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Recent developments and trends

Recent developments

Are there any notable recent developments or trends in the aviation sector in your jurisdiction?

Certain major developments in the Indian aviation sector include the following.

Foreign direct investment

Under the existing regulations, up to 100% foreign direct investment (FDI) is allowed in Indian companies operating scheduled air transport services. Upto 49% FDI is permitted under the automatic route, but any investment beyond this threshold requires government approval. Investment of 100% is permitted under the automatic route for non-resident Indians. However, a scheduled operator’s permit is granted only to a company:

  • registered and having its principal place of business in India;
  • in which the chairman and at least two-thirds of the directors are Indian citizens; and
  • of which the substantial ownership and effective control are vested in Indian nationals.

FDI of 100% is permitted under the automatic route in non-scheduled air transport and helicopter or seaplane services (ie, it does not require government approval).

Foreign airlines can invest up to 49% of paid-up capital in Indian scheduled or non-scheduled air transport operators with government approval (subject to certain conditions).

Civil aviation policy

Recent major changes to India’s civil aviation policy include the following:

  • 5/20 requirements for international operations – previously, for an Indian carrier to fly internationally, it must have flown on domestic routes for five years and have a fleet of atleast 20 aircraft. Airlines can now commence international operations if they deploy 20 aircraft or 20% of their total capacity (in term of average number of seats on all departures put together), whichever is higher, for domestic operations.
  • Regional Connectivity Schemethis is operational in Indian states which reduce value added tax on aviation turbine fuel at participating airports to 1% or less for 10 years. Excise duty is levied at 2% on aviation turbine fuel for an initial period of three years. There is no airport, landing, parking or terminal navigation charge for 10 years.
  • Directorate General of Civil Aviation (DGCA) – the DGCA has been conferred administrative and financial autonomy for an effective aviation safety oversight system. It has created a single-window system for all aviation-related transactions, queries and complaints. The DGCA will review civil aviation requirements when required, but at least once every five years.
  • Bilateral traffic rights – India recently signed an open skies air service agreement with Greece. It also intends to enter into similar agreements on a reciprocal basis with South Asian Association for Regional Cooperation states and other countries located over 5,000 kilometres from Delhi.

Market growth

India's domestic air passenger traffic increased by 21.77% during 2016/2017. International traffic in the first quarter of 2017 witnessed growth of 7.5%. Jet Airways had the maximum market share (14.5%), followed by Air India (10.7%), Emirates (9.5%), Air India Express (6.2%) and Etihad Airways (4.9%). The International Air Transport Association forecasts India to become the world’s third largest aviation market by 2026.

Regulatory framework

Domestic law

What is the primary domestic legislation governing the aviation industry in your jurisdiction?

The following legislation applies:

  • The Aircraft Act 1934 is the primary domestic legislation which governs the Indian aviation sector. Its primary function is to empower the federal government to make rules for regulating the manufacture, sale, use, operation, export, import and safety of all civil aircraft.
  • The Aircraft Rules 1937 generally apply to Indian-registered aircraft (and to persons thereon), wherever they may be (with certain exceptions), and all aircraft present in or over India. These rules set requirements for flying conditions, registration, airworthiness and licences, among other things. Where an aircraft is registered in a foreign country, the regulations of that country will apply, provided that their underlying standards are based on those established by the Chicago Convention. Further, the extent of application usually depends on the agreement between the two countries.
  • The Civil Aviation Requirements set out detailed requirements and compliance procedures in order to:
    • fulfil the duties and obligations of India under the Chicago Convention relating to international civil aviation;
    • standardise and harmonise requirements, taking into account the rules and regulations of other regulatory authorities;
    • implement the recommendations of the courts of inquiry or any other committee constituted by the federal government; and
    • address issues relating to the import, registration, safety and certification of aircraft operations.
  • Other legislation relevant to Indian civil aviation includes:
    • the Airports Authority of India Act 1994;
    • the Airports Economic Regulatory Authority of India Act 2008;
    • the Carriage by Air Act 1972;
    • the Aircraft (Security) Rules 2011; and
    • the Aircraft (Investigation of Accidents and Incidents) Rules 2012.

