Updating the national aviation policy
Special tax exemptions/holidays and other attractions have been recommended by the Pakistan Civil Aviation Authority (CAA) in the policy for the entire aviation sector including hot balloon sports organisers. It is designed to attract not only new airlines but also open new markets.
The policy is aligned with national trade corridor encompassing the government’s vision to route international trade, tourism and passenger traffic through Pakistan. Special incentives to be given to domestic and international air careers and ground handlers. .
According to the draft policy, duly approved by the CAA board, the CAA has recommended that the current policy of zero per cent duties, surcharges and taxes on import of aircraft of all weight categories, engines and spares by Pakistani operators, the CAA and the maintenance companies, should be extended to accommodate manufacturers, equipment required for manufacturing and raw material imported for aircraft.
The same concession may be extended to the CAA and private operators for import of communication, navigation & surveillance (CNS), air traffic management (ATM) systems, life-saving equipment like ballistic recovery system (BRS), emergency medical kits, emergency locator transmitter (ELT), fire-fighting vehicles and equipment including training equipment like all types of simulators, technical publications/manuals imported by the CAA as well as operators and maintenance companies. The new policy maintains that tax holiday shall be granted to aircraft manufacturers, maintenance companies, flying training schools and ground training schools for 10 years.
The CAA has also recommended that the government should exempt all taxes and duties on air ticket for secondary destinations. The same privileges may be extended to operators of small aircraft and helicopters.
The new policy has also touched a very important aspect of market access. It says, restricted market access raises prices, creates monopoly and suppresses aviation growth. Liberal air services agreements remove limitations on airlines’ freedom to increase service, lower fares and promote economic growth. All international airports are to be developed as business and tourists hubs. Since Pakistan is strategically located on the international route, liberal arrangements with our bilateral partners, in addition to providing direct and convenient connections to the local traffic from these airports, will also facilitate to route the flow of international traffic from the East to Europe and North America through Pakistan.
To achieve the required results it was decided that Pakistan will liberalise bilateral arrangements on reciprocal basis with its bilateral partners to provide service from/to Karachi, Lahore and Islamabad (of course after completion of the new airport) to destinations in Western Europe, North America and Africa and to destinations towards the East. Furthermore, there would be no mandatory commercial agreements as part of bilateral agreements. However, airlines will be free to enter into such co-operative marketing arrangements as are mutually agreeable, which will be outside air services agreements.
For the last many months, the CAA concentrated on bringing changes in its cargo set up at each airport in general and top five airports (Karachi, Lahore, Islamabad, Faisalabad and Peshawar) in particular. Planes have been chalked out for cargo complexes/villages at major airports with all kinds of international standard facilities. Now special focus will be on cargo facilities in the new policy in which single-window clearing mechanism will be introduced which willl boost the cargo service at airports. Top clearing agents, including officials of Sialkot airport say that problems faced by clearing agents will be curtailed. An efficient transit, a single-window clearing mechanism comprising airlines, freight forwarders, customs house agents, customs, regulatory agencies and airline ground handling agents, insurance and banks facilities, etc willl be made available under one roof.
Furthermore, infrastructure of a cargo village will include multi-modal transport, cargo terminals, cold storage centres, automatic storage and retrieval systems, mechanized transport cargo, dedicated express cargo terminals with airside and city side openings, computerization and automation. It was reiterated that Pakistan will continue to follow open skies policy for cargo operations based on 3rd, 4th & 5th freedom of traffic rights.
It was also decided that Karachi and Gwadar will be promoted as trans-shipment hubs where cargo villages will be established on the basis of public-private partnership to be linked with the national trade corridor (NTC).
Since Mr Farooq Rahmatullah took over as the DG, CAA, stress has been placed on promoting/attracting the private sector for the development and promotion of aviation activities. Studies were conducted and expert opinions were sought from leading private companies for the promotion of the aviation sector.
The CAA is following a restructuring programme which separates the regulatory, air traffic services and commercial functions to achieve the highest safety standards, to encourage the development of merchant airports, e.g., Sialkot International Airport and to efficiently absorb investment in the aviation sector. “The process is in advanced stages and after completion will make the CAA more efficient, responsive and, above all, capable of ensuring international standards of safety,” experts say.
The construction of new commercial airports as per the NAP will be permitted to meet the growth in air traffic. It was decided that the private sector will be given a free hand to construct and operate new/existing airports/airstrips/helipads/ heliports including cargo complexes on build-and-operate (BO), build-operate-and-transfer (BOT) or any other arrangement and to raise non- aeronautical revenues from these premises. Furthermore, it was also decided that privatisation of airports will be pursued to make them more efficient and productive.
The new policy provides fair and equal opportunities to public and private sector airports to market them within its framework and bilateral air services agreements. The private sector will be encouraged to develop additional revenue streams, i.e., passenger charges, cargo levies and commercial activities. However, the CAA will have the responsibility of economic oversight of all airports.
The writer is the Regional Legal Officer of the Civil Aviation Authority.