Legal Regulation Aviation Sector

Legal Regulation Aviation Sector

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Challenges in Legal Regulation of Aviation Sector in India

All You Need To Know About areas of concern in the Legal Regulation of the Aviation Sector in India
1.

Aviation represents one of the most glorious achievements in the history of human civilisation. The growth of aviation has led to various developments. From hot-air balloons to modern aircraft, man has achieved a tremendous technological capacity to benefit from the use of airspace. Aviation has been thus labelled as a creative activity of modern civilisation.[1] Moreover, it plays a vital role in the economic progress and development of a nation. It not only plays the necessary link for international voyage and trade but also is the mode of connectivity to different nations of the world. The infrastructure of a country is incomplete without aviation. Aviation has an outcome for the development of trade and tourism, flourishes business activity and economic growth and has opened up inaccessible areas of the country. Aviation became the passage of time saver and fastest mode for transportation.

Globally, the aviation industry is the most developed sector, in which the Indian Aviation Industry is one of the fastest-growing airline industries in the world. The Airport Authority of India (AAI) manages 125 airports, which include 18 International Airport, 07 Customs Airports, 78 Domestic Airports and 26 Civil Enclaves at Defence airfields,[2] and there are over 450 airports and 1091 registered aircraft in India which makes it the 9th largest market in the world.[3]

2.

Indian Aviation Sector

The Indian aviation sector can be broadly divided into the following main categories: Scheduled air transport service includes domestic and international airlines. Non-scheduled air transport service consists of charter operators and air taxi operators. Air cargo service, which includes air transportation of cargo and mail.[4] At present, there are numbers of players compared to the one at the beginning of aviation in India. Players in the Indian aviation industry can be categorized into three groups: Public players, Private players, start-up players.[5]There are three public players: Air India (AI), Indian Airlines and Alliance Air (AA). The private players include Jet Airways, Indigo Airlines, Paramount, Go Air Airlines, Kingfisher Airlines, Spice Jet, Air Deccan and many more. The starts up players are those who are planning to enter the markets. Some of them are Omega Air, Magic Air, Premier Star Air and MDLR Airlines.[6] The changes and development in the Indian aviation sector are shown in three stages in chronological order as the following:

First stage: Early Market Developments (1910-1950)

· 1910: India’s first commercial aeroplane was started.

· 1932: The birth of Indian airline companies took place when Tata sons Ltd. started Tata Airlines.

· 1934: Enactment of Aircraft Act.

· 1946: Tata Airlines was renamed Air India.

· 1948: Joint-stock Co-Air International Ltd was set up by Govt. of India and Air India.

Second stage: State Control (1950-1990)

· 1953: Nationalization of Aviation Sector by the enactment of Corporation Act.

· 1986: Private air taxi operators were granted permission to operate.

· 1990: Enactment of Open Sky Act.

Third stage: Deregulation and Merger & Acquisition (1991-2014)

· 1994: Enactment of Airports Authority of India Act.

· 1995: Permission granted to Private Airline Operators.

· 2003: Entry of Low-Cost Carriers (LCC).

· 2007: Emergence of major mergers.

· 2008: Enactment of the Airports Economic Regulatory Authority of India Act (AERA Act).

· 2013: Introduction of the bill of New Civil Aviation Act, 2012 and Civil Aviation Rules.

· 2014: US Federal Aviation Administration (FAA) downgraded India to Category 2 under its International Aviation Safety Assessment (IASA) program.

The aviation sector is a complex and dynamic one. Therefore, there is a need for Air law that should be concerned with the national and global order. Moreover, Air Law is vitally concerned with the economic activities of modern societies. Aviation industries around the world are primarily regulated by rules and laws formulated by the procedure of international treaty and convention. The Annexes and Docs of the International Civil Aviation Organisation (ICAO)[7] is where most of these treaties and convention can be found. Though member states of the ICAO being sovereign nations are privilege to make their laws and rules, but being a member state it has to be notified by them in ICAO’s Aeronautical Information Publication and informs the organisation on the differences so made. India was one of the original signatories to it. In India, the Department of Civil Aviation has been administering Air Law beginning with the Aircraft Act 1934, and the Aircraft Rules 1937.[8]

India has adopted several international conventions on air law. And with the advent of time and the development of aviation in the country, India adopted domestic legislations one after one. The key legislations in India are the Aircraft Act, 1934 and the Aircraft Rules, 1937. There are other national legislations such as The Civil Aviation Requirements, the Aircraft (Carriage of Dangerous Goods) Rules, 2003, The Air Corporations Act, 1953, The Airports Authority of India Act, 1994 (“AAI Act”) and Rules, The Carriage by Air Act, 197, The Tokyo Convention Act, 1975, The Anti-Hijacking Act, 1982, The Suppression of Unlawful Acts against Safety of Civil Aviation Act, 1982, The Airports Economic Regulatory Authority of India Act, 2008 (“AERA Act”). The Aircraft Manual (India) Volume II provides the national legislation.

The regulatory bodies functioning in the Indian aviation sector are mainly the Directorate General of Civil Aviation (DGCA)[9]. The Airports Authority of India (AAI)[10], the Bureau of Civil Aviation Security (BCAS)[11], the Airports Economic Regulatory Authority (AERA)[12], and the other important industry associations such as the Federation of Indian Airlines, Air Cargo Agents Association of India, Indian Commercial Pilots’ Association, Aeronautical Society of India, etc.

This blog is based mainly on a discussion of the aviation sector in India and the issues that arise due to the development and liberalisation of this sector. This blog primarily focuses on the areas which are needed to be concerned in the legal regulation of the aviation sector. The law applicable will be discussed with the issues and also with some comments and suggestions by the researcher by placing them in its relevant chapters. This blog covers three main areas of concern based on the current scenario of the Indian aviation sector.

3.