International law

What international aviation agreements has your jurisdiction concluded?

Conventions

India has ratified the following international conventions:

  • the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed in Warsaw on October 12 1929;
  • the Convention on International Civil Aviation, signed in Chicago on December 7 1944;
  • the Convention on the International Recognition of Rights in Aircraft, signed in Geneva on June 19 1948;
  • the Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface, signed in Rome on October 7 1952;
  • the Convention on Offences and Certain Other Acts Committed on Board Aircraft, signed in Tokyo on September 14 1963;    
  • the Convention for the Suppression of Unlawful Seizure of Aircraft, signed in The Hague on December 16 1970;
  • the Convention on the Suppression of Unlawful Acts against the Safety of Civil Aviation, signed in Montreal on September 23 1971;
  • the Convention for the Unification of Certain Rules for International Carriage by Air, signed in Montreal on May 28 1999; and
  • the Convention on International Interests in Mobile Equipment, signed in Cape Town on November 16 2001.

Bilateral agreements

India has entered into a number of bilateral air service agreements with various countries. Pursuant to the new civil aviation policy of 2016, the Indian government intends to liberalise the air service agreement regime in order to provide greater ease of conducting international operations and tapping into the global passenger market. At the International Civil Aviation Negotiations 2016, India signed open skies agreements with six countries – Czech Republic, Finland, Guyana, Jamaica, Spain and Sri Lanka. India also entered into an open skies air service agreement with Greece and intends to sign similar agreements on a reciprocal basis with South Asian Association for Regional Cooperation states and other countries located over 5,000 kilometres from Delhi.

Regulatory authorities

Which government bodies regulate the aviation industry and what is the extent of their powers?

The following government bodies regulate the aviation industry in India:

  • The Ministry of Civil Aviation administers the Aircraft Act and the Aircraft Rules, and various other aviation-related legislations. It is responsible for formulating national policies and programmes that help in developing and regulating the Indian civil aviation sector. It exercises administrative control over entities such as the Directorate General of Civil Aviation (DGCA), the Bureau of Civil Aviation Security (BCAS) and the Airports Authority of India (AAI), and has the authority to enter into air service agreements with other countries.
  • The DGCA primarily deals with safety and operational issues. Its role and functions include:
    • registration of civil aircraft;
    • formulation of standards of airworthiness for civil aircraft registered in India and granting certificates of airworthiness to such aircraft;
    • granting air operator certificates to Indian carriers and regulation of air transport services operating to, from, within and over India by Indian and foreign operators, including clearance of scheduled and non-scheduled flights of such operators;
    • investigating accidents and incidents and taking accident prevention measures, including formulating implementation of safety aviation management programmes;
    • monitoring aircraft noise and engine emissions and collaborating with the environmental authorities; and
    • safety oversight of all entities approved, certified or licensed under the Aircraft Rules.
  • The BCAS sets and monitors standards and measures with respect to the security of civil flights at international and domestic airports in India for airport and airline operators and security agencies.
  • The AAI was formed with a view to accelerate the integrated development, expansion and modernisation of the operational, terminal and cargo facilities at airports in India in conformity with international standards. Its main functions include:
    • the design, development, operation and maintenance of international and domestic airports and civil enclaves;
    • the expansion and strengthening of operation areas (eg, runways, aprons and taxiways);
    • the control and management of Indian airspace extending beyond the territorial limits of the country; and
    • the provision of communication and navigation aids.

Air carrier operations

Operating authorisation

What procedural and documentary requirements must air carriers meet in order to operate in your jurisdiction?

As a first step, scheduled and non-scheduled air transport operators need a no-objection certificate from the Directorate General of Civil Aviation (DGCA) to import aircraft. This certificate is valid for three years. Thereafter, the operators will need to obtain permission from the Ministry of Civil Aviation to import or acquire the aircraft; this permission is valid for one year. For private import, an import licence is also required from the Directorate of Foreign Trade. Aircraft which are more than 18 years old cannot be imported for passenger operations. The DGCA can waive this requirement in certain situations.

