1 Legal framework
1.1 Which legislative and regulatory provisions govern the aviation sector in your jurisdiction?
The civil aviation sector in India is principally regulated by the following regulations:
- The Aircraft Act, 1934 and the Aircraft Rules, 1937 regulate the manufacturing, possession, sale, use, operation, export and import of aircraft. Among other things, they also stipulate the parameters pertaining to:
- aircraft maintenance;
- general conditions of flying and safety;
- the registration of aircraft; and
- the conduct of investigations.
- The Airports Authority Act, 1994 established the Airports Authority of India (AAI). The AAI is responsible for the development, finance, operation and maintenance of all government airports in India.
- The Civil Aviation Requirements are issued by the Directorate General of Civil Aviation (DGCA) and set out, among other things, the various requirements to be fulfilled by stakeholders before the issuance of a licence, certificate, approval or permission.
- The Carriage by Air Act, 1972 governs the rights and liabilities of carriers, passengers, consignors, consignees and other persons, and applies to both domestic and international carriage by air.
- The Airports Economic Regulatory Authority of India Act, 2008 established the Airports Economic Regulatory Authority of India (AERA). The AERA is responsible for the regulation of tariffs and charges for the various services rendered by airports in India. The act also established an appellate tribunal for the adjudication of any disputes.
- The Aircraft (Security) Rules, 2011 detail the various safety and security regulations for aerodromes and aircraft in India.
Other relevant legislation relating to the civil aviation sector includes the following:
- the Tokyo Convention Act, 1975;
- the Suppression of Unlawful Acts Against Safety of Civil Aviation Act, 1982;
- the Anti-Hijacking Act, 2016;
- the Aircraft (Public Health) Rules, 1954;
- the Aircraft (Demolition of Obstruction caused by buildings and trees etc.) Rules, 1994;
- the Aircraft (Carriage of Dangerous Goods) Rules, 2003; and
- the Aircraft (Investigation of Accidents and Incidents) Rules 2017.
1.2 Which bilateral and multilateral instruments on aviation have effect in your jurisdiction?
The Indian government has entered into bilateral air service agreements with various countries over the years for the operation of commercial air services to and from India. These agreements, among other things, provide guidelines regarding routes, capacity and pricing which apply to airlines designated by the respective countries.
Furthermore, there are several multilateral instruments which establish common international standards on various aspects of aviation. The binding instruments to which India is a party are as follows:
- the Chicago Convention on International Civil Aviation, 1944;
- the Warsaw Convention for the Unification of Certain Rules for International Carriage by Air, 1929;
- the Hague Protocol to amend the Convention for the Unification of Certain Rules relating to International Carriage by Air;
- the Tokyo Convention on Offences and Certain Other Acts Committed on Board Aircraft, 1963;
- the Hague Convention for the Suppression of Unlawful Seizure of Aircraft, 1970;
- the Montreal Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation, 1971;
- the Montreal Supplementary Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, Supplementary to the Montreal Convention 1971;
- the Montreal Convention on marking of Plastic Explosives for the Purpose of Detection, 1991;
- the Montreal Convention for the Unification of Certain Rules for International Carriage by Air, 1999;
- the Cape Town Convention on International Interests in Mobile Equipment, 2001;
- the Aircraft Protocol to the Convention on International Interest in Mobile Equipment on Matters specific to Aircraft Equipment, 2001; and
- the Beijing Protocol Supplementary to the Convention for the Suppression of Unlawful Seizure of Aircraft.
1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?
The Ministry of Civil Aviation (MoCA) is responsible for formulating national policies and programmes for the development and regulation of the civil aviation sector in India.
The MoCA also enforces the applicable laws and regulations pertaining to the civil aviation sector by exercising administrative control over attached and autonomous organisations including:
- the DGCA;
- the Bureau of Civil Aviation Security;
- the AAI; and
- the AERA.
1.4 What is the regulators' general approach in regulating the aviation sector?
The MoCA along with the aviation regulator, the DGCA, is largely supportive of the various stakeholders in the aviation industry in India.
2 Licensing and market access
2.1 What licences are required to provide aviation services in your jurisdiction? Does this vary depending on route?
In order to operate air transport services, an operator must apply for, and be granted after due diligence by the Directorate General of Civil Aviation (DGCA), an air operator permit (AOP). This permit is the equivalent to the air operator certificate that must be issued by a member state of the International Civil Aviation Organization. The type of licence applied for will depend on the type of air transport service offered by the operator, and not the routes it intends to operate.
An AOP is granted for the following types of air transport services:
- scheduled air transport services;
- non-scheduled air transport services;
- air transport cargo services; and
- scheduled commuter air transport services.
