DGCA seeks self-sustaining funding model, share of passenger fees as institutional overhaul proposed

The proposal, submitted to the Ministry of Civil Aviation in December, seeks to give India’s aviation watchdog greater financial and operational independence at a time when fleet expansion is accelerating and staffing shortages remain acute.

The proposal also seeks a share of passenger fees charged at airports to help the DGCA meet its financial requirements.

At the heart of the plan is a move away from a largely Director General (DG)-driven system toward a board-led framework with specialized verticals headed by domain experts. Officials say the reforms are designed to future-proof oversight capacity as India prepares for the addition of over 1,000 aircraft in the next four years.

Revenue rethink

Typically, User Development Fees (UDF) are paid to airport operators for infrastructure development and expansion, whereas other passenger-related charges and fines levied by the regulator are credited to the Consolidated Fund of India.

Financial autonomy would allow the DGCA to “attract talent and offer industry-compensated salaries to draw sector specialists,” the official said.

The overhaul envisions limited government support during the transition phase before the regulator becomes largely self-sustaining.

Currently, the DGCA functions as an attached office under the civil aviation ministry and is funded through the ministry’s annual budget.

India’s ministry of civil aviation has been allocated ₹2101.87 crore in Budget 2026-27, 12.5% lower than last year’s budget estimates of ₹2400 crore. Of this, allotment to the DGCA has increased by 4% to ₹342 crore. It stood at ₹330 crore for the current fiscal.

In FY25, the actual spending for the civil aviation regulator was ₹275.21 crore.

Allotment to the DGCA as a part of the civil aviation ministry’s budgeted expenditure has moved up from 10% in FY25 to 16% in FY26. It is expected to be at 16% for FY27 too, as per the budget documents.

Crash trigger

The report was prepared in the aftermath of the Air India crash in June in Ahmedabad, which triggered renewed scrutiny of the regulator’s organizational structure and staffing levels.

“After every major aviation incident, questions are raised about whether the regulator is run by bureaucrats rather than technocrats,” the official said. “A board-led structure with sector experts would change the nature of regulatory decision-making altogether.”

Shakti Lumba, aviation expert, said: “There needs to be rehaul of how the DGCA operates. It needs experts on board, it need manpower and it needs to be more than a department of the ministry.”

Lumba added that while there have been internal restructuring efforts and staff expansion, the DGCA’s core status remains unchanged—an attached office dependent on budgetary support—precisely the gaps that need to be addressed.

Staffing strain

The DGCA continues to remain severely understaffed.

As of February, the regulator had 787 vacancies—nearly 48% of its sanctioned strength of 1,630 posts. “These vacancies exist largely due to the creation of 441 additional posts during the restructuring undertaken between 2022 and 2024,” the official said.

Vacancies have risen sharply over the past five years, according to documents submitted in Parliament by the ministry. In January 2022, the regulator had 462 vacant positions. The number nearly doubled to 889 in January 2023, stood at 867 in January 2024, and 835 in January 2025, even as sanctioned strength remained above 1,600.

In a written reply to Parliament in January 2025, junior civil aviation minister Murlidhar Mohol said staff shortages were acute in safety-critical roles, including technical officers and flight operations inspectors. Vacancies in these categories rose by nearly 50% after sanctioned strength was expanded from 2023 onward.

“Vacancies at the DGCA today are almost at par with the operating fleet of India’s four major airlines—IndiGo, Air India group, Akasa and SpiceJet—combined,” the official said. “With over 1,000 aircraft expected to be added over the next four years, the regulator’s capacity needs urgent strengthening.”

Combined fleet of the four major airlines is slightly over 800.

Global models

Globally, major aviation regulators operate on largely self-financing models, with most income coming directly from the industry they oversee.

In the US, the Federal Aviation Administration (FAA) is funded through aviation-related taxes such as passenger ticket and fuel levies. Europe’s European Union Aviation Safety Agency (EASA) earns a significant share of its revenues from certification and licensing fees charged to airlines and aircraft manufacturers.

Similarly, the Civil Aviation Authority in the UK and the Civil Aviation Authority of Singapore recover most of their operating costs through oversight and inspection charges, giving them financial independence and the ability to hire specialized technical staff, the official said.

Old idea, new urgency

This is not the first time full autonomy for the DGCA has been proposed.

In August 2025, a parliamentary standing committee on transport, tourism and culture recommended a time-bound plan to grant the regulator full administrative and financial independence, citing chronic staffing shortages, weak enforcement powers and an outdated recruitment model.

Earlier, the Naresh Chandra Committee on Civil Aviation Safety (2011) recommended the creation of an independent Civil Aviation Authority (CAA) with financial autonomy, market-linked salaries and a professional board of technical experts, arguing that safety regulation should be institutionally separated from the ministry.

Similar recommendations were made by the Kaw Committee (2013), chaired by Rohit Nandan Kaw, which proposed converting the DGCA into a statutory regulator funded through user charges and industry fees, with freedom to hire specialists at market pay.

However, both reports were accepted in principle but diluted in execution.

The DGCA and the civil aviation ministry are yet to respond to Mint’s queries.