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

The Economic Times - - Companies - Mi­hirMishra@ times­group.com

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

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