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New Delhi - India approved a civil aviation policy on Wednesday aimed at making air travel affordable for millions of Indians and vastly expanding the country's aviation market.
The government said the long-awaited reforms will bring down airfares to 2 500 rupees ($37) per hour of flying time on many under-served regional routes, particularly away from big cities.
Air travel in India is mostly confined to the urban third of the population, and is largely out of reach for hundreds of millions of people.
The Civil Aviation Policy overhauls rules dating back to the 1930s and received input from stakeholders from across the airline industry.
"Today history has been made. Since Independence, India has never had any civil aviation policy," Ravi Shankar Prasad, a cabinet minister, told reporters.
The minister said the government would look to develop about 350 dilapidated or underused airstrips across India, many dating back to World War Two, into "no frills airports".
"The new civil aviation policy is about connecting the unconnected and servicing the unserviced," he said.
In a boost for domestic carriers, the government also amended the "5-20 rule" which had been criticised by the Indian aviation industry.
Under the new regime, Indian airlines must still have 20 planes before they can fly internationally but no longer need to have operated for five years, as was previously the case.
Only 70 million of India's 1.2 billion citizens flew domestically in 2014-15, according to the Sydney-based Centre for Asia-Pacific Aviation, making it one of the world's most under-penetrated markets.
The government said it aims to increase domestic ticket sales to 300 million a year by 2022.
India's aviation sector has undergone rapid transformation since a liberalisation drive began in 2003.
But it still ranks ninth globally, according to the government, which wants it to become the world's third largest civil aviation market by 2022.
