Flying higher

In order to encourage investment & competition in the aviation sector, the new policy features zero tax on investments

The government unveiled the long-awaited national aviation policy, referring to it as a “liberal and forward-looking” one that promotes bilateral arrangements with partners that attracts international traffic in the country. With talk of proposals — that would encourage investment and competition — going on for a while, the policy also featured zero tax on investments made in the aviation sector. While the tax structure would be finalised in the upcoming budget, said the finance minister, the policy also revised upwards the minimum paid-up capital requirement for airlines. From the previous level of Rs100 million, which attracted financially weaker players as well, the amount was taken to Rs500 million for a licence in the passenger and cargo category. In addition, a minimum of three airworthy aircraft for domestic and five planes for international operations were fixed for any airline company to operate. Stress was also laid on aircraft’s age, days of wet-lease, predatory pricing on airfares and role of the Civil Aviation Authority in intervening to resolve public grievances.



While the entire draft of the policy also elaborated on the importance of air safety and ground security, the fact remains that there is a reason why international airlines have shut down operations in Pakistan. For several years, Pakistan has been plagued with terrorism and this has remained a huge cause of concern for investors and foreigners. With the government’s priority featuring security concerns at the very top, the policy needs to go hand-in-hand with ensuring consistency in implementation and assuring travellers of fool-proof security. Bilateral arrangements then need to be made in a way that benefit Pakistan just as much. The government also decided to increase the role of the private sector in airport development, commercial activities, establishing hotels on the premises as well. However, any sort of importance attached to safety would not be enough. It will take several years to construct these facilities and many more to establish a reputation of being safe. Any untoward incident — of which the country has seen many — can cast a shadow over Pakistan’s future already suffering due to declining tourism and airlines shutting operations.

Published in The Express Tribune, March  27^th,  2015.

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