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Airline Operations Regulatory Issues in India By K Gohain Joint Director General of Civil Aviation

Air Transport Scene Pre-1953      

Nine private airlines in operation Too many war surplus aircraft All airlines sick - beyond recovery Air Corporation Act 1953 passed Private airlines nationalised Birth of national carriers  Air India  Indian Airlines

Air Transport Scene Post Nationalisation  Scheduled services reserved for corporations by Air Corporation Act  Monopoly to national carriers and associates for scheduled services  No competitive environment  Impressive growth of Indian Airlines till late eighties

Birth of Air Taxi Operations  Air taxi operations commenced in Sept. 1990  Extensive expansion began in Feb., 1992  Air taxi operations confined to highly profitable routes and was only for nonscheduled operations  Air taxi operations, however, grew like scheduled services  It was then decided to repeal Air Corporations Act

Repeal of Air Corporation Act 1953  Air Corporation Act repealed with effect from 1.3.1994  To remove monopoly of air corporations on scheduled services  To enable private airlines to operate scheduled service  To convert Indian Airlines and Air India to limited company  To enable private participation in the national carriers

Route Dispersal Guidelines  With a view to achieve better regulation of air transport services and taking into account the need for air transport services of different regions of the country, the Government issued Route Dispersal Guidelines on 1.3.1994  In accordance with Route Dispersal Guidelines, all routes were divided into Category I, II, IIA and III

Category I Routes  Following 12 trunk/profitable routes, which connect metropolitan cities directly: Mumbai-Bangalore

Mumbai-Chennai

Mumbai-Delhi

Mumbai-Hyderabad

Mumbai-Kolkata

Mumbai-Trivandrum

Delhi-Bangalore

Delhi-Chennai

Delhi-Hyderabad

Kolkata-Bangalore

Kolkata-Chennai

Kolkata-Delhi

Category II/IIA & III Routes  Category II - Stations in Jammu & Kashmir, North-East Region, Andaman & Nicobar and Lakshadweep Islands connected with stations outside these regions  Category IIA - Routes exclusively within destinations in Jammu & Kashmir, North-East Region, Andaman & Nicobar and Lakshadweep Islands  Category III - Routes other than those included in Category I and II

ASKM Deployment Requirements  Scheduled airlines are mandatorily required to deploy in Category II, IIA and III routes, a specified percentage of capacity deployed in Category I routes as per the following details –  Category II – At least 10% of capacity deployed on Routes in Category I  Category IIA – At least 10% of capacity deployed on Routes in Category II  Category III – At least 50% of capacity deployed on Routes in Category I Note: Bagdogra in North Bengal has been included in the North-East region as it is in the NE FIR and also in the of North-East

ADI

ASKM Deployment Requirements  The Route Dispersal Guidelines also envisaged that for rendering prescribed minimum service on routes in Category II and III, the scheduled operator may provide the service either by aircraft in his fleet or with aircraft in any other operator’s fleet on mutually agreed terms

GROWTH OF DOMESTIC PASSENGER TRAFFIC

18.17

20

















14.54

13.32



12.81

13.32

12.23

11.86



11.64



11.91

10.5

8.84

10

8.47

15

11.98



8.06

PAX. CARRIED (MILLIONS)

25





5

0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

YEAR

SHARE OF PRIVATE OPERATORS IN CARRIAGE OF DOMESTIC PASSENGERS 80 68.5

70 58.8

60

% SHARE

52.8 50

61.4

63

52.6

46.5 40.9

40

34.4

30

41.4

41.2 36.6

23.7

20 10 0

4.9 0.4 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005(*)

YEAR (*) Data for 2005 is upto Oct.

Daily Average Capacity Provided & Passengers Carried • • • •

Total Seats Deployed/Day Total Passengers carried/Day Overall System Seat Factor Passenger Growth Rate

Year 2005

- 89,000 - 59,000 - 69.0 % - 22.0 %

Regulatory Requirements  In order to maintain orderly growth of airline operation, to serve the needs of the country, in an efficient and safe manner, the Civil Aviation Requirements, Section 3, Air Transport, Series C, Part II were issued in 1994 which stipulates the minimum requirements for grant of permit to operate scheduled passenger air transport services  Scheduled Operator's Permit is granted only to:  A citizen of India; or  A Company or a Corporate provided that: • It is registered and has its principal place of business within India; • Its 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.

