Indian Economy News

FAA upgrades India’s aviation safety ranking

  • Livemint" target="_blank">Livemint
  • April 9, 2015

Mumbai: Local airline firms can now expand in the US market after the Federal Aviation Administration (FAA) upgraded India’s air safety ranking, US transportation secretary Anthony Foxx announced on Wednesday at a meeting with aviation minister Ashok Gajapathi Raju.

India now complies with safety standards set by the International Civil Aviation Organization (Icao), Foxx said. “The US government commends the government of India for taking corrective action to address the safety oversight issues identified during the IASA (international aviation safety assessment) process,” he said.

The US watchdog had downgraded the country’s ranking in January last year, citing a lack of adequate regulatory oversight. It invited tighter scrutiny of air-worthiness and safety. Indian airline firms were also not allowed to add new routes to the US.

The upgrade follows a 8-12 December FAA review of procedures implemented by India’s Directorate General of Civil Aviation (DGCA) and another visit by its officials on 30-31 March.

“Our countries will continue to work together to meet the challenges of ensuring safety in international civil aviation,” FAA administrator Michael Huerta said.

The upgrade will help in changing risk perceptions of India by aviation authorities in other countries. In 2013, state-run Air India Ltd had faced hurdles in launching flights to the Japanese city of Osaka against the backdrop of ongoing safety audits.

The downgrade did not reflect on the safety of India’s airlines as the ranking measures the ability of the regulator to follow safety processes.

“I feel that besides the efforts made by DGCA, political and diplomatic channels were obviously at play. Having said that, DGCA should not stop here. It should go ahead and empower the organization with more technical and professional resources to arrest any slippage in the future,” said Shakti Lumba, an independent aerospace consultant.

The upgrade is a positive for Jet Airways (India) Ltd as its US operations will be executed more aggressively, and both Air India and Jet Airways can now pursue more code-share agreements with the US airlines, according to Kapil Kaul, chief executive officer, South Asia, at aviation consultancy firm Capa India.

A code-share agreement refers to a pact of marketing and selling the flights of another airline as if they were the airline’s own flights. A code-share agreement always consist of two partner airlines—the operating airline and one marketing airline that places its own flight number on the partner’s operated flights.

Vistara, India’s newest airline that is a joint venture between Tata Sons Ltd and Singapore Airlines Ltd, also has plans to start flying to overseas destinations within two years.

“DGCA has to improve its transparency and ease of doing business with industry,” said Amber Dubey, partner and India head of aerospace and defence at KPMG, a consultancy firm. “The industry hopes the upgrade should lead to further reforms soon.”

Jet Airways welcomed the move. The airline has a code-share agreement with United Airlines, while Air India has joined global grouping of airlines Star Alliance, which includes US airlines.

Air India declined to comment.

Investors of Jet Airways were not enthused at the news as its shares lost 3.58% to Rs.474.30 on Wednesday on BSE, while the benchmark Sensex gained 0.67% to 28,707.75 points.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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