2.2 What nationality requirements must be satisfied to obtain a licence?
An AOP for scheduled or non-scheduled air transport services may be granted to the following parties:
- a citizen of India; or
- a company or a body 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 are vested in Indian nationals.
An AOP for air transport cargo services may be granted to the following parties:
- a citizen of India;
- a group of individuals of Indian nationality or a trust/society registered under the Societies Registration Act, 1860;
- a non-resident Indian (NRI)/overseas corporate body;
- a company registered under the Companies Act, 2013 which has its principal place of business in India, and with or without equity participation (excluding NRI equity) as approved by the government from time to time; or
- the central government, a state government or an undertaking owned or controlled by any of those governments.
2.3 What financial requirements must be satisfied to obtain a licence?
The financial requirements to obtain an AOP vary depending on the type of air transport service.
Scheduled air transport permit (SATP): To obtain a SATP, an operator must fulfil the following minimum paid-up capital requirements:
- Airlines operating with aircraft with take-off mass equal to or exceeding 40,000 kilograms (kg) and operating with up to five aircraft: INR 500 million. For each addition of up to five aircraft, an additional equity investment of INR 200 million will be required.
- Airlines operating with aircraft with take-off mass not exceeding 40,000 kg and operating up to five aircraft: INR 200 million. For each addition of up to five aircraft, additional equity investment of INR 100 million will be required.
- There may be no need for further enhancement of equity if the paid-up equity/reserves of INR 1 billion are available with the airline.
Non-scheduled air transport permit (NSATP): To obtain an NSATP, an operator must have the following minimum paid-up capital requirements:
- Airlines operating up to two aircraft or helicopters: INR 20 million.
- Airlines operating with between three and five aircraft or helicopters: INR 50 million.
- Airlines operating with between six and 10 aircraft or helicopters: INR 100 million.
- Airlines operating with more than 10 aircraft or helicopters: INR 150 million.
Scheduled commuter air transport permit (SCATP): To obtain an SCATP, an operator must have the following minimum paid-up capital requirements:
- Airlines operating with aircraft with maximum gross take-off weight (MGTOW) up to 5,700 kg and operating with up to three aircraft: INR 50 million. For each additional aircraft, additional equity investment of INR 20 million will be required, subject to a maximum of INR 150 million, after which no further equity enhancement will be required.
- Airlines operating with aircraft with MGTOW more than 5,700 kg and up to 40,000 kg and operating up to three aircraft: INR 100 million. For each additional aircraft, additional equity investment of INR 30 million will be required, subject to a maximum of INR 250 million, after which no further equity enhancement will be required.
Air transport cargo service permit (ACSP): To obtain an ACSP, the operator's subscribed equity capital must be at least INR 10 million. However, in case of an existing company, instead of subscribed equity capital, a net worth of INR 10 million will be reckoned as the minimum requirement to assess the financial soundness of the company; or it may raise subscribed equity for the required amount.
2.4 What other requirements must be satisfied to obtain a licence? Do specific requirements or restrictions apply to foreign operators?
The DGCA requires operators, among other things, to:
- demonstrate adequate organisation, methods of control and supervision of flight operations; and
- formulate a training programme and maintenance arrangements consistent with the nature and extent of the specified operations.
Aeronautical Information Circular (AIC) 9/2020 details the requirements for grant of operating authorisation to foreign airlines designated under the bilateral air service agreements. This AIC, among other things, details conditions pertaining to the ownership, effective control and safety qualifications of foreign operators.
2.5 What is the procedure for obtaining a licence?
The CAP 3100 Air Operator Certification Manual details the various requirements that an operator must fulfil in order to obtain an AOP. The entire process has been classified and divided into different phases as follows:
- Pre-application phase: The operator submits to the Ministry of Civil Aviation (MoCA) a letter of intent outlining its proposal and applies to the MoCA for the issuance of a no-objection certificate (NOC). The certificate is issued upon the examination of the proposal from financial, economic and legal perspectives.
- Formal application: The operator submits a complete application in the prescribed form to the DGCA, along with the prescribed fees and all supporting documents. After conducting due diligence, the DGCA may invite the operator for a meeting to discuss the application.
- Document evaluation: During this phase, the DGCA assesses the applicant's capability to conduct aircraft transport operations by verifying the various documents submitted. The documents must precisely reflect the mode and the methods through which the applicant intends to conduct the proposed operations. Upon approval, these will form a part of the understanding between the DGCA and the operator regarding the future functioning of the operator.
- Demonstration and inspection: During this phase, the applicant must demonstrate to the DGCA its capability to conduct the proposed operations in accordance with the procedures detailed in the manuals and documents reviewed in the previous phase. Upon further scrutiny of the entire application, and inspection of facilities and sufficiency of resources, the DGCA may require the operator to conduct approval flight(s) to destinations of its intended operations, as determined by the DGCA. All changes required by the DGCA at this stage must be incorporated by the operator before the process can move on to the final phase.