Statement of Problems

Indian Aviation Industry is in a chaotic phase over the past several years. With the liberalization of the Indian aviation sector, there was a rapid transformation in the industry. Till the late 1980s, India‘s civil aviation sector was controlled by India‘s government-owned airlines. It was in 1986, the Indian government granted the private sector’s entry. India‘s Open Sky Policy of 1990[13] and the Air Corporations (Transfer of Undertakings and Repeal) Act of 1994[14]removed the government carrier monopoly. From government-owned industry, it is now dominated by privately owned full-service airlines and low-cost carrier (LCC). At present, private airlines account for around 75% portion of the domestic aviation market.[15]While the policy changes led to a dramatic increase in the number of private airline carriers however due to viability issues, many private air carriers exited the market in the last of the 20th century. The competitive spirit was lost. The suspension of operations of Kingfisher Airlines has had a flow-on impact on the global leasing and financing sector, highlighting some of the challenges facing aircraft financiers and lesser in the Indian market and raising concerns regarding regulatory safeguards for international investment in India.[16]

Due to inflation and the declining value of the rupee the growth rate of India’s Gross Domestic Product (GDP) has eased. Airline costs have been rising due to the reduced currency valuation, very high charges for aviation fuel and high sales taxes are imposed by state governments. A recent report asserts that the overall cost of airline operations increased by 20 per cent in just three months in 2013 because of jet fuel prices and rupee devaluation. The Indian domestic air travel market is sensitive to pricing.[17]Today, most of the civil air carriers in India are in financial distress. According to one report, India’s leading airlines posted a combined loss of $1.65 billion between 2012 and 2013.[18]India’s aviation sector is affected due to high taxation charges, and above all, it has poor regulation and the infrastructure is also not upgraded and has bad airports.[19] The US Federal Aviation Administration (FAA) has downgraded India’s Aviation Safety Ranking to II for failing to meet ICAO standards, it says Indian carriers cannot increase flights to the US and will be subject to greater scrutiny. However, recently it has been promised to be upgraded by the US president.[20]

Indian aviation has come of age. But the Indian aviation industry is not mature further in the field of commercialisation and customer relations. The major concern of Indian aviation is the need to overhaul and review the entire aviation law. The old Aircraft act of 1934 does not meet the modern techniques and rules of aviation policies. Most of the advanced countries have enacted new aviation laws against the realities of the seventies and eighties. But our Indian Air law still is based on timeworn strategies which must be reviewed in terms of the objectives of air safety, competition, consumer protection, modernization, and liberalisation. Besides reviewing the law, an attempt must be made to clarify principles of accountability of the various factors involved, also transparency of decision and actions. India also has been on record of being slow on ratifying treaties. So, it’s the duty of the Director-General of Civil Aviation (DGCA) to keep track of international aviation treaties and initiate actions in appropriate cases in this regard. It is time for the Government of India to evolve a comprehensive aviation policy, enact new Air Law, modify it from time to time, and make it known to the public.

As regards the Air Law in India, the executive power to make rules coupled with the DGCA’s power to issue directions has undoubtedly preserved a degree of flexibility in the law quickly to respond to the needs of changes or modifications. Earlier the major emphasis was limited only to the related issues as reflected in the preamble, which states “An Act to make better provision for the control of the manufacture, possession, use, operation, sale, import and export of aircraft”.[21] Currently, emphasis is on safe and secure, viable, efficient and sustainable air transportation of passengers and goods. And the major concern today is that of regulating safety, security, efficiency, viability and sustainability in all aspects of Civil Aviation. India is still lacking in the perspective of growth trends, technological developments safety and reliability of operations and customer service at the global level and is fast losing ground to other competitors in the field.

To discuss the above-mentioned statement of problems the following issues have been formulated and addressed:

4.

a. What is the liberalization scenario and regulatory framework followed in India concerning the aviation sector?

Liberalisation is a phenomenon that has gained currency in the Indian economy since 1990.[22]Liberalization of the domestic civil aviation industry in India gained speed with the repeal of the Air Corporations Act 1953 on 29th January 1994 which enabled the regulatory authorities to grant scheduled airline status to many private airlines.[23]Due to which the private airline started operations as Air Taxi Operators. The industry has turned from government-owned to private player’s dominant industry. Thus, the aviation sector has shown remarkable growth post-privatization and after the entry of the LCCs in 2003. However, despite the trend towards liberalisation, there remain considerable government restrictions. Many, Air Service Agreements (ASA) still follow the constrictive model established over 50 years ago and most governments still apply restrictions on the ownership and control of airlines.[24]The domestic civil aviation activities in India can be broadly classified into three categories;

i. regulatory-cum-developmental,

ii. infrastructural and

iii. Air transport services.

The ministry of civil aviation (MOCA), the directorate general of civil aviation (DGCA) and the bureau of civil aviation security (BCAS) look after the regulatory and developmental aspects of civil aviation in India while the Airports Authority of India (AAI) provides infrastructural facilities.[25]

Many changes have taken place after liberalisation but its pace has been very slow in the Indian civil aviation industry. India has signed numerous bilateral agreements regarding air transport with countries all around the world. But such agreements are not utilised to their full capacity. Currently, India has Open Skies agreements with the US and UK and multilateral agreement with Europe.[26] To date, none of the Indian airlines is a member of the three largest alliances in the world i.e. Star Alliance, Sky Team and One World. Since 2007 Air India has been waiting to become a member of the Star Alliance but the membership has not materialized as yet.[27] The major impact of liberalisation is on the domestic aviation sector. The domestic air passenger traffic has a growth of about 16.3% in October 2014.[28] The domestic airlines flew 55.06 million passengers during the Jan-October 2014 as against 50.7 million in the year-ago period.[29] Besides, those various other impacts are resulting from market access, ownership and control liberalisation. The incremental traffic was stimulated by liberalisation. There was a huge impact on passengers as well due to fare reduction and consumer surplus benefits.[30]There is also additional tourists’ attraction and the employment generated. The Gross Domestic Product (GDP) of the country was also affected by additional GDP generated.[31]

With changes also come many challenges. One of the major challenges of the Indian aviation industry is the high and growing debt burden of the carriers. India’s leading airline, the government-owned carrier, Air India, has a total debt of $6.4 billion. The financial results, taken as a whole, are discouraging. Several of the budget carriers like Kingfisher, Paramount and MDLR have already ceased operation.[32] It’s mainly because of the high price and taxes payable for aviation turbine fuel (ATF) by the scheduled domestic carriers. The current crisis of the Indian aviation sector may trigger further liberalisation. The only chance to recover is to open the civil aviation sector to foreign airline investment. The Government of India has permitted foreign direct investment (FDI) of up to 49% in the Indian aviation sector. However, this has also created a barrier in domestic carrier’s competition.

