Pvt Airlines Can Now Bid for Loss-making Routes
Decision, which is part of the govt’s move to boost regional connectivity, will allow private airlines to bid for such routes and get subsidies on par with national carrier AI
New Delhi: Private Indian airlines will be allowed to bid for operations on loss-making regional routes where the government will provide subsidy as part of the regional connectivity plan, a top aviation ministry official has said.
This will be the first time private carriers will be allowed to bid for these routes and claim government subsidy. At present, only state-run national carrier Air India gets subsidy for providing connectivity in the northeastern region.
The decision is a part of the rules that will govern the regional connectivity plan, which the government plans to implement as soon as the Civil Aviation Policy is approved. It will override the draft aviation policy’s proposal to create a scheduled commuter airline category for the purpose, said the aviation ministry official, who did not wish to be identified.
“Both regional and national scheduled airlines can operate flights for the regional routes,” the official said. “Non-scheduled operators will have to convert to scheduled carriers to bid for these flights.”
The National Civil Aviation Policy 2016 is likely to be taken up by the Cabinet by the end of this month, the official said.
According to the official, the ministry intends to immediately roll out regional flights at 30 airports which have the infrastructure in place. The government has decided to fix fares on regional flights at .₹ 2,500 per hour, and the rest of the cost of the flight will be funded by the government through subsidy, he said. Analysts, however, said the government should look at allowing non-schedule operators (NSOPs) on these routes, as scheduled airlines would not like to get into operating smaller aircraft.
“The key to regional connectivity being success- ful in India lies with the surplus and underutilised general aviation fleet in India, which currently stands at over 110 turboprops and nearly 270 helicopters that are capable of connecting airfields and landing grounds that fall within the remote, out-of-reach, displaced category in India,” said Mark Martin, founder and CEO of Martin Consulting, an aviation advisory firm.
The official quoted earlier said subsidy support will be provided only till the time the route is developed. “The subsidy for a regional flight will be stopped the moment it starts making money. Every route will have a separate break-even load factor, and the moment the airline’s load hits it, the subsidy will be stopped,” the official said.
The regional connectivity plan is part of the new civil aviation policy and aims at taking air travel to the masses. The government aims to fund the subsidy in part through a .₹ 8,000 per flight landing charge. The official said state governments will have to contribute 20% of the subsidy required by regional flights in their respective states.
The National Civil Aviation Policy 2016 is likely to be taken up by the Cabinet by the end of this month