The decision taken by the Prime Minister's Office (PMO) to put on hold Civil Aviation Minister Ajit Singh's newly formed Aircraft Acquisition Committee (AAC) has been praised by industry experts.
The industry analysts said that the changes made by the minister in the committee promotes red tape in the process of acquiring aircrafts and hence creating more barriers in the growth of the industry. The PMO took the decision after it received the complaint that the Committee would delay the acquisition procedure of an aircraft and promote licence raj.
"I do not think that the new AAC constituted by the minister is adding any value to the entire procedure, rather it will only promote red tape in an already over regulated airline industry," said aviation expert Devesh Agarwal.
He explained that the aviation industry in India is already over-regulated unlike in other countries and the Association formed for recommending the purchase of aircraft would mean a delay in the procedure of importing the aircraft.
"An airline's request for purchasing an aircraft is entirely a company decision. So what is the need for the government to intervene in a company's decision apart from giving an approval?" asked Agarwal.
The report on the newly constituted committee clearly states that the AAC will first examine the applications and proposals in terms of air transport capacity required to meet air traffic demand, as well as the safety, security, and financial and commercial aspects.
An industry expert, who did not wish to be named, said, "Airlines are already facing a difficult situation, therefore, they would have considered the financial, commercial and all other aspects of adding an aircraft before taking the decision of importing one. So why does the ministry have to add such unnecessary conditions?"
The ministry had also stated in the document that the committee would consider 10 to 12 proposals in one meeting. "To scrutinize the proposal properly, it would be appropriate not to consider more than 10 to 12 proposals in one meeting of the AAC," stated the report.
Analysts fear that this will not only delay the acquisition period for the airline but would also promote favouritism while granting an approval. "Earlier, the committee would take up several proposals for approval in a meeting, however, if the changes in the committee are implemented, then, it may happen that an application of an airline may be conveniently axed if it is not in the good books of the committee or even the members of the ministry as they are the final authority to grant an approval," said another expert who requested anonymity.
According to the report, the committee is also empowered to cancel an approval if there is a delay in the induction of the aircraft on the specified route within the time period indicated by the airline while getting the approval from the committee. "This condition is absolutely not required as the induction of the new aircraft can get delayed for various reasons including financial negotiations or delay in completing the legalities," said the expert.
The committee, however, allows an airline to re-apply and go through the entire procedure of seeking an approval if financial transactions have been made. "However, where the airline has made financial transactions on the basis of 'in-principle' approval, it may apply for re-instatement of its 'in-principle' approval together with substantiating documents."
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