Once permission is granted, a temporary certificate of registration may be granted for the purpose of bringing the aircraft by air. Where it is not feasible for the DGCA to inspect the aircraft, usually a temporary certificate of airworthiness or special flight permit is issued for the purpose of delivery of the aircraft in India. These temporary certificates/permits are valid only until the first landing in India.

For the issuance of a regular certificate of registration, an application for registration of the aircraft alongwith the requisite documents will need to be submitted within the stipulated timeframe.Without a certificate of registration or airworthiness, an operator cannot undertake air operation activities. For the grant of a scheduled operator’s permit, an airline must have a fleet of at least five aeroplanes or multi-engine helicopters, whereas at least one aircraft is required for a non-scheduled operator’s permit. Operators also need a licence for radio communication apparatus.

Ownership and control

Do any nationality or other requirements or restrictions apply to ownership or control of air carriers operating in your jurisdiction?

A scheduled or non-scheduled operator’s permit is granted to:

  • a citizen of India; or
  • a company:
    • that is registered and has its principal place of business in India;
    • whose chairman and at least two-thirds of whose directors are Indian citizens; and
    • that is substantially owned and effectively controlled by Indian nationals.

An air cargo operator's permit is granted to:

  • a citizen of India;
  • a group of individuals of Indian nationality or a registered trust or society;
  • a non-resident Indian or overseas corporate bodies; or
  • an Indian-registered company having its principal place of business in India with or without foreign equity participation (excluding non-resident Indian equity).

Financial requirements

What financial thresholds must air carriers meet to obtain operating authorisation?

The financial thresholds for scheduled operators, non-scheduled operators and cargo operators are as follows.

Scheduled air transport services (passenger)

An applicant for a scheduled operator’s permit must have the following paid-up capital:

  • operating aircraft with take-off mass of 40,000 kilograms or more:
    • up to five aircraft – Rs500 million (approximately $8.19 million); and
    • for every additionalfive aircraft – additional equity investment of Rs200 million ($3.27 million); and
  • operating aircraft with take-off mass of less than 40,000 kilograms:
    • upto five aircraft – Rs200 million ($3.27 million); and
    • for every additional five aircraft – additional equity investment of Rs100 million ($1.63million).

Non-scheduled air transport services (passenger and cargo)

To obtain a non-scheduled operator’s permit, an operator must have the following minimum paid-up capital:

  • up to two aeroplanes or helicopters – Rs20 million ($327,868);
  • between three and five aeroplanes or helicopters – Rs50 million ($815,000);
  • between six and 10 aeroplanes or helicopters – Rs100 million ($1.63 million); and
  • more than 10 aeroplanes or helicopters – Rs150 million ($2.44 million).

Air cargo operators

To obtain an air cargo operator's permit, the operator’s subscribed equity capital must be at least Rs10 million ($163,934).

Insurance coverage

What is the required level of insurance coverage for air carrier operations?

The operator must maintain comprehensive insurance to cover its liability towards passengers, their baggage, crew, cargo, hull loss and third-party risks in compliance with the Carriage by Air Act 1972 or any other applicable law. Insurance on Indian-registered aircraft must be with an Indian insurer, which can then reinsure up to 95% of the risk to an overseas reinsurer.

Safety requirements

What safety requirements apply to air carrier operations, including with regard to professional and technical certifications?

The DGCA has laid down detailed rules, regulations and procedures for regulating air transport and ensuring the safety of aircraft operations. No aircraft can be flown unless it possesses a valid certificate of airworthiness. Further, an aircraft which is more than 18 years old cannot be imported for passenger services. All aircraft owners and operators must comply with the engineering, inspection and manual and safety requirements, as specified by the DGCA.

Primary responsibility for the safe conduct of the operations and compliance with the laws, rules and regulations lies with the operator. The operator must develop its own detailed operating procedures necessary for safety, regularity and efficiency of operations within the framework of the laws. The DGCA must approve the operator’s flight safety manual, which shall clearly lay down the operator’s safety policies, flight safety awareness and accident/incident prevention programmes.