- Certification: Upon fulfilment of the criteria stipulated by the DGCA and successful completion of the procedures detailed in the above phases, the DGCA will issue an AOP.
3 Safety and maintenance
3.1 What key safety requirements apply to operators in your jurisdiction?
The Directorate General of Civil Aviation (DGCA) regulates the safety requirements observed by operators in India. These are in line with the International Civil Aviation Organization guidelines on safety and standards and recommended practices.
The Aircraft Rules in Part II (General Conditions of Flying), Part III (General Safety Conditions) and Part IV (Airworthiness), detail the various safety requirements to be observed by operators. The operator must, among other things, apply for a certificate of airworthiness (CoA) from the DGCA prior to flying the aircraft. The CoA is issued once the DGCA confirms that the aircraft:
- conforms to the safety standards;
- is safe to operate; and
- meets the minimum requirements with respect to engineering, inspection and maintenance.
To be eligible for the issuance of a CoA, an aircraft must be type certified, its type certificate must be validated or its type certificate must be accepted by the DGCA.
3.2 What key maintenance requirements apply to operators in your jurisdiction?
Please see question 3.1
3.3 Do these requirements differ depending on whether the operator is providing commercial, cargo or private services?
The safety rules and regulations are equally applicable to all aircraft operators.
3.4 What are the potential consequences of breach of the safety and maintenance requirements?
Any violation of the safety and maintenance requirements will invite disciplinary/penal action, including:
- alteration, suspension or cancellation of the air operator permit;
- partial or total suspension of the flight schedule approved by the DGCA; and/or
- a reduction in airline entitlements on international routes.
3.5 What best practices in relation to safety and maintenance should operators consider adopting in your jurisdiction?
Operators must ensure that all applicable safety and maintenance obligations deriving from the various rules and legislation are observed.
4 Consumer protection
4.1 What rights do passengers enjoy in your jurisdiction in relation to: (a) Flight delays or cancellations? (b) Overbooking? (c) Denied boarding for other reasons? (d) Baggage delay, damage or loss? and (e) Disabled access?
The Civil Aviation Requirements (CAR), Section 3 – Air Transport, Series M, Part IV, issued by the Directorate General of Civil Aviation (DGCA), governs the rules and regulations relating to denial of boarding rights and or cancellation of flights.
(a) Flight delays or cancellations?
In the event of flight delays or cancellations, the operating airline will not be obliged to pay compensation if these were caused by an event(s) of force majeure – that is, extraordinary circumstance(s) beyond the control of the airline whose impact led to the cancellation or delay of flight(s), and which could not have been avoided even if all reasonable measures had been taken by the airline. Such extraordinary circumstances may, in particular, occur due to:
- political instability;
- natural disasters;
- civil war, insurrection or riot;
- government regulation or order affecting the aircraft;
- strikes or labour disputes causing cessation, slowdown or interruption of work; or
- any other factors that are beyond the control of the airline.
The following scenarios illustrate different situations in case of flight delays.
|Scenario 1||Scenario 2||Scenario 3|
If a passenger has checked in on time, but the airline expects a delay of
the passenger must be offered meals and refreshments in relation to waiting time.
|When a domestic flight is expected to be delayed for more than six hours from the published scheduled time of departure or the previously revised departure time (communicated more than 24 hours prior to original scheduled departure time), the airline must offer the option of either an alternative flight within a period of six hours or a full refund of the ticket to the passenger.||If the airline experiences a delay in departure of more than 24 hours or more than six hours for flights scheduled to depart between 20:00 and 03:00, the passenger must be given free hotel accommodation (including transfers).|
In case of flight cancellation, the airline must inform the passenger of the cancellation at least two weeks before the scheduled time of departure and arrange an alternative flight/refund as acceptable to the passenger. If the passenger is informed of the flight cancellation less than two weeks and up to 24 hours before the scheduled departure time, the airline must offer an alternative fight or refund the ticket, as acceptable to the passenger.