In the near future, India may face issues like the grant of antitrust immunities (ATI) due to further liberalisation. At present, the Government of India has the right to grant antitrust immunity. However, the government of Indian does not have any policy on this. And as per the regulatory regime is considered; right now India does not have a proper regulatory framework to deal with antitrust immunities.[33]

5.

b. What are the areas of legal regulation which need attention in the aviation sector in India?

There are various anti-competitive practices that have been going on and are continuing in the aviation sector at various levels. Generally, there can be two factors that limit competition i.e., horizontal and vertical. Horizontal factor affects the airlines. Vertical issues affect airline firm and companies at a different point in the same value chain. Thus the ability of airlines to offer similar services may be precluded if there is vertical foreclosure. Access to slots is an example of such vertical foreclosure by creating a barrier to entry.[34]There are many issues of competition in the aviation sector. The Indian aviation sector has its issues of competition of which some need to be addressed by the ministry whereas some must be evaluated by the competition authorities. The Indian aviation sector at present is afflicted with the following issues:

Ø Fleet and Equity Requirements:

India’s Civil Aviation Requirement (CAR) Section 3 Part II and Part III prescribe the minimum requirements for grants of Permit to operate Schedule Passenger Air Transport Services and Non-Schedule Air Transport Services. The requirements mandate that a scheduled service operator that applies to provide services using aircraft with a take-off mass of 40,000 kg or more must purchase or lease a minimum of five aircraft with a start-up equity requirement of Rs50 crore. For each addition of up to five aircraft, an additional equity investment of Rs 20 crore will be required. Airlines operating with aircraft with take-off mass not exceeding 40,000 kg must purchase or lease up to 5 aircraft with paid-up equity of Rs 20 crore. For each addition of up to five aircraft, an additional equity investment of Rs 10 crore will be required.[35]For Non-Schedule Passenger Air Transport Service, requires possession of just one aircraft – there exist equity requirements based on the number of aircraft owned or leased by the operator.[36]

These provisions of minimum Equity and Fleet requirement unnecessarily raise barriers to entry as even without these requirements the cost of entry into the civil aviation sector is already too high. This not only limits the number of players in the market but also affect the size of the firm that enter as they should possess enough capital to match up the requirement.[37]Such fleet and equity requirements also reduce consumer choice of international flights due to the limited number of players. Whereas, the foreign carriers are not required to follow such norms to operate in India which certainly puts Indian carriers at disadvantage as the requirement is too high for the domestic player for international operation.

Ø Route Dispersal Guidelines

The Government of India Order No. AV 11012/2/94-A regulates how a carrier service provider allocates his fleet on different routes. According to this regulation, Indian carriers are required to provide their services in all identified routes i.e. category I which includes large Indian city hubs and category II and III which mostly covers relatively small and unpopular service routes.[38] The regulation may serve the social need but economically it results in losses for airline companies as mostly they are not able to recover the cost of operation in these routes. This adversely affects the entry of potential carriers, and their ability to compete and respond to prevailing demand for air transport.[39]

Ø Slot Allocation

The DGCA and AAI allot slots in India follows the International Air Transport Association (IATA) Slot allocation guidelines according to which an incumbent airline can retain a group of slots based on historic precedence.[40]According to the IATA principles of slot allotment an airline is entitled to retain a group of slots based on historic precedence, That is, if the slots in question have been allocated by the slot coordinator to a passenger air carrier and have been utilized at least 80 per cent of the time in the preceding season.[41]Moreover, the slots may not be withdrawn from a carrier to accommodate new entrants.[42]50% of the slots contained in the pool at initial slot allocation must be allocated to new entrants unless requests by new entrants are less than 50%. Thus, from the pool of available slots, new entrants have access to only 50 per cent of the slots.[43] This type of allocation of slots is termed as ‘grandfather rule’ of allocation of slots. Application of the grandfather ‘rule limits the ability of new carriers to compete for slots at different Indian airports.[44]These rules create barriers to entry for new entrants. And thus, limits the number and range of air carrier service providers. In India, IATA slot allocation guidelines are managed by separate agencies like the DGCA, AAI, and BCAS. These agencies coordinate with individual airports. And therefore, there is regulatory overlap. As a result, it is difficult to sanitize a clear and uniform slot allocation policy. This overlapping regulatory and lack of a clear policy hampers the ability of incumbent and new entrant to compete due to a lack of a predictable path of outcomes.[45]

Ø Anti-competitive Behaviour and Pricing

The pricing system of Indian aviation is not neat in comparison to other countries aviation market. Both high prices and the low prices charged by the airline companies signifies a different kind of anti-competitive behaviour of airline companies i.e. cartelization in case of high prices and predatory pricing in case of low prices.[46] Both of these methods create barriers to entry for new players in the industry. Within the past year, pricing in the airline industry has ranged from excessively high prices to low prices potentially affecting the financial viability of the carriers as well as impacting consumer spending on air travel services. Another problem is that the abnormally low prices are affecting the financial viability of the airlines. While a cartel would create barriers to a new entrant into the market, predatory pricing itself makes it unprofitable for new entrants and thus limits competition. Both the way competition will be harmed, and the long-term viability of the industry will be at stake to the detriment of consumers.[47]Hence, the regulator needs to reduce barriers to entry by promoting a larger number of market participants. Lesser entry barriers and a greater number of participants will increase the competition and decrease cartel behaviour.

The priority for aviation administrations and airlines is the safety and security of passengers, the general public, ground personnel, and property.[48] In recent year cases can be seen where the improvements in technology, which restored safety to modern aircraft, have also contributed to a great risk of loss to passengers. Primarily, governments cannot dissociate from the responsibility to ensure an optimal level of safety, security and efficiency in civil aviation. Safety and security assurances are necessary for the smooth running of the aviation sector especially if international tourism and the airline industry are to thrive. The maintenance of air safety and security issues are global which can be solved by a strong organisation and initiatives. In this regard, this chapter deals with the issues that involve the maintenance of air safety and security.

Ø Aviation Safety

Air safety generally means the minimization of dangers, risks and hazards during aircraft operations, bearing chiefly on safety standards established by aviation technology and the competence of personnel involved in aircraft operation.[49]Air safety is the basis of public confidence in the air transport industry. And for the continued growth and prosperity of the aviation industry and the world economy, public confidence is a necessary condition.[50]Therefore, there should be inordinate air safety.