Eligibility Requirements  Before the Scheduled Operator's Permit is issued, an applicant should have:  A subscribed equity capital of not less than Rs. 30 crores in respect of aircraft of maximum take-off mass exceeding 40,000 kg and not less than Rs. 10 crores in respect of aircraft of maximum take-off mass not exceeding 40,000 kg.  A fleet of minimum five aircraft either by outright purchase or through lease with maximum certified take-off mass more than 5,700 kg and type certified meeting the requirements of transport category aircraft acceptable to DGCA.

Eligibility Requirements

Contd..

 To facilitate the start of operations, operators will be permitted to operate with three aircraft and will be given one year’s time to have the fleet size of five aircraft. The fourth aircraft should be acquired within a period of six months and the fifth aircraft within a period of one year.  The aircraft shall be registered in India with current Certificate of Airworthiness in normal passenger category.  Adequate number of AMEs and own maintenance and repair facilities for maintenance of aircraft at least up to flight release or 500 hours, whichever is higher. For higher maintenance, the operator should preferably establish his own maintenance facilities, but can carry out such maintenance using facilities of reputed organisation approved by DGCA.

Eligibility Requirements

Contd..

 Sufficient number of flight crew and cabin crew but not less than three sets of crew per aircraft. The flight crew should hold current licenses issued by DGCA and appropriate endorsements on the type of aircraft operated.  Adequate number of AMEs and own maintenance and repair facilities for maintenance of aircraft at least up to flight release or 500 hours, whichever is higher. For higher maintenance, the operator should preferably establish his own maintenance facilities, but can carry out such maintenance using facilities of reputed organisation approved by DGCA.  Sufficient number of flight crew and cabin crew but not less than three sets of crew per aircraft. The flight crew should hold current licenses issued by DGCA and appropriate endorsements on the type of aircraft operated.

Procedural Requirements  An applicant shall first apply for an initial NoObjection Certificate (NOC). The application shall be submitted to the Ministry of Civil Aviation in a prescribed proforma along with requisite fee.  Before grant of NOC, approval of Foreign Investment Promotion Board (FIPB), if foreign investment is envisaged, and security clearance of the Directors and Chairman of the firm is necessary.  Foreign equity upto 40% and NRI/OCB investment upto 100% would be permitted in the domestic air transport services.  Equity from foreign airlines is not allowed in domestic air transport services.

Procedural Requirements

Contd..

 After scrutiny by the Ministry of Civil Aviation and approval of the competent authority, applicants fulfilling the basic requirements shall be issued the initial NOC by DGCA to become a Scheduled operator.  The NOC shall initially be valid for one year and six months from the date of issue and shall stand automatically cancelled if the applicant fails to obtain the Scheduled Operator's Permit within this period.  The competent authority may, however, extend the validity of the NOC for a period upto six months depending on merits of the case. However, where the aircraft proposed to be imported is a new one with a definite delivery schedule, extension of NOC may be allowed for the actual lead time of delivery, even if it exceeds the total period of one and a half years.

Procedural Requirements

Contd..

 After receipt of initial NOC, the applicant needs to take necessary steps to the satisfaction of DGCA for establishing the required infrastructure, recruitment and training of manpower, Minimum Equipment List, maintenance schedules and training manual etc.  The applicant shall get the security manual approved by BCAS.  The applicant shall show adequate preparedness to DGCA for conducting scheduled operations on sustained basis. The applicant shall prepare following manuals:  Operations manual in accordance with CAR Section 2 Series O Part X. The manual shall contain the operations procedures and policies to be adopted during operations.  Maintenance Control (Quality Control) manual in accordance with CAR Section 2 Series E part I. This manual will describe the operator’s quality control and maintenance policies.  Training manual for flight crew and cabin crew

Procedural Requirements

Contd..

 The applicant is required to submit to DGCA:  Maintenance program  Information on aircraft proposed to be imported to ensure compliance of all ADs and mandatory modifications

 Establish a process to ensure that information in the manuals is up-to date and in conformity with the rules and regulations and that all concerned personnel are familiar with the contents of the manuals.  On completion of above preparedness, the applicant shall apply in a prescribed proforma to the Ministry of Civil Aviation for the issue of permission to import the aircraft.  Eligible applicants can import aircraft through foreign exchange as per the rules and regulations of the Ministry of Finance and/or RBI.

Procedural Requirements

Contd..

 The Ministry of Civil Aviation grants permission to the applicant for acquisition of aircraft.  The permission to import the aircraft shall be valid for one year. It may be extended on one time basis by 3 months with prior approval of the competent authority. Where the aircraft to be imported is new one, the validity of import permission shall be in accordance with the delivery schedule.  Acquisition of aircraft within the country shall also be with the approval of the competent authority.  The applicant shall provide all details of the pilots and engineers recruited by them and shall get their training programme approved by DGCA and ensure completion before actual acquisition of aircraft. Note:

Security clearance of foreign flight crew and engineers shall be necessary before they can be allowed to operate/ maintain Indian registered aircraft.