If the passenger has not been informed as per the above timeline or misses a connecting flight booked on the same ticket number of an airline, the airline must provide either an alternative flight as acceptable to the passenger or compensation, in addition to a full refund of the air ticket in accordance with the following scenarios.
|Flights with a block time of up to and including one hour||Compensation of INR 5,000 or a booked one-way basic fare plus airline fuel charge, whichever is less, will be payable.|
|Flights with a block time of between one and two hours||Compensation of INR 7,500 or a booked one-way basic fare plus airline fuel charge, whichever is less, will be payable.|
|Flights with a block time of more than two hours||Compensation of INR 10,000 or a booked one-way basic fare plus airline fuel charge, whichever is less, will be payable|
An airline must first ask for volunteers to give up their seats so as to make seats available for other booked passengers to travel on the flight, in exchange for such benefits/facilities as the airline, at its own discretion, may wish to offer. However, if boarding is denied against the will of a passenger, the following scenarios may arise.
|The airline arranges an alternative flight scheduled to depart within one hour of the original scheduled departure time.||The passenger cannot hold the airline liable for compensation.|
|The airline arranges an alternative flight scheduled to depart within 24 hours of the booked scheduled departure.||
Compensation equal to 200% of the booked one-way basic fare plus airline fuel charge, subject to a maximum of INR 10,000.
|The airline fails to arrange for an alternative flight scheduled to depart within one hour of the original scheduled departure time, and arranges an alternative flight scheduled to depart more than 24 hours of the booked scheduled departure||
Compensation equal to 400% of the booked one-way basic fare plus airline fuel charge, subject to a maximum of INR 20,000.
|The airline fails to arrange for an alternative flight scheduled to depart within one hour of the original scheduled departure time and the passenger does not opt for an alternative flight||
A refund of the full value of ticket and compensation equal to 400% of the booked one-way basic fare plus airline fuel charge, subject to a maximum of INR 20,000.
(c) Denied boarding for other reasons?
Please see question 4.1(d).
(d) Baggage delay, damage or loss?
|International carriage||Domestic carriage|
|In case of loss, delay or damage to baggage, the carrier's liability is limited to 1,288 Special Drawing Rights (SDR) per passenger||In case of loss, delay or damage to baggage, the carrier's liability is limited to INR 20,000 per passenger.|
|In case of loss, delay or damage to cargo, the carrier's liability is limited to 22 SDR per kilogram (kg)||In case of loss, delay or damage to cargo, the carrier's liability is limited to INR 350 per kg|
(e) Disabled access?
The CARs, Section 3 – Air Transport, Series M, Part IV deals with carriage of persons with disability and/or persons with reduced mobility.
Airlines cannot refuse to carry disabled passengers in India. They must, among other things, provide convenient seats and all relevant assistance to such passengers without any extra cost. They must also permit such passengers to travel along with any and all assistive aids/devices, escorts and guide dogs.
4.2 Are airfares regulated in your jurisdiction? What other requirements apply to the pricing and sale of flights?
Airfare as not regulated in India. However, as per Rule 135 of the Aircraft Rules 1937, operators must take into account factors such as:
- the cost of operations;
- the characteristics of service;
- reasonable profits; and
- the generally prevailing tariff.
The government has permitted various services to be unbundled and charged separately on an opt-in basis, including:
- preferential seating;
- meal, snack and drink charges (except drinking water);
- use of airline lounges; and
- check-in baggage.
4.3 What other marketing and advertising requirements apply to operators in your jurisdiction?
No specific marketing and advertising standards apply to airlines in India. However, ads must be fair so as to inform customers of the available choices and must not be offensive to generally accepted standards of advertisement or public decency.
4.4 What requirements apply in relation to the retention and protection of passenger data in your jurisdiction?
India does not currently have a separate data protection law. However, the Information Technology Act 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 set out procedures to ensure the safety and security of sensitive personal information. Airlines that collect personal information should:
- have reasonable security practices to maintain the confidentiality of the information.
In Puttuswamy v Union of India a nine-judge bench of the Supreme Court declared that the right to privacy is a fundamental right under the Indian Constitution. Accordingly, passengers' data and privacy will now be regarded as a fundamental right. Airlines may need to seek passengers' prior permission before disclosing such information to a third party, unless such information is required by law.
4.5 What other general consumer protection requirements are of relevance for operators in your jurisdiction?
Please see question 4.4.
4.6 How are consumer complaints in relation to aviation services handled in your jurisdiction?
The DGCA has set up the Air Sewa web portal/mobile application to deal with passenger complaints pertaining to airline operators. This platform provides a facilitation platform for passengers to file complaints with their respective airline. The Consumer Protection Act 2019 also provides an additional remedy for passengers to claim compensation for any deficiency in service by the airlines.
5 Accidents and liability
5.1 What is the applicable aviation liability regime in your jurisdiction?
The Carriage by Air Act, 1972 incorporates the provisions of:
- the Warsaw Convention 1929;
- the Hague Protocol 1955; and
- the Montreal Convention, 1999.
India became the 91st country to ratify the Montreal Convention. The convention has significantly influenced liabilities concerning civil aviation. It highlights the circumstances in which entities will be held liable for death or injury caused to any passenger. The Indian legislature has accordingly aligned its objectives to fill in the gaps between the convention and the act. The act has been amended from time to time to keep it up to date, the most recent amendment being in 2016.
The act applies to all carriage – including carriage of passengers, baggage and cargo – performed for remuneration.