The Directorate General of Civil Aviation DGCA under the Ministry of Civil Aviation has the responsibility for aviation safety in India. The DGCA is the regulatory authority for aviation safety regulations and comprises the Directorates of Airworthiness, Flight Inspection, Aerodrome Standards, Flight Crew Training and Licensing, Air Transport, Regulation & Information, Air Safety and Research & Development.[51] The DGCA is not able to cope up with the newer demand and challenges with the existing manpower, authority and resources at its command. The DGCA as the aviation safety regulator faced obstacles due to the changed circumstances.

Safety in air operation is based on accident investigation and prevention through stringent programs. Various factors contribute to an accident or collusion posing threat to the safety of aircraft such as the aircraft equipment failure, malfunction, confusion/disorientation of instruction between the pilot and the ATC, breach of procedures/rules, shortage of skilled air traffic controller and air route unequipped with navigation aids or lack of air traffic control service. In such cases, an investigation is necessary to find the cause so that remedial action may be taken to prevent future disasters.

In India, the director of air safety is one of the agencies functioning under the DGCA who also has a regulatory function over safety requirement.[52] The air safety directorate presently depends heavily on the operator and is handicapped in its investigations for lack of pilot experience. To strengthen the safety regulations some point should be noted such as; the investigating agency should be an autonomous body independent of the Ministry of Civil Aviation; the investigating agency for any accident should have as much technical know-how and experience as the operator or the other agencies possesses; should have adequate resources to analyze data independently.[53] And most importantly, the Directorate of Air Safety should undertake regular surveys to identify problem areas where the safety standard is not maintained, and alert the agencies to their failure and take necessary measures.

The airworthiness of aircraft is an important factor in safety maintenance; therefore first there should be strict certifications of airworthiness. The Aircraft Rules 1937 provides the various provisions of airworthiness in part 6, Rules 49-62. However, Indian aviation is not able to meet the ICAO safety standards and there is a serious concern for strengthening the safety regulation of Indian aviation.

Ø Aviation Security

In term of aviation, law security means a combination of measures, human and material resources intended to be used to safeguard civil aviation against acts of unlawful interference.[54] Thus, it involves the protection of persons and cargo in the carriage by air facilities and related auxiliary support activities.[55]The Civil aviation environment has been greatly affected by social unrest since the 1960s due to causes like hijacking, shooting down, armed attacks on airports, passengers and aviation property and bombings. Such crimes involve motives ranging from political ideology to extortion and murders.[56]Such acts are committed by individuals, terrorist organizations, groups, or members of a community.

The security issues and problems of Indian aviation emanate from several factors. First, the civil aviation sector by the very nature of its activities is vulnerable to terrorist actions. Moreover, security needs to be provided as a part of the facilitation process for passengers and cargo. Secondly, security functions in some airports in India are still divided among different authorities like the State/Union Territory (UT) police, Central Industrial Security Force (CISF), AAI and the airlines.[57]Due to this, there is a lack of a single agency that is directly accountable for overall security. The third factor is that the aviation security procedures have to conform to certain agreed international norms which create a challenge to the Indian sector due to its poor regulatory structure. Finally, there is a lack of clarity regarding the prioritisation of different security needs and establishing accountability for meeting those needs.[58]Taking into consideration that aviation and airport security, being sovereign responsibilities. The security responsibilities should be taken over and funded by the government.

The civil aviation security regulation of India is based on Annexure 17 of the Chicago convention 1944.[59] The annexe provides that the contracting states shall ensure the security of international passenger’s through well-trained officers, supporting facilities, safeguard of airport and ground facilitates at all international airports and effective implementation of national civil aviation training programs.[60] The civil aviation exercise was introduced in India after the passage of the Tokyo convention act 1975.[61] Following that, the Anti-hijacking Act, 1982[62] and the Suppression of the Unlawful Acts against Safety of the Civil Aviation Act, 1982[63]were passed.

The subject “Civil aviation” comes in the union list under the Constitution of India. Thus, it is the responsibility of the Union Government for any criminal activity, unlawful interference against civil aviation occurring anywhere in India. In comparison with countries like the UK and the US, the Indian security law is not able to properly implement and tackle the threat of security. In light of this, there is no specific law that deals with airport security. The Aircraft Act, 1934 and the Aircraft Security Rules, 1937 does not specifically contain a provision regarding airport security.[64]

6.

c. Are the Current Air law in India on par with the modern development and requirements?

India has adhered to the Warsaw Convention 1929[65], The Hague Protocol, 1955[66] and the Montreal Convention 1999[67] under Schedule I, II and III of the Carriage by Air Act 1972.[68]For a long time, India confined itself to ratify only to the Warsaw Convention and the Hague Protocol, based on which the liability regime in the country was given affected by the central legislation, the Carriage by Air Act. It was then in 2009 India ratified the Montreal Convention 1999 and thereafter vast improvement was made on the liability regime.[69]

Ø The Carriage by Air Act [70]

The Carriage by Air Act 1972 does not give appropriate effect to India’s ratification of the Montreal Convention. The Act does not refer to the hierarchy created by Article 55 of the Convention over the Warsaw Convention and its amending protocols.[71] The Warsaw Convention and the Hague Convention Protocol as implemented by the I and II Schedule shall only applicable between and the signatory states of the Warsaw Convention or the Hague Protocol. The Act indicates that greater importance has been accorded towards the implementation of the Warsaw Convention than the Montreal Convention.[72] The Act must determine the effects of India’s ratification of the Montreal Convention on the domestic carriage.

Section 8 of the Act requires the Central Government to notify[73] the adoption of the regime under the Montreal convention for non-international carriage. The words mentioned in Section 8 cannot be considered as the notification itself. So there should be a separate notification in pursuance of the provisions of Section 8 of the Act. In absence of such separate notification, the Montreal Convention cannot be made applicable to the domestic carriage. For which the liability regime of the Warsaw Convention shall continue to apply.

