AVIATION POLICY TO ATTRACT PRIVATE SECTOR

SYED OBAID UR REHMAN
May 26 - June 01, 2008

The forth coming National Aviation Policy (NAP), which is ready for the approval of the cabinet, will be opening new doors for private importers, manufacturers, and airlines operators besides promoting national tourism, sports and aviation sectors of Pakistan.

Special Tax exemptions/holidays and other attractions have been recommended by the Pakistan Civil Aviation Authority. Entire aviation sectors of the country including hot balloon sports organisers are anxiously waiting the final implementation of NAP. Experts in the aviation sector believe that while implementing the policy, the CAA would attract not only new airlines but also open new markets which, according to them, would bring enough booms in the aviation sector. "We expect huge changes in the economy," they predict.

Forthcoming policy is aligned with national trade corridor, which encompasses the government's vision to route international trade, tourism and passenger traffic through Pakistan. It also aims to provide the public direct connections from Pakistan while ensuring safe, affordable and quality services. Special incentives have been given to domestic & international air careers, ground handlers. However they say that the CAA has not compromised on safety and security of the passengers with international standards which is the main and primary object of the CAA Pakistan.

According to the detailed study of 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 all Pakistani operators, the CAA & maintenance companies should be extended to accommodate manufacturers, equipment required for manufacturing and raw material imported for manufacturing of aircraft.

The same concession , shall also be extended to the Civil Aviation Authority and private operators for the import of Communication, Navigation & Surveillance (CNS), Air Traffic Management (ATM) systems, life saving equipment like BRS (Ballistic Recovery System), emergency medical kits, ELT (Emergency Locator Transmitter) Fire Fighting vehicles & 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 aviation policy maintain that tax holiday shall be granted to aircraft manufacturers, maintenance companies, flying training schools and ground training schools for 10 years.

It was also approved by CAA Pakistan Board of directors to recommend that the government should exempt all taxes and duties on air ticket on secondary destinations. The same privileges shall be extended to operators of small aircraft and helicopters.

The new aviation 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 & 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, shall also facilitate to route the flow of international traffic from east to Europe and North America through Pakistan. To achieve the required results it was decided that Pakistan shall 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 east. Furthermore, there would be no mandatory commercial agreements as part of bilateral agreements. However, airlines shall be free to enter into such co-operative marketing arrangements as are mutually agreeable, which will be outside of air services agreements.

For the last many months, the CAA Pakistan is concentrating on bringing great 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 haven made on the cargo facilities in the forthcoming NAP in which single-window clearing mechanism was introduced which as per cargo agents shall boost the growing up cargo at all the airports. The top clearing agents, including official of Sialkot airport, say that problems, being faced by the clearing agents shall be curtailed. According to the new NAP, an efficient and quick transit, a single-window clearing mechanism comprising airlines, freight forwarders, customs house agents, customs, regulatory agencies and airline ground handling agents, insurance & banks facilities, etc shall be made available under one roof.

Furthermore, infrastructure of a cargo village shall include multi-modal transport, cargo terminals, cold storage centres, automatic storage and retrieval systems, mechanised transport of cargo, dedicated express cargo terminals with airside and city side openings, computerisation and automation. Interestingly and encouragingly it was reiterated that Pakistan shall continue to follow open skies policy for cargo operations based on 3rd, 4th & 5th freedom traffic rights.

Enough attraction was given to Karachi and Gwadar and it was decided that Karachi and Gwadar shall be promoted as transshipments hubs where as cargo villages it was decided shall be established on public-private partnership at major international airports and linked with NTC (national trade corridor).

Soon after the joining of Mr Farooq Rahmatullah as CAA DG, attention was given not only to the commercialisation of the airports, passengers' safety and security but stress has been placed on promoting/attracting the private sector for the development and promotion of aviation activities/sector. Studies were conducted and expert opinions were sought from renowned and leading private companies for the promotion of the aviation sectors in the country.

The CAA is now continuously 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 shall make the CAA more efficient, responsive and, above all, capable of ensuring international standards of safety," experts add.

Basing on the experts" opinions, precedents, and hectic homework recommendations were incorporated in the NAP for smooth and beneficial working relations in the best interest of the country and economy. According to the new aviation policy, airports shall be made safer & user friendly while ensuring world-class airport infrastructure in accordance with demand, ensuring maximum capacity utilisation and efficient management by involving the private sector.

The construction of new commercial airports as per the NAP will be permitted to meet the growth in air traffic. It is decided that the private sector shall be free to construct and operate new/existing airports/airstrips/helipads/ heliports including cargo complexes on BO (build and operate, BOT (build, operate and transfer) or any other management arrangement and to raise non- aeronautical revenues from these premises. Furthermore, it was also approved by the CAA Board that privatisation of airports shall be pursued to make them more efficient and productive.

It is worth mentioning here that, in the aviation world the role of the private sector cannot be ignored. A lot of aviation departments/authorities of the world have given special incentives to the private sector for increasing national revenue. In the past such thing was not visible in the Pakistan.

However, in the new aviation policy, the private sector was given special attentions and it was decided that fair and equal opportunities shall be afforded to public and private sector airports to market themselves within the framework of national aviation policy & bilateral air services agreements. The private sector shall be encouraged to develop additional revenue streams, i.e., passenger charges, cargo levies and commercial activities. However, the CAA shall have the responsibility of economic oversight of all airports.

The new aviation policy which, according to aviation experts, is subject to the approval of the cabinet shall make new high ways for boosting economy in the country and will be a role model for commercialisation in the aviation world. The policy has given tremendous attention to the commercialisation of the airports in the country as the CAA has planned to develop; airport cities which included hotels on public-private partnership at all the major airports. Besides vacant land at airports shall be evaluated and developed for construction of aviation related facilities (e.g., cargo complexes and aircraft maintenance facilities, etc. Land at remote and non-operational airports shall be utilised for non-aeronautical commercial and recreational purposes. The CAA intends to review and formulate land lease policy to make it commercially viable for the private investors at airports.

In short, the forth coming NAP shall definitely open new skies in the aviation sector and it is expected that great positive effects shall be seen in the economy of the country due to this policy.