Specific Airworthiness Requirements  Pressurised aircraft to be imported for scheduled operations shall not be more than 15 years in age or have completed 75% of its design economic life or 45,000 pressurisation cycles whichever is earlier.  For the import of unpressurised aircraft, the decision will be taken on a case to case basis and depends on inspection of the aircraft and its records.  DGCA would normally not allow import of more than 20 years old aircraft.  Before import of an aircraft, the applicant shall ensure that no major checks including those applicable to aging aircraft are due within one year/2000 flight hours.

Specific Airworthiness Requirements Contd..  The aircraft shall be fitted with mandatory equipments as specified by DGCA.  The aircraft before acquisition was maintained by an approved organisation.  The engineers should be supported by sufficient number of technicians in each category.  DGCA may allow a few qualified and licensed foreign engineers to carry out and certify maintenance work of Indian registered aircraft for a limited period to enable engineers of the operator to acquire necessary maintenance experience for acquiring the type endorsement.

Other Airworthiness Requirements  The operator is required to set up:  Own facility for retrieving DFDR/SSFDR data. For preparing readouts of data, he may have either his own facility or arrangement with other approved facilities.  Own CVR readout.  Basic NDT facilities such as ultrasound, eddy current, magnetic particle check, etc. commensurate with the scope of approval.  At night stop stations, necessary technical literature, consumable spares, tools and manpower needs to be available.

 With the increase in fleet size, the operator is required to set up bench-test facilities at least for instruments, hydraulic and pneumatic components, electrical units and other components which need frequent shop checks.

Operational Requirements  The operator shall have:  Operational management organisation which shall be adequately staffed with qualified and trained personnel to conduct operations safely and regularly.  Operator shall designate competent and qualified pilots as Director/Chief of Operations and Director/Chief of Flight Safety responsible to DGCA for ensuring compliance of all operational requirements and ensuring adherence to flight safety norms.  Setup for crew scheduling and computerised system to maintain their flying record and monitor compliance of FDTL, currency of licenses, medical and proficiency checks, and refresher courses done/due, etc.  Approved arrangements/ facilities and manpower for imparting training to their flight crew, cabin crew, flight despatchers and other operational staff.

Operational Requirements

Contd..

 Adequate number of flight despatchers and other staff for operational and flight planning, pre-flight briefing of flight crew, etc.  Facilities for conducting pre-flight medical examination of flight crew and cabin crew.

 The operator engaged in international operations shall ensure that all its employees posted abroad are fully aware with the laws, regulations and procedures of those states in which operations are conducted.  The operator shall ensure that all pilots are familiar with the laws, regulations and procedures, prescribed for the areas to be traversed, aerodromes to be used and air navigation facilities relating thereto, which are pertinent to performance of their duties.

Operational Requirements

Contd..

 The operator shall have:  Necessary operational documents and publications like operations manual, CARs, AICs, NOTAMs, aeronautical maps and charts, etc. for reference by flight crew personnel at the main base and also at the night stopping stations.  Flight Safety Manual laying down his policies and procedures for ensuring safety of operations, investigation of occurrences, implementation of safety recommendations, accident/incident prevention programmes, etc. Proactive safety measures should be adopted to the maximum extent.  System to analyse DFDR/SSFDR data of all flights to determine exceedances in flight operations and to ensure compliance of operating procedures.

Operational Requirements

Contd..

 Scheduled operations shall be conducted from approved operational bases and only to/from airports suitable for the type of aircraft.  Scheduled operators shall ensure that all the security requirements stipulated by BCAS are strictly followed at all airports.

Operational Requirements

Contd..

 The operator shall have a system to submit:  The flight plan of each flight with the ATC unit and obtain clearance well before the expected time of operation. For Air Defence Identification Zones (ADIZ), Air Defence Clearance shall also be obtained.  Whereby The Pilot-in-Command or an authorised person shall obtain meteorological and ATC briefings before undertaking the flight.  Whereby Articles classified as dangerous goods, arms, ammunition, explosives and inflammable materials shall be carried only with the prior approval of DGCA and shall have facilities to train their personnel in handling dangerous goods and ensure that requirements regarding packing, handling, loading/ unloading and transportation of such goods are complied with.

