Liberal Aviation Policy unveiled

The government has cleared for take-off a more liberal civil aviation policy, kick-started consolidation among public sector banks by backing SBI's proposed merger of five associate banks with itself and approved 10% stake sale in HUDCO in a fresh push to reforms. The big Cabinet decisions on Wednesday came a day after the government moved decisively on GST, igniting stock markets that celebrated the steps that were widely anticipated after the recent assembly polls and Rajya Sabha elections. The new aviation policy junks the so-called 5/20 rule and gives a leg up to greater air connectivity by providing incentives to airlines for flying to cities that are not on the air map. SBI had sought the government's nod for merging five associate banks -State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore -and Bharatiya Mahila Bank with itself.
The government's support nonetheless puts the process on fast track, signalling the beginning of the process of consolidation among state-run banks.
The Cabinet Committee on Economic Affairs approved 10% disinvestment in HUDCO through an

Airlines including Vistara and AirAsia India will soon be allowed to start overseas flights under the new policy that allows airlines to fly international even before they complete five years of domestic operations.  Under the new civil aviation policy, any domestic carrier can now fly international if it has a fleet of at least 20 aircraft and maintains about 20% of total capacity in the domestic sector at all times. The earlier rule required domestic airlines to have a fleet of at least 20 aircraft and five years of domestic flying experience to launch overseas flights.
Officials said it was a tough task to find the middle ground because the incumbent carriers and the new airlines were ranged against each other and took opposing stands on the policy .
While Ratan Tata, chairman emeritus of Tata Sons, took early aim by tweeting on February 22 that the older airlines were seeking “protectionism“ and “preferential treatment“, the Federation of Indian Airlines, the main lobby group representing IndiGo, Jet Airways, SpiceJet and GoAir, reacted strongly , claiming “reverse discrimination“ if the 5/20 norm was removed. IndiGo founder Rahul Bhatia even accused Tata of “subverting the law“.

With the new policy, the Modi government also intends to provide connectivity to smaller cities across the country at a fare of Rs.2,500 per hour of flight.This will be achieved through a subsidy, 80% of which will be provided by the central government and the rest by the state governments.