200 aircraft leased out from Gift City: Civil Aviation Minister Naidu

India is trying to create an aircraft leasing ecosystem and the Gift City in Gujarat has already leased out 200 planes to different companies, Civil Aviation Minister Ram Mohan Naidu said on Wednesday. Replying to supplementaries in the Lok Sabha, Naidu said civil aviation has witnessed phenomenal growth over the decades and the government was committed to facilitating greater competition in the sector which could lead to lower air fares.

"I agree with the idea that we need more competition. It is simple economics, more competition, more flights and definitely tariffs will come down," the minister said.

Naidu said Prime Minister Narendra Modi was keen on developing the aircraft leasing ecosystem in the country and several companies have set up bases at the Gift City in Gujarat.

"Gift City is trying to create such an ecosystem. It has already leased out 200 planes," the minister said, adding that Ireland, Singapore and Dubai are major hubs for leasing aircraft.

Naidu said the government was keen on getting more airline fleets in the country and was also working on bringing down the aircraft leasing costs.

"We are bringing a law to ratify Capetown Convention which will reduce the leasing costs by 8-10 per cent. The reduction in leasing costs will trickle down to passengers and air fares," he said.

Naidu said India had 340 aircraft in 2014 and that number has increased to 840 and airlines have placed orders for 1,700 planes.

"The market is completely open, we are not restricting any airline to not operate in the country. We want more airlines to come in and with the beginning of the UDAN scheme, we have seen smaller airlines also coming into picture," Naidu said.

On airfares, the minister said the Government does not regulate the commercial fares set by airlines – Indian or foreign.

"The fares on any route are dependent, inter-alia, on seasonality, holidays and festivals, cost of Aviation Turbine Fuel, competition and other similar factors," he said.

Naidu said airline pricing runs in multiple levels – buckets or RBDs – which are in line with the practice being followed globally and due to dynamic fare pricing, the tickets bought in advance are much cheaper than those purchased near the travel date.

"Under the provisions of Rule 135(1) of the Aircraft Rules, 1937, the airlines are free to fix tariffs, having regard to all relevant factors, including cost of operation, characteristics of services, generally prevailing tariff etc. DGCA's Tariff Monitoring Unit (TMU) ensures that the fares being charged by the airlines are as per the tariff established by the airlines," the minister said.