Environmental obligations

What environmental obligations apply to air carrier operations?

Airport and airline operators must produce an annual emission management report on:

  • their carbon footprint to monitor emission trends;
  • voluntary measures taken to reduce carbon dioxide emissions, especially in relation to fuel efficiency; and
  • certification in accordance with International Organisation for Standardisation (ISO) standards (eg, ISO-14001 and ISO 14064).

Airport operators must additionally submit the following data to the DGCA annually:

  • fuel consumption data for owned power generators;
  • fuel consumption data for airport-owned vehicles and equipment;
  • electricity consumption for the entire airport (inclusive of the electricity consumed by the tenants functioning inside the airport); and
  • electricity consumption for the airport operator only.

Airline operators must annually submit aviation turbine fuel consumption data for aircraft main engines and auxiliary power units for both domestic and international operations. Airport operators must carry out a noise mapping study around their airports, including areas directly under the flight paths, to assess the existing noise loads and the population affected within the various noise contours/maps.

Air traffic control

How are air traffic control services regulated in your jurisdiction?

The Airports Authority of India is the statutory authority responsible for providing air traffic services in India. No other agency may provide such services, unless approved by the DGCA. Air traffic services mainly include:

  • air traffic control services;
  • flight information services; and
  • alert services.

Air traffic services are provided by flight information centres and air traffic control units.

Routes

Do any licensing requirements apply to specific routes?

DGCA permission is required to operate an air transport service to, within and from India. Where an operator plans to operate on a new route, make a substantial alteration to or discontinue an existing route or introduce a new timetable, it must give prior notice to the DGCA and obtain its consent.

Are any public service obligations in place with respect to remote destinations?

Yes. All scheduled operators must deploy 10% of their capacity on remote routes.

Charter services

Do any special provisions apply to charter services?

Yes. The DGCA has prescribed minimum airworthiness and operational requirements and other procedural requirements for the grant of a non-scheduled operator’s permit. The DGCA has issued civil aviation requirements on the procedure for the issuance of non-scheduled flight clearances to foreign registered aircraft (including cargo flights, inclusive tour packages, charter flights, aerial photography, geophysical surveys, cloud seeding operations and non-scheduled flights by Indian operators to foreign destinations).

Taxes

What taxes apply to the provision of air carrier services?

Goods and services tax (GST) has replaced almost all indirect taxes in India (eg, excise duty, service tax, value added tax (VAT), central sales tax (CST) and entry taxes). Import of aircraft is exempt from GST, but leasing attracts 5% GST. Maintenance, repair and overhaul services attract GST. It is also levied on air travel. However, aviation turbine fuel is beyond the purview of GST, although it is still subject to CST and VAT.

Consumer protection and liability

Airfares

Are airfares regulated in your jurisdiction?

In terms of Rule 135 of the Aircraft Rules 1937, airfares are established having regard to factors such as cost of operation, characteristics of service, reasonable profit and the generally prevailing tariff. The government has permitted services to be unbundled and charged separately on an opt-in basis, including:

  • preferential seating;
  • meal, snack and drink charges (except drinking water);
  • charges for using airline lounges; and
  • check-in baggage charges.

Passenger protection

What rules and liabilities are air carriers subject to in respect of:

(a) Flight delays and cancellations?

In the event of delay beyond the specified timeline, airlines must offer meals and refreshments during the waiting time and hotel accommodation free of charge to passengers. Where airlines cancel flights without informing passengers, they may have to pay compensation of upto Rs10,000 (approximately $164) or booked one-way basic fare plus airline fuel charge, whichever is less, in addition to a refund of the ticket price. For foreign carriers, compensation is based on the terms of the regulations of their country of origin or upto 400% of the booked one-way basic fare plus airline fuel charge, subject to a maximum of Rs20,000 ($328).

(b) Oversold flights?

If a flight is oversold, airlines usually ask for volunteers to surrender their seats. Airlines provide such volunteers with an alternative flight alongwith certain benefits. Where passengers are denied boarding against their will, the airline must provide them with an alternate flight within one hour of the original scheduled departure time, failing which it may have to refund the full ticket price and pay compensation of upto 400% of the booked one-way basic fare plus airline fuel charge, subject to a maximum of Rs20,000 ($328).