The provisions of the convention apply to non-international carriage by air in India.
5.2 What insurance requirements apply to operators in your jurisdiction?
The operator must maintain comprehensive insurance to cover its liability towards passengers and their baggage, crew, cargo, hull loss and third-party risks in compliance with the Carriage by Air Act 1972 and other applicable laws.
Indian registered aircraft may be insured by an Indian insurer, which in turn can seek reinsurance on the international insurance market. However, a 5% obligatory cession is payable to the General Insurance Company of India.
5.3 What body is responsible for investigating accidents in your jurisdiction and what procedure will it follow in doing so?
The Aircraft Accident Investigation Bureau of India (AAIB), established under the Aircraft (Investigations of Accidents and Incidents) Rules 2012 as per annex 13 of the Chicago Convention, is the independent aircraft accident investigating authority in India.
The procedure for investigating aircraft accidents as per the Aircraft (Investigations of Accidents and Incidents) Rules 2017 (‘AIAI Rules 2017') is detailed below:
- The Directorate General of Civil Aviation (DGCA), which supervises the AAIB, will institute an investigation:
- into a serious incident if the aircraft involved is of maximum mass of over 2,250 kilograms (kg) or is a turbojet aircraft; and
- into all incidents and serious incidents involving all other aircraft.
- The DGCA may authorise an officer to carry out a preliminary investigation into the accident or incident and submit a preliminary report to the AAIB in a specified format to assess the classification of the occurrence and the expertise needed for detailed investigation.
- Upon receipt of the preliminary report, the DGCA and the AAIB may appoint an investigator in charge and one or more investigators for assistance to conduct an investigation into aircraft accident or serious incident and submit a report as per annex 13 of the Chicago Convention. The report will be made public by the DGCA and the AAIB.
- Where the central government deems it expedient to conduct a formal investigation of an accident, it will appoint a competent person (the court) to conduct a formal investigation and may appoint one or more persons possessing legal, aeronautical, engineering or other specialist knowledge to act as assessors; one or more investigators will also be appointed as assessors by the AAIB. All investigations undertaken prior to the appointment of the court will be treated as closed and transferred to the court.
- The court will conduct an investigation to ascertain the cause and circumstances of the accident and prepare a report. The court may hold all or part of the investigation in camera if it is of the opinion to do otherwise would likely to prejudice the interests of any country or jeopardise the personal safety of any person.
- The court will submit the final report of such formal investigation to the central government, which will forward it to the AAIB for further processing.
- The report of the investigator-in-charge or the court will be forwarded to:
- the state of registry;
- the state of the operator;
- the state of design;
- the state of the manufacturer; and
- the state that participated in the investigation (ie, the state which has a special interest in an accident by virtue of fatalities or serious injuries to its citizens).
These parties may submit their significant and substantiated comments on the report within 60 days of its issuance.
The investigator in charge or the court may amend the report by including or appending any comments received, and will make public the final report, together with any reservations or dissents and their reasons, in such manner as is deemed fit based on the relevant standards of Annex 13.
The final report will be forwarded:
- to the states entitled to receive such report under Annex 13; and
- to the International Civil Aviation Organization (ICAO) if the mass of the aircraft involved in the accident or incident is more than 5,700 kg.
5.4 What reporting requirements apply to accidents and incidents in your jurisdiction?
If an accident or incident involves an aircraft which is registered in India, wherever it may be, or which is registered outside India but for the time is in or over India, or which is operated by a person who is not a citizen of India but has his principal place of business or permanent residence in India, then the pilot-in-command of the aircraft or, if he or she is killed or incapacitated, the owner, operator, hirer or any other person on whose behalf the pilot was in command of the aircraft, or any relevant person, as the case may must:
- send notice thereof with the relevant information as per the AIAI Rules 2017 to AAIB and DGCA by the quickest means of communication available; and
- in the case of an accident of incident occurring in India, give information to the District Magistrate and the Officer-in-charge of the nearest Police Station of the accident or incident and of the place where it occurred.
This must be done as soon as is reasonably practicable, but in any case, no later than 24 hours after the relevant person became aware of the accident or the incident
The AAIB, on receipt of such information, must further notify the following bodies of the facts of the accident or serious incident in the Indian territory or in the assigned oceanic airspace beyond the territory of India, providing as much information as may be available, with minimum delay and by the most suitable and quickest means available:
- the state of registry;
- the state of the operator;
- the state of design;
- the state of manufacture; and
- ICAO, where the aircraft involved has a maximum mass of over 2,250 kg or is a turbojet-powered aircraft.
The AAIB must also notify these authorities of the following:
- an indication of whether the investigation will be conducted by the AAIB or is proposed to be delegated by the AAIB to another state; and
- identification of the originating authority and means of contacting the investigator in charge or court referred to in Rule 12 of the AIAI Rules 2017, as the case may be.