Ø Liability

Another major concern is relating to the liability of the carriers towards the victim. The recent tragic crash of the Air India Express at Mangalore throws light on the issue of liability along with the issue of compensation and the jurisdiction in claiming damages.[74]The Montreal Convention introduce a two-tier liability; the first tier of strict liability for damages of up to 100,000 SDR[75] and the second tier of liability based on the presumed fault of the carrier in which case there is unlimited liability.[76]The first-tier liability amount does not reflect the minimum liability of the carrier. The Convention has left the determination of the level of damage to the municipal law.

Moreover, the compensation in respect of the second tier of liability is assessed under the Convention. Globally the amount of compensation is worked out in each case separately on a “proof of loss basis” and determined and dependent upon the parameters of loss suffered by each passenger or claimant namely, the age of the deceased, educational status, employment with salary, earning capacity, dependants, general economic status etc.[77] In the event, the claimants challenge compensation of more than 100,000 SDR, the burden of proof will lie on the airline to prove that the incident was not on account of its negligence[78] and may thereby avoid liability by proving that the accident which caused the injury or death was solely due to the negligence of a third party.[79]

However, in light of the Mangalore air crash debate on the amount of compensation has raised under the Montreal Convention. Since the carrier Air India Express was operating an international carriage from Dubai to Mangalore, the provisions of the Montreal Convention were applied and Air India Express had to pay the compensation based on the two-tier system. This was argued that the compensation was low. This raises a new outlook to the Montreal Convention to relook on the level of compensation as well as to punish those responsible for such incident. And demand for inclusion of provision of liability for negligence is made.[80]

Ø Jurisdiction

In addition to the four jurisdictions provided under the Warsaw Convention and Hague Protocol, the Montreal Convention introduces a new “fifth” jurisdiction, namely the principal and permanent residence of the passenger provided the carrier operates in such jurisdiction and such territory is a signatory to the Convention.[81]The four jurisdictions are the territory where the carrier maintains its principal residence, the carrier has its primary location of the business, the contract is made, or the flight intended to have its final destination.[82] For the application of the fifth jurisdiction, the damage must consist of death or bodily injury of a passenger. This fifth jurisdiction leads to discrimination among passengers. Based on the home jurisdiction the amount of compensation will not be equal for all passengers. A country like the US with a generous legal system will receive more compensation while passengers on the same flight from developing countries will receive lower compensation.[83] Therefore this creates inequality and the Convention shall look into this issue as well as the Central Government shall also keep in mind the level of compensation when such issue arises.

7.

Conclusion

In light of the Open skies policy, it can be recommended that India should pursue a path comprising of two phases for the liberalisation of its international air transport segment. In the first phase, the domestic private carriers should be allowed to operate international air transport services to and from India. In the next phase, India should have a complete liberalisation of the international air transport segment through bilateral agreements and joining other countries with similar agenda of liberalisation.

The executive power of the DGCA to make rules and power to issue directions has undoubtedly preserved a degree of flexibility in the law quickly to respond to the needs of changes or modifications. The DGCA despite having strong executive power is not able to meet the problems of the aviation sector. The Director-General of Civil Aviation (DGCA) exercises sweeping control without considering the airlines’ interests. A recent example is that of the DGCA summoning the recently launched Air Asia India’s management over the issue of unbundling of fares, a practice that is common across the globe.[84]India has a bad record of being slow in ratifying treaties. The DGCA should keep track of international aviation treaties and initiate actions in appropriate cases.

One of the major concerns of the Indian aviation sector is the need to overhaul and review its entire aviation law. The Indian aviation sector is generally believed to be over-regulated. There is the Aircraft Act (1934) along with Indian Aircraft Rules (1937). These ancient acts do not take into account the leaps that the industry has taken.[85]There is a need for a new law that takes into consideration of issues and other aspects of modern aviation. And the existing laws should be reviewed in terms of the objectives of air safety, security regulations, passenger comfort, modernisation and liberalisation. The Government of India should evolve a comprehensive aviation policy, modify it from time to time and make it known to the public.

The Aircraft act 1934. Aircraft Rules 1937 and other Regulations are required to be amended because many of the provisions are outdated and are not synchronized with the changing aviation environment. The Aircraft Act 1934 should be amended keeping in point of provisions like the responsibility of licensing Air traffic Controller should be vested with the DGCA. The financial penalty laid down in the Act is very low and is inadequate in the present context, therefore, Section 10, 11, and 11B on this aspect need to be reviewed and suitably amended. Likewise, the Aircraft Rules 1937 need to be review and new rules about provision like licensing of Air Traffic Controller, certification, surveillance of aerodromes and Satellite-Based Augmentation System (SBAS), etc. need to be introduced. India is still lagging in the legal framework in comparison with other countries. There is a need for a separate regulatory body like CAA to keep pace with the changing Aviation strategies.

8.

BIBLIOGRAPHY

Legislations:

· The Aircraft Act, 1934.

· The Aircraft (Security) Rules, 2011

· The Airports Authority of India Act, 1994.

· The Air Corporations Act, 1953.

· The Airports Economic Regulatory Authority of India Act, 2008.

· Civil Aviation Requirement (CAR)

· Chicago Convention, 1944.

· Tokyo Convention, 1975.

· The Anti-hijacking Act, 1982.

· The Suppression of the Unlawful Acts against Safety of the Civil Aviation Act, 1982.

· Warsaw Convention, 1929.

· The Hague Protocol, 1955.

· Montreal Convention, 1999.

· The Carriage by Air Act, 1972.

Articles:

· G.S. Sachdeva, History of Aviation, in Air Law and Policy in India, 35-50 (S.Bhatt, V.S. Mani, V.Balakista Reddy, eds., New Delhi: Lancer Books, 1997).

· Robert S Metzger, Challenges Facing Civil Aviation in India, Indian Defence Review, Vol. 28.4, 2013.

· V.S. Mani and V. Balakista Reddy, The History and Development of Air Law in India: A survey, in Air Law and Policy in India, 30-31 (S.Bhatt, V.S. Mani, V.Balakista Reddy, eds., New Delhi: Lancer Books, 1997).

· V.S. Mani, Aviation Security International Terrorism and the Indian response, in Air Law and Policy in India, 365-385 (S.Bhatt, V.S. Mani, V.Balakista Reddy, eds., New Delhi: Lancer Books, 1997).