(c) Denied boarding?

Where a passenger is denied boarding against his or her will, the airline must arrange an alternate flight for the passenger within one hour of the original scheduled departure, failing which it may have to refund the full value of the ticket and pay compensation of up to 400% of the booked one-way basic fare plus airline fuel charge, subject to a maximum of Rs20,000 ($328).

(d) Access for disabled passengers?

Airlines cannot refuse to carry persons with a disability or reduced mobility or their aids, devices and escorts in the cabin, provided that such persons or their representatives, at the time of booking, inform the airline of their requirements. Airlines must make available in accessible format, on their website, the safety rules that apply to persons with a disability or reduced mobility as well as any restrictions on their carriage or mobility equipment due to the size of the aircraft. Airlines must obtain necessary information about the specific requirements of such persons at the time of booking. Persons with a disability or reduced mobility must notify the airline of their needs 48 hours before the scheduled departure time. Airlines must make suitable arrangements for assisting disabled persons for their quick clearance and baggage delivery. Airport operators must display signage throughout the airport in a clear and unambiguous manner, and must provide ramps for easy access.

(e) Lost, damaged or destroyed luggage?

India is a party to the Warsaw Convention, the Hague Protocol and the Montreal Convention, which set out airlines’ liabilities. An airline is liable for damages sustained because of loss, damage or destruction of any registered luggage or any goods, if the damage so sustained took place during the carriage by air. For instance, this is Rs20,000 ($328) for each passenger for destruction, loss, damage or delay with respect to baggage under the Montreal Convention. Passengers usually file complaints under the Consumer Protection Act 1986 on the ground of ‘deficiency of service’ for cases ranging from delayed flights and lost baggage to death.  

(f) Retention and protection of passenger data?

India does not currently have a separate data protection law. The Information Technology Act 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules 2011 lay down the procedures to ensure the safety and security of sensitive personal information. Persons collecting personal information should publish a privacy policy stating the purpose for which such information is collected and have reasonable security practices to maintain the confidentiality of the information. Data must not be retained longer than required. In August 2017 the Supreme Court declared that the right to privacy is a fundamental right protected under the Constitution. Accordingly, passengers’ data and privacy will now be regarded as a fundamental right. The airline may need to seek passengers’ prior permission before disclosing such information to a third party, unless such information is required by law.

Cargo

What rules and liabilities apply to the air carriage of cargo?

The Carriage by Air Act 1972 deals with the liability of the carrier. It is Rs350 ($5) per kilogram for destruction, loss, damage or delay with respect to carriage of cargo under the Montreal Convention.

Marketing and advertising

Do any special rules apply to the marketing and advertising of aviation services?

No, but the advertisements must be fair so as to inform customers of available choices and must not be offensive to generally accepted standards of advertisement or public decency.

Complaints handling

Do any special rules apply to consumer complaints handling in the aviation industry?

Complaints can be filed with a nodal officer of the concerned airline or airport operator. If the issue remains unresolved, complaints can be filed with the appellate authority of the concerned airline or airport operator. Airline and airport operators must address grievances within one month. In case of non-redressal within the stipulated timeframe, the matter is overseen by the Directorate General of Civil Aviation. In addition, a consumer complaint may be filed under the Consumer Protection Act 1986 for deficiency of services.

Aircraft

Aircraft register

What are the requirements for entry in the domestic aircraft register?

The Indian aircraft register is maintained by the Directorate General of Civil Aviation (DGCA). Foreign-owned aircraft leased to Indian operators can be registered by making an application (through duly authorised agents, usually the lessee/Indian operator) using Form CA-28, along with paying the prescribed fees and submitting the requisite documents and information (eg, bill of entry, ownership, name, nationality and address of directors of the owner, lessor, security interest holder and operator).

Mortgages and encumbrances

Is there a domestic register for aircraft mortgages, encumbrances and other interests? If so, what are the requirements and legal effects of registration?

