Aviation Sector

Introduction

The aviation industry in India is one of the fastest-growing aviation markets globally, with the country poised to become one of the three largest aviation markets by 2025. The sector has witnessed significant expansion due to:

• Liberalization of the aviation industry, allowing private airlines to operate.
• Growth in air travel demand, fueled by rising disposable incomes and expanding tourism.
• Public-Private Partnerships (PPP) in airport development, modernizing infrastructure.
• Foreign Direct Investment (FDI) policies, attracting international investors.

Despite this rapid expansion, the aviation sector faces complex regulatory challenges, including civil aviation laws, taxation policies, safety standards, foreign investment rules, and liability frameworks.

Candour Legal is a leading aviation law firm in India, providing legal advisory services for airlines, airport operators, aircraft lessors, aviation investors, and regulatory compliance.

Legal & Regulatory Framework Governing the Aviation Industry in India:

The Indian aviation industry is regulated by multiple laws and regulatory authorities, covering aspects like aircraft operations, airport management, passenger rights, foreign investments, and aviation taxation.

Key Regulatory Agencies in Indian Aviation:

a) Directorate General of Civil Aviation (DGCA)

The DGCA is the primary regulatory authority for civil aviation in India, responsible for:

• Regulation of air transport services and compliance with Aircraft Rules, 1937.
• Licensing pilots, aircraft maintenance engineers, and flight crew standards.
• Aircraft registration, airworthiness certification, and flight safety monitoring.
• Investigation of aviation incidents and regulatory compliance enforcement.

b) Airports Authority of India (AAI):

The AAI manages airport operations, infrastructure, and air traffic control. It oversees:

• Modernisation of airports through Public-Private Partnerships (PPP).
• Regulation of aeronautical services and air navigation safety.
• Management of international and domestic airport operations.

c) Bureau of Civil Aviation Security (BCAS):

The BCAS is the primary aviation security regulator, responsible for:

• Setting security protocols at airports and onboard aircraft.
• Implementing anti-terrorism and hijacking prevention measures.
• Ensuring compliance with global aviation security standards (ICAO guidelines).

d) Airports Economic Regulatory Authority (AERA):

The AERA regulates airport tariffs, aeronautical charges, and airport service standards, ensuring:

• Fair competition among airport operators.
• Regulation of passenger and cargo charges at major airports.
• Investment incentives for new airport development projects.

Key Aviation Laws in India:

The Indian aviation sector is governed by multiple laws and regulations, including:

1. The Aircraft Act, 1934 & The Aircraft Rules, 1937
   • Regulates manufacture, possession, operation, and sale of aircraft.
   • Establishes airworthiness standards, flight safety norms, and aircraft maintenance requirements.
2.  Civil Aviation Requirements (CARs)
   • Covers airport standards, aircraft operations, crew licensing, and aviation safety.
   • Regulates aviation environment protection and noise pollution standards.
3. The Carriage by Air Act, 1972
   • Implements the Warsaw Convention, defining liability for passenger injuries, baggage loss, and cargo damage.
4. The Airports Authority of India Act, 1994
   • Governs the administration, management, and modernisation of Indian airports.
   • Grants AAI authority to manage air traffic services, infrastructure development, and airport security.
5. The Anti-Hijacking Act, 1982 & The Tokyo Convention Act, 1975
   • Establishes anti-hijacking laws, legal framework for unlawful acts against civil aviation.
   • Extends Indian penal laws to acts committed on Indian-registered aircraft.

Foreign Direct Investment (FDI) in the Indian Aviation Sector:

The FDI Consolidated Policy allows foreign investment in various aviation segments, including:

1. FDI in Airlines
   • 49% FDI allowed via automatic route for Scheduled & Non-Scheduled Passenger Airlines.
   • 100% investment by Non-Resident Indians (NRI) permitted via automatic route.
   • 49% FDI by foreign airlines allowed under government approval route.
2. FDI in Other Aviation Services
   • 74% FDI in Ground Handling Services (automatic up to 49%, government approval beyond).
   • 100% FDI in Maintenance, Repair, and Overhaul (MRO) Services under the automatic route.
   • 100% FDI in Greenfield airport projects under the automatic route.

Candour Legal provides legal advisory for foreign investors, FDI structuring, and compliance in the Indian aviation industry.

Aircraft Leasing, Financing & Taxation Laws:

With the expansion of fleet sizes, Indian airlines rely on aircraft leasing, structured financing, and tax incentives:

1. Aircraft Leasing & Financing Structures
   • Operating Leases & Finance Leases – Compliance with Reserve Bank of India (RBI) guidelines.
   • Sale-and-Lease-Back (SLB) Transactions – Tax-efficient structuring for airlines.
   • External Commercial Borrowings (ECB) for Aviation – RBI-approved ECB funding for working capital.
2. Taxation of Airlines & Airports
   • 36% Service Tax on airline tickets, airport charges.
   • High Sales Tax on Aviation Turbine Fuel (ATF) – One of the highest globally.
   • Customs Duties on Aircraft & Spare Parts – Varies based on aircraft type and leasing structure.

Candour Legal provides tax structuring services, aircraft leasing legal advisory, and ECB compliance assistance for airlines.

Consumer Protection & Passenger Rights in Aviation:

With rising passenger traffic, legal disputes in aviation often involve:

• Passenger Rights & Compensation Claims – Delays, cancellations, baggage loss under Carriage by Air Act.
• Product Liability & Airline Service Disputes – Claims under Consumer Protection Act, 2019.
• Aviation Accident Liability & Insurance Claims – Compliance with Warsaw & Montreal Conventions.

Candour Legal represents airlines, airport operators, and aviation service providers in legal disputes and liability claims.

Why Choose Candour Legal for Aviation Legal Services?

Candour Legal is a top aviation law firm in India, specializing in:

• Aviation Regulatory Compliance – DGCA, AAI, BCAS, AERA approvals.
• Aircraft Leasing & Financing – Structuring lease agreements, cross-border taxation.
• FDI & Investment Advisory in Aviation – Legal assistance for foreign investors.
• Aviation Taxation & Fuel Pricing Laws – Compliance with customs duties, GST, and tax exemptions.
• Consumer Protection & Airline Liability – Handling passenger claims, product liability disputes.

Conclusion:

The Indian aviation industry is undergoing rapid expansion, but legal and regulatory challenges remain critical for sustained growth. Airlines, investors, and aviation service providers must comply with complex aviation laws, foreign investment regulations, and tax policies to remain competitive.

If you are looking for a trusted aviation lawyer in India or Ahmedabad, Candour Legal is your go-to law firm for aviation regulations, airline compliance, and aviation sector investments.

For expert legal assistance, contact Candour Legal – Your Trusted Aviation Law Firm in India.