· Sridevi Krishna, Dr T.R Maruthi, India and the Montreal Convention-A New Perspective, available at http://jsslawcollege.in/wp-content/uploads/2013/05/India-and-the-Montreal-Convention.pdf (Last visited on 27 January 2015).

· Satadru Goswami, The Warsaw System and the Montreal Convention: Questions over the implementation of the Liability Regime, Short notes in Asian Journal of Air& Space Law, Vol.2 No.1, 101-102 (2012).

· Sanjay Kumar, Airline Liability in India for death or injury to Passengers: An Insight from the Perspective of Mangalore Air Crash, Short notes in Asian Journal of Air & Space Law, Vol.1 No.2, 203-210 (2011).

· Manisha Singhal, Aviation industry needs regulatory re-think: Experts, June 4, 2014, available at http://businesstoday.intoday.in/story/aviation-industry-needs-regulatory-re-think-experts/1/206923.html (Last visited on 27 January 2015).

Dissertations/Thesis/Projects:

· Nithya Narayanan, Aircraft Repossession in India- Turbulence Ahead, Buckle Up, XXXVIII, Annals of Air and Space Law, ( unpublished thesis, McGill University), 2013.

· Vinita Sharma, Competitive Assessment Of Cooperation in the Civil Aviation Industry, Competition Commission of India, New Delhi, May 2013, 31, available at http://cci.gov.in/images/media/ResearchReports/Competitive%20Assessment%20of%20Cooperation%20in%20the%20Civil%20Aviation%20Industry.pdf (last visited on January 27, 2015).

· Akber Ahmed, Internship Project Report on Competition issues in the Transport Sector: Air Transport, Competition Commission of India, 31st May 2013, 43-46, available at http://cci.gov.in/images/media/ResearchReports/Competition%20Issues%20in%20Transport%20Sector_Air%20Transport.pdf (Last visited on 27 January 2015).

· Aadil Hassan, Safety and Security Regulation in India:-Emerging Legal Issues, available at http://plesetsk-info.ru/10-klass/safety-and-security-regulation-in-indiaemerging-legal-issues/ (Last visited on 27 January 2015).

· Gautam Acharya, Legal Aspects of Aviation Security Measures Taken at Airport, (2005), 61-65, available at http://digitool.Library.McGill.CA:80/R/-?func=dbin-jump-full&object_id=98600&silo_library=GEN01 (last visited on January 27, 2015).

Working blogs:

· Study Galaxy, Reports on Industry Analysis of Aviation Industry, available at http://www.studygalaxy.com/reports/aviation-industry-189 (last visited on January 15, 2015).

· The Impact of International Air Service Liberalisation on India, Report by InterVISTAS-EU Consulting Inc., July 2009, available at https://www.iata.org/policy/liberalization/agenda-freedom/Documents/india-report.pdf (last visited on January 27, 2015).

· Competition Issues in the Air Transport Sector in India, ASCI Research and Consultancy, 30, available at http://www.cci.gov.in/images/media/completed/transport_20090421133744.pdf (last visited on January 27, 2015).

· Research Study of the Civil Aviation Sector in India, the Ministry of Corporate Affairs, Govt. of India, January 24, 2012. Available at: http://circ.in/pdf/Civil_Aviation_Sector.pdf (Last visited on January 20, 2015).

· Committee on Civil Aviation Policy, Report of the Committee on a Road map for the Civil Aviation Sector, Part II, Ministry of Civil Aviation Government of India, October 2004, available at http://civilaviation.gov.in/cs/groups/public/documents/newsandupdates/moca_000741.pdf (Last visited on 27 January 2015).

· Airline and airport Management, available at http://kimsexam2012.blogspot.in/2012/01/open-sky-policy-current-scenario.html (last visited on January 25, 2015).

Newsblog Articles/Magazine Articles:

· Indian Mirror, Indian Aviation Industry, available at http://www.indianmirror.com/indian-industries/aviation.html (last visited on January 20, 2015).

· Business Maps of India, Overview of Airlines Industry in India, available at http://business.mapsofindia.com/aviation/ (last visited on January 25, 2015).

· G R Gopinath, India’s aviation sector is choking on high taxes, poor regulation & bad airports, The Economic Times Commentary, July 8, 2014, available at http://articles.economictimes.indiatimes.com/2014-07-08/news/51191434_1_aviation-sector-civil-aviation-new-airports (last visited on January 25, 2015).

· Manoj Pant, Competition, cartels & civil aviation, The Economic Times (ET Bureau) Dec 10, 2010, available at http://articles.economictimes.indiatimes.com/2010-12-10/news/27621401_1_aviation-sector-civil-aviation-airline-industry (last visited on January 27, 2015).

Websites:

· www.aai.aero

· www.icao.int

· http://dgca.nic.in/welcome.html

· http://www.bcasindia.nic.in/welcome.html

· http://aera.gov.in/

· www.iata.org

· http://cci.gov.in

· http://circ.in

· http://civilaviation.gov.in/

9.

References

[1]G.S. Sachdeva, History of Aviation, in Air Law and Policy in India, 35-50 (S.Bhatt, V.S. Mani, V.Balakista Reddy, eds., New Delhi: Lancer Books, 1997).
[2]Airports Authority of India Reports, available at http://www.aai.aero/public_notices/aaisite_test/orign.jsp (Last visited on January 15, 2015).
[3]Study Galaxy, Reports on Industry Analysis of Aviation Industry, available at http://www.studygalaxy.com/reports/aviation-industry-189 (Last visited on January 15, 2015).
[4]Id.
[5]Indian Mirror, Indian Aviation Industry, available at http://www.indianmirror.com/indian-industries/aviation.html (Last visited on January 20, 2015).
[6]Id.
[7]The International Civil Aviation Organization (ICAO)was created in 1944. It is a UN specialized agency, created upon the signing of the Convention on International Civil Aviation (Chicago Convention). ICAO works with the Convention’s 191 Member States and global aviation organizations to develop international Standards and Recommended Practices (SARPs) which States reference when developing their legally-enforceable national civil aviation regulations. There are currently over 10,000 SARPs reflected in the 19 Annexes to the Chicago Convention which ICAO oversees, and it is through these provisions – as well as ICAO’s complementary policy, auditing and capacity-building efforts – that today’s global air transport network is able to operate close to 100,000 daily flights, safely, efficiently and securely in every region of the world. Available at http://www.icao.int/about-icao/Pages/default.aspx (Last visited on January 20, 2015).
[8]See, Aircrafts Manual India, vols. II and III, revised edition corrected up to 30 September, 2003 issued by the Department of Civil Aviation which contains all current air law and regulations applicable in India.
[9]The Directorate General of Civil Aviation (DGCA) established under the Ministry of Civil Aviation is the main regulatory body governing the safety aspects of civil aviation in India.The DGCA is responsible for implementing, controlling, and supervising airworthiness standards, safety operations, crew training in India. Available at http://dgca.nic.in/welcome.html (Last visited on January 20, 2015).
[10]The Airports Authority of India (“AAI”) was constituted by an Act of Parliament and came into being on 1st April 1995 by merging erstwhile National Airports Authority and International Airports Authority of India. The merger brought into existence a single Organization entrusted with the responsibility of creating, upgrading, maintaining and managing civil aviation infrastructure both on the ground and air space in the country.