There is no separate register for mortgages, encumbrances or other interests in India. However, where aircraft are mortgaged or hypothecated, such a mortgage or hypothecation, on proper application, is endorsed on the certificate of registration. This constitutes a public notice. Further, a charge created over an asset of the Indian company must be filed with the registrar of companies. Under the Companies Act 2013, ‘charge’ includes mortgage. Without registration, it is void against the liquidator or any other creditor of the company. 

Detention

What rules and procedures govern the detention of aircraft?

The federal government may detain an aircraft if:

  • it is in the interest of public safety or tranquillity;
  • the flight of such aircraft would endanger persons in the aircraft or any other person or property;
  • detention is necessary to secure compliance with any regulation;
  • the aircraft belongs to, is owned or operated by, or is in the possession or custody of any person of an enemy territory; or
  • the operation of the aircraft is likely to assist an enemy or be prejudicial to the defence of India.

Aircraft involved in drug trafficking or any other serious crime can be seized or detained and may even be eventually sold. Amounts due for landing and parking charges may lead to detention of the aircraft, but usually it would not be sold. It is unlikely that a sale would be ordered without notifying the owner. The federal government or its agencies can confiscate, detain or requisition aircraft (whether foreign owned or otherwise) during a general emergency.

Safety and maintenance

What rules and procedures govern aircraft safety and maintenance?

The DGCA has issued various civil aviation requirements in respect of safety and maintenance,including with regard to:

  • approval of maintenance organisations;
  • approved maintenance training organisations;
  • licensing of aircraft maintenance engineers;
  • validation of foreign licences of aircraft maintenance engineers; and
  • airworthiness and maintenance requirements.

No person is allowed to operate any flight unless it meets the minimum safety requirements laid down by the DGCA. Every operator must have a flight safety awareness and accident/incident prevention programme. Further, aircraft that are more than 18 years old cannot be imported for passenger operations. For air cargo operations, aircraft must be less than 25 years old. Use of mobile phones or any electronic device that transmits radio signals inside the aircraft is not permitted. 

Drones

What is the state of regulation on unmanned aerial vehicles (drones) in your jurisdiction?

There is currently no law in India which governs the operation of unmanned aerial vehicles (UAVs). In 2014 the DGCA issued a public notice wherein it prohibited the launch of any UAV in Indian civil airspace by any non-government agency or individual. On November 1 2017 the DGCA issued draft guidelines for the operation of civil UAVs, which require registration of all UAVs. Under these draft guidelines, the DGCA would issue operator’s permits and unique identification numbers.

Remote pilots will have to undertake ground training like crew of manned aircraft. Third-party insurance will also need to be procured.

Accidents

Investigation

How are air accidents investigated in your jurisdiction?

The Aircraft (Investigation of Accidents and Incidents) Rules 2012 provide for the establishment of the Aircraft Accident Investigation Bureau of India (AAIB) to investigate accidents, serious incidents and incidents referred to in Rules 5(1), (2) and (4) of these rules. Under Rule 9, an officer of the AAIB is authorised to carry out the preliminary investigation into the accident or incident and submit the preliminary report to the AAIB. Under Rule 11, the federal government may appoint a committee composed of two or more persons to hold an inquiry into an aircraft accident or serious incident. Under Rule 12, a competent person (the court) is appointed to conduct the investigation. The court investigation is usually conducted openly, but if the court is of the opinion that doing so is likely to prejudice the interests of any country or jeopardise the personal safety of any person, it may hold all or part of the investigation in camera.

In terms of Rule 14, the AAIB must forward a copy of the report of the court or committee, within 60 days of its issuance, to the country of the aircraft’s registry, operator, design and manufacturer, inviting their comments. The federal government may amend the report at its discretion. The federal government also has the power to reopen the investigation if any new and material evidence has become available. The report is forwarded to the International Civil Aviation Organisation if the mass of the aircraft involved in the accident or incident is more than 5,700 kilograms.