6 General operation
6.1 What requirements apply to charter services in your jurisdiction?
The Directorate General of Civil Aviation (DGCA) permits non-scheduled air operator permit (AOP) holders to operate charter flights. These may be operated:
- on a per-seat basis;
- by way of chartering the whole aircraft on a per-flight basis; or
There is no bar on the same aircraft being used for either purpose as customers may require from time to time. The operator is also free to operate a series of flights in any sector in India by selling individual seats; but it cannot publish timetables for such flights. The operation of revenue charters to points outside India may also be undertaken, as per rules issued by the DGCA.
The DGCA also regulates the operation of tourist charter flights to and from India as part of the Inclusive Tour Package detailed in Aeronautical Information Circular 3/2020.
6.2 What requirements apply to the carriage of cargo in your jurisdiction?
Cargo may be carried in commercial aircraft subject to the requirements laid down by the Bureau of Civil Aviation Security, among other things. In order to operate dedicated cargo services, operators must obtain an AOP for air cargo services and fulfil the requirements by the DGCA and other authorities.
Furthermore, the carriage of dangerous goods by air to, from, within or over India is strictly governed by the Aircraft (Carriage of Dangerous Goods) Rules, 2003. Rule 12 of the Aircraft (Carriage of Dangerous Goods), 2003 provides that all operators must establish and maintain initial and recurrent dangerous goods training programmes.
6.3 What environmental requirements apply to operators in your jurisdiction?
The DGCA requires airlines to:
- produce an annual emission management report on their carbon footprint;
- undertake voluntary measures to reduce CO2 emissions; and
- ensure certification in accordance with International Organization for Standardisation (ISO) standards (eg, ISO-14001 and ISO 14064).
Airline operators must also annually submit aviation turbine fuel consumption data for aircraft engines and auxiliary power units for both domestic and international operations.
6.4 How are aviation services taxed in your jurisdiction? Do any special tax regimes apply to this sector? What indirect taxes are of relevance to operators?
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 and entry taxes).
GST is applicable to:
- lease rentals of aircraft (5% on reverse charge basis to be paid by the lessee);
- maintenance, repair and overhaul services; and
- on-air travel.
The import of aircraft for use by scheduled airlines is exempt from import duty.
ATF is exempted from the purview of GST although it is still subject to central excise tax and VAT.
6.5 What is the applicable employment regime in your jurisdiction and what specific implications does this have for operators in the aviation sector?
Various laws in India pertain to employment, social security, wages, industrial disputes and other relevant labour/employment-related matters, such as:
- the Payment of Wages Act, 1936;
- the Minimum Wages Act, 1948;
- the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976;
- the Industrial Disputes Act, 1947;
- the Trade Unions Act, 1926;
- the Industrial Employment (Standing Orders) Act, 1946;
- the Contract Labour (Regulation and Abolition) Act, 1970;
- the Factories Act, 1948;
- the Employees' Compensation Act, 1923;
- the Employees' Provident Funds and Miscellaneous Provisions Act, 1952;
- the Payment of Gratuity Act, 1972; and
- the Maternity Benefit Act, 1961.
While most of these statutes apply to government-owned entities, some of the rights accruing from such laws also apply to private sector employment – including in the aviation sector, as in all other sectors of the economy.
7 Ownership, financing and leasing
7.1 What body administers the aircraft register in your jurisdiction?
The Indian aircraft register is administered by the Directorate General of Civil Aviation (DGCA).
7.2 What are the formal and documentary requirements for registration?
The applicant must file notarised copies of the following documents with the DGCA along with the CA-28 aircraft registration form:
- the customs clearance certificate/bill of entry of the aircraft;
- a certificate of de-registration from the previous registering authority;
- evidence that the aircraft has been purchased or is wholly owned by the applicant;
- where the aircraft was purchased from a previous owner, an affidavit to that effect;
- where the aircraft is taken on a dry lease, a copy of the lease agreement;
- where the aircraft is owned by a company or corporation, a document of registration of the company and the names, addresses and nationalities of the directors;
- a copy of the import licence issued by the director general of foreign trade or permission for import of aircraft issued by the Ministry of Civil Aviation/DGCA; and
- in cases where the aircraft has been mortgaged/hypothecated, the owner/operator shall submit his or her consent for the same and the papers to this effect.
Registration of an aircraft, and thus issue of the certificate of registration in relation to the aircraft, may take anywhere from two to four weeks. There is no requirement for any government consent whatsoever. There is a fee for registration of an aircraft with the Indian aircraft registry which is based on the weight of the aircraft. Apart from this fee, no other taxes or duties are payable for registering a lease.