Available at http://www.aai.aero/public_notices/aaisite_test/orign.jsp (Last visited on January 15, 2015).
[11]The Bureau of Civil Aviation Security (BCAS) is the regulatory authority for civil aviation security in India. It was initially set up as a cell of the DGCA in 1978. Available at http://www.bcasindia.nic.in/welcome.html (Last visited on January 20, 2015).
[12] The Airports Economic Regulatory Authority (AERA) is a statutory body constituted under the Airports Economic Regulatory Authority of India Act, 2008. It regulates tariffs and other aeronautical charges, as well as monitors airport’s performance standards. Available at http://aera.gov.in/ (Last visited on January 20, 2015).
[13]Airline and airport Management, available athttp://kimsexam2012.blogspot.in/2012/01/open-sky-policy-current-scenario.html (Last visited on January 25, 2015).
[14] An Act to provide for the transfer and vesting of the undertakings of Indian Airlines and Air India respectively to and in the companies formed and registered as Indian Airlines Limited and Air India Limited and for matters connected therewith or incidental thereto and also to repeal the Air Corporations Act, 1953. Available at http://dgca.nic.in/nat_conv/NatConv_Chap3.pdf(Last visited on January 25, 2015).
[15] Business Maps of India, Overview of Airlines Industry in India, available at http://business.mapsofindia.com/aviation/ (Last visited on January 25, 2015).
[16] Nithya Narayanan, Aircraft Repossession in India- Turbulence Ahead, Buckle Up, XXXVIII, Annals of Air and Space Law, ( unpublished thesis, McGill University), 2013.
[17] Robert S Metzger, Challenges Facing Civil Aviation in India, Indian Defence Review, Vol. 28.4, 2013.
[18]Id.
[19] G R Gopinath, India’s aviation sector is choking on high taxes, poor regulation & bad airports, The Economic Times Commentary, July 8, 2014, available at http://articles.economictimes.indiatimes.com/2014-07-08/news/51191434_1_aviation-sector-civil-aviation-new-airports (Last visited on January 25, 2015).
[20]Mihir Mishra,Obama in India: Federal Aviation Authority gives nod for upgrading Indian Aviation to category I, The Economic Times (ET Bureau) January 22, 2015, available at http://articles.economictimes.indiatimes.com/2015-01-22/news/58344213_1_indian-aviation-the-faa-dgca-official (Last visited on January 25, 2015).
[21]The Aircraft Act, 1934. Preamble.
[22]V.S. Mani and V. Balakista Reddy, The History and Development of Air Law in India: A survey,in Air Law and Policy in India, 30-31 (S.Bhatt, V.S. Mani, V.Balakista Reddy, eds., New Delhi: Lancer Books, 1997).
[23]Id.
[24]The Impact of International Air Service Liberalisation on India, Report by InterVISTAS-EU Consulting Inc.,