The DGCA may order the investigation of an accident or serious incident wherethe relevant aircraft has an all-up weight below 2,250 kilograms and is not a turbo-jet aircraft. The DGCA submits its report to the federal government, but if the latter decides to investigate the accident independently, the DGCA investigation will be annulled and all records are transferred to the court or the committee, as the case may be.

Liability

What liability regime governs death, injury and loss arising from air accidents?

The liability of air carriers in case of death, injury and loss arising from passenger air accidents is specified in the Carriage by Air Act 1972. Maximum liability under the Warsaw Convention for each passenger death and injury is limited to125,000 francs; under the Hague Protocol it is 250,000 francs. However, this amount can be increased by a special contract. Liability under the Montreal Convention may be above Rs2million (approximately $30,769), depending on the fault liability.

Regulatory notification

What are the reporting requirements for air accidents?

The investigation rules provide for a mandatory incident reporting system. Service providers and stakeholders must notify all accidents and incidents to the AAIB and the DGCA as soon as possible, but no later than 24 hours after their occurrence. The DGCA will immediately notify the AAIB about accidents and incidents with requisite information. The investigation rules also provide for a voluntary incident reporting system to facilitate collection of information on actual or potential safety deficiencies that may not be captured by the mandatory incident reporting system.

Airports

Ownership

What rules govern the ownership of airports (both public and private)?

Airports in India are governed by the Airport Authority of India Act 1994.

Operation

What is the authorisation procedure for the operation of airports?

The Airports Authority of India (AAI) has the power to establish airports and assist in the establishment of private airports by rendering technical, financial or other assistance necessary for such purpose. It may lease airport premises to a private operator with prior government approval. The Aircraft Rules provide for licensing of aerodromes.

What ongoing operating requirements apply (including obligations relating to safety, security and facilities maintenance)?

The Bureau of Civil Aviation Security (BCAS) is the regulatory authority for civil aviation security in India. It sets aviation security standards in accordance with Annex 17 to the Chicago Convention of the International Civil Aviation Organisation for airport operators, airline operators and their security agencies responsible for implementing aviation security measures, monitoring the implementation of security rules and regulations and carrying out surveys of security needs. The Directorate General of Civil Aviation has issued civil aviation requirements with regard to safety, security, maintenance and repair organisations.

Airport charges

What airport charges apply and how are they regulated?

In 2008 the Airport Economic Regulatory Authority was established, which regulates:

  • tariff charges;
  • passenger service fees;
  • airport security fees;
  • user development fees; and
  • other charges.

Landing and parking charges are payable to the owner of the airfield. For operations from defence airfields where the AAI has civil enclaves, a separate charge may be payable. Route navigation facilities charges are payable to the organisation which provides these facilities.

Access

What regulations govern access to airports?

The AAI is empowered to make rules and regulations prohibiting or restricting access to any part of the airport or civil enclave. No pilot or person in charge of any aircraft may use any place for regular landings and departures other than a licensed or approved aerodrome. Further, no person other than the occupant of a manoeuvring aircraft may enter the landing area without the consent of the person in charge of the aerodrome. With the exception of passengers embarking, disembarking or in transit who hold air tickets and persons engaged on regular duty, no person may enter or be in the terminal building or any other area of the airport unless he or she holds an admission ticket or entry pass.

Slot allocation

What regime governs the allocation of airport slots (including slot transfer, revocation and disputes)?

Before 2007, the AAI allocated slots to international and domestic airlines. In September 2007 the Ministry of Civil Aviation issued a revised procedure which permitted Delhi and Mumbai airport operators to allocate slots for these airports. Instructions issued in 2011 required domestic airlines to file schedules at least four months in advance. Before the beginning of each season, the AAI and airport operators should publish notices on airport capacities on their websites, so that airlines can plan their schedules accordingly. Where an airline does not use its allocated slot for one month, the slot may be cancelled. Airlines must also disclose unused slots or flights not operated for a considerable period due to commercial reasons. A dispute resolution committee is constituted to deal with any disputes that arise.

Ground handling

How are ground handling services regulated?

