURE X

PASSENGERS CARRIED SINCE 1992 ON DOMESTIC SECTOR (in Lakhs)

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