India removes barriers to aircraft acquisition

25 March, 2013 12:00

The Indian government on Thursday eased control over aircraft imports by airlines and other operators. For decades, airlines, flying schools and non-scheduled operators had to obtain permission for importing aircraft from the Aircraft Acquisition Committee, which was often a bottleneck for airline expansion plans.

This is the second major move by India to liberalize civil aviation in recent months—the first was allowing foreign direct investment of up to 49% in Indian carriers. The move will be an incentive for carriers such as IndiGo and GoAir, which have ordered a large number of aircraft. It will also make the process easier for the proposed AirAsia-Tata joint venture, which has ambitious plans to scale up as soon as permissions are in place.

In a statement, the ministry of civil aviation said that henceforth operators wanting to import aircraft will need only an in-principle approval, which is mandated by the Indian Aircraft Rules and Reserve Bank guidelines.

The ministry of civil aviation has served as a gatekeeper on aircraft acquisitions, mainly to avoid over-capacity. The idea was to control growth so airlines remained profitable, preventing huge losses. With economic liberalization, the government wants airlines to decide for themselves. India’s minister for civil aviation Ajit Singh said the committee is no longer relevant. The Directorate General of Civil Aviation (DGCA) will deal with aircraft import and replacement. The ministry has approved imports of 97 aircraft by airlines and cargo operators in the last 15 months.

The ministry has approved imports of 97 aircraft by airlines and cargo operators, in the last 15 months. India’s largest carrier by market share IndiGo has been the largest with 35 A320s, Jet Airways follows with 33 aircraft--a combination of wide and narrow bodies. India’s scheduled airlines have about 390 aircraft on their fleets, according to DGCA data.




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