An airline operator may carry out ground handling services at an airport or procure the services of the AAI, Air India, Indian Airlines or any other agency licensed by the AAI. However, foreign airlines are not permitted to engage in handling services themselves. No ground handling agency is allowed to work at the airport without obtaining prior security clearance from the BCAS.

The government recently proposed the Ground Handling Services Regulations 2017 (not yet implemented), which essentially provide that all domestic scheduled airline operators (including helicopter operators) would be free to undertake self-handling at all airports including civil enclaves (but foreign airlines would not be allowed). Ground handling agencies having more than 50% foreign direct investment may not undertake ground handling activities at civil enclaves.

Competition issues

Governing regime

Do any sector-specific competition regulatory/legal provisions apply to the aviation industry in your jurisdiction?

No. All competition issues are governed by the Competition Act 2002. Enterprises are usually prohibited from:

  • entering into anti-competitive agreements;
  • abusing their dominant positions; and
  • forming combinationsand cartels.

The Competition Commission of India (CCI), a quasi-judicial body established under the Competition Act, ensures that no enterprise or person indulges in anti-competitive agreements or arrangements or abuses its dominant position. It can investigate alleged violations in any sector on its own motion or on receipt of a complaint. The Directorate General of Civil Aviation may issue directions to any air transport undertaking that has established excessive or predatory tariffs or indulged in oligopolistic practices.

Code sharing and joint ventures

What (if any) competition concerns arise in relation to code sharing and air carrier joint ventures?

Indian carriers are free to enter into domestic code-share agreements with foreign carriers, but where such agreements or combinations cause an appreciable adverse effect on competition in the market or amount to abuse of dominance, the CCI may issue suitable orders, including directing the parties to discontinue such agreements or arrangements.

State aid

What rules govern state aid in the aviation industry? Do any exemptions apply?

The government usually does not grant aid to private airlines. In the past it has infused funds into Air India, the national carrier. However, as a helping measure, the government has liberalised the regulations on foreign direct investment. Airlines are permitted to raise external commercial borrowings (ECBs) (ie, commercial loans from non-resident lenders). ECBs are allowed based on the cash flow, foreign exchange earnings and capability to service and repay the debt. ECBs can be raised with a minimum average maturity of three years, subject to certain terms and conditions. Further, if an airline operates on Regional Connectivity Scheme (RCS) routes, value added tax levied on aviation turbine fuel is 1% and excise duty is 2%. No airport, landing, parking or terminal navigation landing charges are levied for RCS operations for 10 years. Further, viability gap funding for RCS operations is shared between the Ministry of Civil Aviation and state governments at a ratio of 80:20. For remote areas, this is 90:10.

Notable cases

Have there been any notable recent cases or rulings involving competition in the aviation industry?

In February 2017 the CCI approved a proposed joint venture between Reliance Aerostructure Ltd and Dassault Aviation, wherein the former would hold 51% equity while the latter held 49%. In 2015 the CCI imposed penalties of approximately $24 million on Jet Airways, $10 million on IndiGo Airlines and $6 million on SpiceJet for indulging in cartelisation in the garb of fuel surcharges. However, these were later set aside by the appellate body.

Dispute resolution

Disputes

What aviation-related disputes typically arise in your jurisdiction and how are they usually resolved?

     Usually, Indian airlines default in lease and other payments. In such situations, the lessors or owners invariably first seek to secure the equipment, and then to recover the outstanding amounts and enforce their other rights (including security). An owner or lessor can choose one or more of the following options:

  • an action at the Directorate General of Civil Aviation (DGCA);
  • court proceedings; and
  • self-help, where possible.

As a first step, a legal notice is issued to terminate the lease and demand payment of the outstanding amounts (including costs, interests and charges), and also possession of the aircraft. If the airline fails to comply with the notice, an application can be made immediately to the DGCA to deregister the aircraft. Proceedings can also be brought in another jurisdiction, which the parties may have chosen, in accordance with the chosen governing law. India has reciprocal arrangements for enforcement of foreign judgments of superior courts of certain countries (eg, the United Kingdom) and usually enforces such judgments, provided that they meet certain prescribed conditions.