7.3 What is the process for registration?
Please see question 7.2.
7.4 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?
As an aircraft is a movable asset, there is no mandatory requirement to register any mortgages, liens, encumbrances or similar on the aircraft in India. However, an aircraft mortgage can be registered with the sub-registrar of assurances under the Indian Registration Act, 1908 within four months of its execution. Registration (of movables) with the sub-registrar of assurances constitutes persuasive value against a claim by a bona fide purchaser without notice. Registration with the registrar of companies is also possible; however, it is not compulsory if the mortgagor of the aircraft is not an Indian entity with its registered place of business in India.
The DGCA records various parameters in relation to an aircraft, such as details of the owner, lessor, operator and mortgagee. The effect of such notation on the aircraft register amounts to notice to all third parties regarding the details and existence of such an interest in that aircraft.
The DGCA will need to be informed of any change of ownership in an aircraft. The interests of the owner/lessor should be recorded in the Indian aircraft register. The DGCA will request, among other things, certain statutory/constitutional documents of the new owner, together with a copy of the executed bill of sale. Upon transfer of title, the DGCA will issue a new certificate of registration to the new owner.
The is no particular form for creation of a security interest in India; and the security need be registered in India. However, it is recommended that the document creating a security interest be filed and recorded with the DGCA. The DGCA will endorse on the certificate of registration the name of the mortgagee and/or details of the hypothecation. Additionally, for the purposes of perfecting an interest in an aviation asset or registering an interest with the International Registry, encumbrances must be recorded with the International Registry.
7.5 What operational requirements are of relevance for aircraft lessors and financiers in your jurisdiction?
Foreign aircraft lessors need not be licensed or have a place of permanent establishment in India to do business with a domestic lessee.
Lessors and financiers should ensure compliance with the Aircraft Leasing Manual (CAP 3200), relevant taxation law, contract laws, foreign exchange laws and stamp duty laws.
7.6 What rules govern the detention and seizure of aircraft
Under the Aircraft Act, the central government may, in the interests of public safety or tranquillity, direct that any aircraft or class of aircraft be delivered forthwith or within a specified time to such authority named by the central government, to be at the disposal of the government for public service. Any person that suffers direct injury or loss by reason of such order will be entitled to compensation, as determined by an authority appointed by the central government.
Further, any authority so authorised by the central government can detain any aircraft if, in the opinion of such authority:
- the flight of such aircraft would endanger persons in the aircraft or any other persons or property; or
- detention is necessary to ensure compliance with any provisions of the Aircraft Act or the aircraft rules applicable to the aircraft, or to prevent a contravention of any rules made under Sections 5(2)(h) and (i) of the act.
Detention during emergency: The government or its agencies can confiscate, detain or requisition aircraft (whether foreign owned or otherwise) during a general emergency. The central government can also seize:
- any aircraft belonging to the enemy;
- any aircraft or class of aircraft that is owned or operated by, or in the possession or custody of, any person domiciled or resident in an enemy territory; or
- any aircraft or class of aircraft whose operation is likely to aid or assist the enemy, or to be prejudicial to the defence of India or to public safety.
Such an order may also require any aircraft or class of aircraft to be placed at the disposal of any authority specified therein.
Where it appears necessary in the interest of the defence of India and civil defence to do so, any person so authorised by the central government can order that any particular aircraft at any place in India may not leave that place until permitted to do by such authority or person as may be prescribed in that order. This power was exercised by the government during the state of emergency declared in India in 1962 and 1971 under the Defence of India Acts, 1962 and 1971 and the rules made thereunder. The acts and the rules remained in force until six months after revocation of the emergency order.
Rule 36 of the Aircraft (Security) Rules, 2011 also permits the commissioner of security to detain an aircraft for security purposes if so required.
As per the Epidemic Diseases Act 1897, the central government is empowered to take measures to inspect and detain any conveyance, including an aircraft, leaving or arriving at any land port, port or aerodrome of India, as the case may be.
Aircraft may also be detained and in extreme circumstances sold under the customs and other tax laws of India.
8.1 How are airports owned and regulated in your jurisdiction?
Airports in India are owned and regulated by the Airports Authority of India (AAI), which was established under the Airports Authority of India Act, 1994.
The act provides a framework for airport privatisation and the functions of the AAI, which include the efficient management of airports, civil enclaves and aeronautical communication stations. The AAI is also responsible for providing air traffic service and air transport service at airports and civil enclaves.
8.2 What requirements must be satisfied to obtain airport authorisation in your jurisdiction? What is the procedure for obtaining authorisation?
The 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 the licensing of aerodromes
8.3 What key safety and maintenance requirements apply to airports in your jurisdiction?
The Bureau of Civil Aviation Security 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 also issued civil aviation requirements with regard to safety, security, maintenance and repair organisations.