Issue of Operating Permit  After completion of preparedness and import/acquisition of aircraft the applicant shall apply to DGCA for issue of the operating Permit.  Application shall contain the following information: Particulars of aircraft intended to be used; C of R and C of A of the aircraft; Financing pattern on which the aircraft has been bought/leased; Approval of maintenance organisation and details of approved organizations toundertake major maintenance of the aircraft;  Details of licenses and type ratings of the operating crew and engineers, approval of key personnel by DGCA like the load and trim sheet persons, flight despatchers, cabin crew, etc. If foreign pilots and engineers are employed for a specified period, approval of the competent authority shall have to be obtained;  Insurance policy covering passengers and their baggage, crew, third party risks, hull loss, etc.    

Issue of Operating Permit

Contd..

 Acceptable proof of compliance of conditions of the NOC and/or justification for any change in information supplied at the time of obtaining initial NOC;  Compliance of requirements for leased aircraft operations if the aircraft is acquired on lease;  Information to show the fulfillment of operational, maintenance and security requirements;

 After scrutiny of the relevant documents , DGCA shall issue the operating permit along with operations specifications for Scheduled Operations stipulating conditions, if any.  The permit shall be valid for a period not exceeding one year from the date of issue.  The operator is required to carry out operations in accordance with the scope of the Permit and the Operations Specifications.

Renewal of Operating Permit  It will be the responsibility of the operator to ensure that during the period of validity of the Permit, capability of the operator is not degraded in any way.  The operator shall upgrade his operations only after prior approval of DGCA and appropriate endorsements made in the Operations Specifications.  The Permit shall be renewable by DGCA every year against payment of requisite fee of Rs. 25,000/-.  The operator shall submit its internal safety audit report within 30 to 60 days prior to expiry of the permit. DGCA may also carry out an audit of the operator’s facilities if considered necessary.  The operator shall demonstrate continued capability to conduct the operations authorised under the operating permit.

Induction of New Type of Aircraft  If the operator desires to induct a new type of aircraft in his operations, it shall be done after ensuring the following:  Obtaining NOC from the Ministry of Civil Aviation,  Establishing the required maintenance and other facilities for the type inducted,  Preparation of relevant manuals,  Recruitment and training of manpower, etc.for the type inducted

 Before commencing operations, the operator shall have to acquire the required capability to conduct operations with the new type of aircraft.

General Requirements  The operator shall intimate any change in the Board of Directors/ Chairman/CEO at any time to the Ministry of Civil Aviation and DGCA along with the details of new Chairman or Director. New chairman and Directors shall be appointed only after their security clearance.  Prior permission of DGCA/Ministry of Civil Aviation shall be required for:  Change in the name of the Company;  Change in management of the Company arising out of changes in the equity holdings of the Company;  Take over of the Company by another Company.

General Requirements

Contd..

 Scheduled operators can conduct charter/ non-scheduled operations for transportation by air of persons, mail or goods provided such flights do not change their approved operating schedule.  The applicant may, with the approval of the competent authority, acquire suitable aircraft within the country, on purchase/ lease for operation of services.  Before deploying any additional aircraft for operations, the aircraft shall be endorsed on the Permit.  Scheduled Operators' Permit is not transferable.  Landing and parking charges shall be payable by the operator to the owner of the airfield. The Route Navigation Facilities Charges (RNFC) shall be payable by the operator to the organisation which provides these facilities.

General Requirements

Contd..

 The operator shall regularly submit to DGCA, information relating to their operational, engineering, and commercial and financial performance.  The operator shall regularly submit to DGCA the statistical data regarding his operation such as capacity deployed, passengers carried, aircraft hours flown, cargo carried etc. as per the prescribed proforma on a monthly basis so as to reach DGCA office before the tenth day of the next month.  The scheduled operators shall issue passenger tickets in accordance with the provisions of the Carriage by Air Act, 1972. The tickets shall stipulate the conditions of carriage including the liability of the operator.

General Requirements

Contd..

 The operator shall maintain a current insurance for an amount adequate to cover its liability towards passengers and their baggage, crew, cargo, hull loss and third party risks in compliance with the requirements of the Carriage by Air Act, 1972, or any other applicable law.  The operator may, with prior permission of the competent authority, borrow an aircraft from another operator on short term basis to meet their operator exigencies.  The operator shall get his flight schedules approved by DGCA atleast 30 days in advance and operate services in accordance with the flight schedules so approved.

General Requirements

Contd..

 The operator is bound to comply with the requirements of any new rules or regulations promulgated from time to time for scheduled air transport services.  Degradation of the operator’s capability below the required level or breach of any of the requirements of relevant CARs or of any provisions of Aircraft Act, 1934, Aircraft Rules, 1937, Civil Aviation Requirements, orders/ directions/requirements issued under the said act or rules and as amended from time to time, shall render the Operating Permit liable to alteration, suspension or cancellation.