Cooperative federalism, also known as marble-cake federalism, is a concept of federalism in which federal, state, and local governments interact cooperatively and collectively to solve common problems, rather than making policies separately but more or less equally. It reflects the relationship between centre and state where they both come together and resolve the common problems with each other’s’ cooperation.

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Current status of Civil Aviation in India:

• Civil Aviation, being a central subject, gets little attention from states.
• It is evident from the fact that very few States in India have active civil aviation departments.
• The Regional Connectivity Scheme, Ude Desh ka Aam Naagrik (UDAN), has become a game changer as this flagship programme has a built-in mechanism to develop stakes of State governments in the growth of the sector.
• The penetration of aviation market in India stands at 7%. There is potential to be among the global top three nations in terms of domestic and international passenger traffic.

Challenges faced by civil aviation sector:

• High VAT on ATF: States have very high rates of value-added tax (VAT) on Aviation Turbine Fuel , sometimes as high as 25%, which has dampened the growth trajectory of civil aviation. For any airline in India, the cost of Aviation Turbine Fuel (ATF) forms about 40% of the total operational cost.
• Acquisition of land: Land involves huge capital and is a scarce resource.
• Policy reluctance due to financial non-viability of the models to connect remote areas.
• Capital intensive nature of airline industry disincentivises the airlines to start operations in such areas where there is lack of enough passenger traffic to make them profitable.
• Fundraising for Viability Gap Funding (VGF) poses a major challenge.

Key policy interventions necessary to jump-start the aviation market:

• Relief on ATF: The airline industry is capital-intensive and works on very thin profit margins. Therefore, relief on ATF is a major incentive for airlines to augment their operations.
• For States, it would be a notional revenue loss which can be offset by enhanced economic activities as a result of increased air connectivity to the region.
• Development and management of airports: There are many regional airports which can be developed by States on their own or in collaboration with the Airports Authority of India (AAI).
• PPP model: There have been different models of public-private-partnership which can be leveraged to develop infrastructures.
• Create ‘no-frill airports’: Innovative models can be explored to create viable ‘no-frill airports’. These functional airports can open up regions and change the way people travel.
• Linking the hinterland: States and the Central government can play a crucial role in supporting airlines to develop air services in the remote regions.
• Considering the infrastructural constraints and difficult terrain, small aircraft operators need to be encouraged.
• Areas which cannot be connected meaningfully by road or rail have to be linked by air.
• States can converge their relevant schemes relating to tourism, health, and insurance for supporting air connectivity to supplement the objectives of regional connectivity.
• For this States need to create a conducive business environment to facilitate the strong aspirations of a burgeoning Indian middle class to fly at least once a year.

Conclusion:

Developing airports, incentivising airlines and pooling resources of both the Union and State governments can accelerate the harmonised growth of the Indian civil aviation sector which would be equitable and inclusive.