8.4 What requirements can airports impose on operators that use their facilities?
In 2008 the Airports Economic Regulatory Authority (AERA) 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.
8.5 How are the following regulated in your jurisdiction: (a) Airport charges? (b) Slot allocation? (c) Air traffic control? and (d) Ground handling?
(a) Airport charges?
Airport charges are regulated by the AERA, which was established in 2008 under the Airports Economic Regulatory Authority of India Act, 2008.
(b) Slot allocation?
Slot allocation in India rests with the Ministry of Civil Aviation (MoCA) and its affiliate organisations, such as the AAI, the DGCA and with the respective airports. Slots are allocated as per the slot allocation guidelines, which were last revised in 2013.
(c) Air traffic control?
The AAI provides air traffic services over Indian airspace and adjoining oceanic areas in accordance with the International Civil Aviation Organization Standards and Recommended Practices
(d) Ground handling?
Ground handing is regulated by the AAI as per the Airports Authority of India (Ground Handling Services) Regulations, 2018.
9.1 What specific challenges or concerns does the aviation sector present from a competition perspective? Are there any pro-competition measures that are targeted specifically at operators?
Air transport undertakings in India are prohibited from establishing excessive or predatory tariffs or indulging in oligopolistic practices. The Competition Act, 2002 applies and:
- prohibits anti-competitive agreements (Section 3);
- prohibits abuse of dominance (Section 4); and
- regulates combinations including mergers (Sections 5 and 6).
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.
9.2 How are forms of industry cooperation such as pooling, code-sharing, alliances and joint ventures treated from a competition perspective?
Indian carriers are free to enter into domestic code-sharing 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.
9.3 Does the aviation sector in your jurisdiction benefit from state aid? What forms does this typically take and what rules apply in this regard?
There are no specific rules that prescribe financial support or aid to airlines or operators in India. However, the central government may, at its discretion, grant such aid or other financial support to the aviation sector.
9.4 Are there any applicable obligations or incentives to ensure service on routes that are socially desirable, but not commercially viable (eg, to remote areas)?
The National Civil Aviation Policy, 2016 introduced the Regional Connectivity Scheme (RCS), which aims to provide support and concessions to air operators, airports and other stakeholders.
Furthermore, under the UDAN scheme, selected airport operators are provided with viability gap funding and other concessions by both state and central governments, along with airport operators at airports designated for the RCS scheme.
10.1 In which forums are aviation disputes typically heard in your jurisdiction?
The subject matter, value, facts and circumstances of the dispute will determine the forum for adjudication, as there are no specific courts that are specifically competent to decide aviation disputes per se in India.
10.2 What issues do such disputes typically involve? How are they typically resolved?
Disputes vary between owners/lessors and operators/lessees, air carriers and passengers or air carriers and the government.
10.3 Have there been any recent cases of note?
- Awas 39423 Ireland Ltd v Directorate General of Civil Aviation WP (C) 871/2015, decided on 19 March 2015;
- B Bank One Limited v Directorate General of Civil Aviation CWP 3277/2018, decided on 2 May 2019;
- In Re: Alleged Cartelisation in the Airline Industry, Suo Motu Case 3/2015, decided on 22 February 2021 by the Competition Commission of India; and
- State Bank of India v Jet Airways (India) Ltd, IA 2081/2020 in CP (IB) 2205/MB/2019, decided on 22 June 2021 by the National Company Law Tribunal (Mumbai Bench).
11 Trends and predictions
11.1 How would you describe the current aviation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The Indian aviation industry, much like its global peers, has been hit hard by the COVID-19 pandemic. Unlike its counterparts in the United States and many other nations, the Indian government has not provided any bailouts to the sector. However, in order to protect cash-poor airlines from bankruptcy, the Ministry of Civil Aviation has, among other things, regulated fares and capacity on most domestic routes. While the capacity caps were removed starting 18th October 2021, the fare caps remain in place till date.
12 Tips and traps
12.1 What are your top tips for operators in your jurisdiction and what potential sticking points would you highlight?
India is often perceived as a challenging jurisdiction in which to operate, due to various regulatory and bureaucratic complexities. While this may have been true to some extent in the past, things have changed dramatically over the last decade.
In the last couple of years, the Directorate General of Civil Aviation has moved the vast majority of approvals pertaining to aircraft leasing, operation, airworthiness and licensing online via its e-GCA portal. This has greatly aided the expeditious processing of these approvals.
The Ministry of Civil Aviation has also actively engaged with industry stakeholders for the overall betterment of the sector. This has resulted in various reforms pertaining to foreign direct investment and maintenance, repair and overhaul organisations; and has led to the establishment of a domestic aircraft leasing ecosystem in the country.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.