July 2009, available at https://www.iata.org/policy/liberalization/agenda-freedom/Documents/india-report.pdf(Last visited on January 27, 2015).
[25]S. C. Bansal, M. N. Khan and V. R. Dutt, Economic Liberalisation and Civil Aviation Industry, Economic and Political Weekly, Vol. 43, No. 34 (Aug. 23 – 29, 2008), 71-76, available at http://www.jstor.org/stable/40277880 (Last visited on January 27, 2015).
[26]Vinita Sharma,Competitive Assessment Of Cooperation in the Civil Aviation Industry, Competition Commission of India, New Delhi, May 2013, 31, available at http://cci.gov.in/images/media/ResearchReports/Competitive%20Assessment%20of%20Cooperation%20in%20the%20Civil%20Aviation%20Industry.pdf (Last visited on January 27, 2015).
[27]Id.
[28]Data released by the International transport Association (IATA).
[29]Data released by the Director General of Civil Aviation (DGCA).
[30]Supra note: 25, 17-29.
[31]Id.
[32]Supra note: 18.
[33]Supra note: 27.
[34]Competition Issues in the Air Transport Sector in India, ASCI Research and Consultancy, 30, available at http://www.cci.gov.in/images/media/completed/transport_20090421133744.pdf(Last visited on January 27, 2015).
[35]Civil Aviation Requirement (CAR), Section 3, Series C, Part II – Sections 3.2.1.
[36]Civil Aviation Requirement (CAR), Section 3, Part III- Sections 3.2.3.
[37]Akber Ahmed, Internship Project Report on: Competition issues in the Transport Sector: Air Transport, Competition Commission of India, 31st May, 2013, 43-46, available at http://cci.gov.in/images/media/ResearchReports/Competition%20Issues%20in%20Transport%20Sector_Air%20Transport.pdf (Last visited on 27 January, 2015).
[38]Id.
[39]Research Study of the Civil Aviation Sector in India, The Ministry of Corporate Affairs, Govt. of India, January 24, 2012. Available at: http://circ.in/pdf/Civil_Aviation_Sector.pdf (Last visited on January 20, 2015).
[40]IATA Worldwide Slot Guidelines, August 2014, 6th Ed, available at http://www.iata.org/policy/slots/Documents/wsg-6.pdf (last visited on January 27, 2015).
[41]Id., Section 8.1.1. (f) (g).
[42]Id., Section 8.1.1. (h).
[43]Id., Section 8.3.5.2.
[44]Supra Note: 37, 46-51.
[45]Supra Note: 39, 34-36.
[46]Manoj Pant, Competition, cartels & civil aviation, The Economic Times (ET Bureau) Dec 10, 2010, available at http://articles.economictimes.indiatimes.com/2010-12-10/news/27621401_1_aviation-sector-civil-aviation-airline-industry (Last visited on January 27, 2015).
[47]Supra Note: 39, 44-45.
[48]Aadil Hassan, Safety and Security Regulation in India:-Emerging Legal Issues, available at http://plesetsk-info.ru/10-klass/safety-and-security-regulation-in-indiaemerging-legal-issues/ (Last visited on 27 January, 2015).
[49]Id.
[50]Id.
[51] Committee on Civil Aviation Policy, Report of the Committee on a Road map for the Civil Aviation Sector, Part II, Ministry of Civil Aviation Government of India, October 2004, available athttp://civilaviation.gov.in/cs/groups/public/documents/newsandupdates/moca_000741.pdf (Last visited on 27 January, 2015).
[52]Id.
[53]Supra Note: 41.
[54]Aircraft (Security) Rules, 2011, Section 2 (u).
[55]V.S. Mani, Aviation Security International Terrorism and the Indian response, in Air Law and Policy in India, 365-385 (S. Bhatt, V.S. Mani, V. Balakista Reddy, eds., New Delhi: Lancer Books, 1997).
[56]Id.
[57]Supra Note: 44
[58]Id.
[59]The Convention on International Civil Aviation, also known as the Chicago Convention, was signed on December 7, 1944 in Chicago, U.S., by 52 signatory states. The Convention establishes rules of airspace, aircraft registration and safety, and details the rights of the signatories in relation to air travel.
[60]Supra Note: 41.
[61]The Convention on Offences and Certain Other Acts Committed On board Aircraft, commonly called the Tokyo Convention, is an international treaty, entered into force on 4 December 1969, and as of 2015 has been ratified by 186 parties. The Convention is applicable to offences against penal law and to any acts jeopardising the safety of persons or property on board civilian aircraft while in-flight and engaged in international air navigation.
[62]The Act gives effect to the 1970 Hague Convention for the Suppression of Seizure of Aircraft and for matters connected therewith.
[63]The Act gives effect to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation dated 23 September 1971, commonly known as the Montreal Convention 1971.
[64]Gautam Acharya, Legal Aspects of Aviation Security Measures Taken at Airport, (2005), 61-65, available at http://digitool.Library.McGill.CA:80/R/-?func=dbin-jump-full&object_id=98600&silo_library=GEN01 (Last visited on January 27, 2015).
[65]The Convention for the Unification of certain rules relating to international carriage by air, commonly known as the Warsaw Convention, originally signed in 1929 in Warsaw is an international convention which regulates liability for international carriage of persons, luggage, or goods performed by aircraft for reward. It was amended in 1955 at The Hague, Netherlands, and in 1971 in Guatemala City, Guatemala.
[66]The Protocol to amend the Convention for the Unification of certain rules relating to international carriage by air, signed at Warsaw on 12 October 1929, done at The Hague on 28 September 1955.
[67] The Convention for the Unification of Certain Rules for International Carriage by Air, commonly known as Montreal Convention is a multilateral treaty adopted by a diplomatic meeting of ICAO member states in 1999. It amended important provisions of the Warsaw Convention’s regime concerning compensation for the victims of air disasters. The Convention attempts to re-establish uniformity and predictability of rules relating to the international carriage of passengers, baggage and cargo.
[68] An Act to give effect to the Convention for the unification of certain rules relating to international carriage by air signed at Warsaw on the 12th day of October, 1929 and to the said Convention as amended by the Hague Protocol on the 28th day of September, 1955 a [and also to the Montreal Convention signed on the 28th day of May, 1999] and to make provision for applying the rules contained in the said Convention in its original form and in the amended form (subject to exceptions, adaptations and modification) to non-international carriage by air and for matters connected therewith.
[69] Sridevi Krishna, Dr T.R Maruthi, India and the Montreal Convention- A New Perspective, available at http://jsslawcollege.in/wp-content/uploads/2013/05/India-and-the-Montreal-Convention.pdf(Last visited on January 27, 2015).
[70]An Act to give effect to the Convention for the unification of certain rules relating to international carriage by air signed at Warsaw on the 12th day of October, 1929 and to the said Convention as amended by the Hague Protocol on the 28th day of September, 1955 a [and also to the Montreal Convention signed on the 28th day of May, 1999] and to make provision for applying the rules contained in the said Convention in its original form and in the amended form (subject to exceptions, adaptations and modification) to non-international carriage by air and for matters connected therewith.
[71] Satadru Goswami, The Warsaw System and the Montreal Convention: Questions over implementation of the Liability Regime, Short notes in Asian Journal of Air & Space Law, Vol.2 No.1, 101-102 (2012).
[72]Id.
[73] The Carriage by Air Act, 1972. Sec. 8(2): The Central Government may, by notification in the Official Gazette, apply rules contained in the Second Schedule and any provisions of Section 4 or Section 5 or section 6 to such carriage by air, not being international carriage by air as defined in the Second schedule, as may be specified in the notification, subject, however, to such exceptions, adaptations and modifications, if any, as may be so specified.
[74]Supra note: 62.
[75] Montreal Convention 1999, Art. 21 (1).
[76]Id., Art. 21(2).
[77]Sanjay Kumar, Airline Liability in India for death or injury to Passengers: An Insight from the Perspective of Mangalore Air Crash, Short notes in Asian Journal of Air & Space Law, Vol.1 No.2, 203-210 (2011).
[78]Supra note: 67, Art. 21 (2) (a).
[79]Id., Art. 21 (2) (b).
[80]Supra note: 62.
[81]Montreal Convention 1999, Art. 33(2).
[82] The Warsaw Convention as Amended at The Hague, and by Protocol No.4 of Montreal, 1975, Art 28 (1).
[83]Supra Note: 69.
[84] Manisha Singhal, Aviation industry needs regulatory re-think: Experts, June 4, 2014, available at http://businesstoday.intoday.in/story/aviation-industry-needs-regulatory-re-think-experts/1/206923.html(Last visited on 27 January, 2015).
[85]Id.

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