Govt wants loss-making airlines to pay for its 'regional connectivity' mission

New Delhi: The Ministry of Civil Aviation is keen to enhance air connectivity to India’s remote towns and small cities but wants airlines to bear the brunt of this mission. Or so it seems from a draft policy on Regional and Remote Area Connectivity.

The policy clearly states that all scheduled airlines - Air India, SpiceJet, IndiGo, GoAir, Jet Airways - will have to match capacities on regional routes and trunk routes by 2016. This means they will have to substantially increase seats on regional routes which are often not viable because they connect one major city with smaller cities in a region.

For example, a regional route in the North could be connecting Delhi to Chandigarh, Delhi to Meerut etc. In the Western region, it could mean a flight between Mumbai and Gondia for example. Trunk routes are those which connect destinations with enough traffic potential such as Delhi-Mumbai.

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This policy will replace the current route dispersal gudelines which mandate that airlines deploy 10 percent of their capacity in remote areas.

Though the policy suggests ways for the scheduled airlines to manage this seemingly impossible demand of the government by tying up with regional airlines and also mentions some kind of an air connectivity fund besides some freebies from respective state governments, this move could see stiff resistance from industry.

India’s airlines are already mired in losses (except IndiGo and GoAir) and a previous attempt to formulate a similar policy was thwarted as stakeholders could not agree on how much state governments should pitch in to get small cities on the aviation map. Now, though there is talk of a fund, though there is no quantum mentioned and it has been suggested as a mere long term measure.

The policy is just at the draft stage as of now and the ministry has sought comments from all stakeholders by 4 September.

The government has identified 87 destinations as “incentive destinations” for which airlines will be given certain incentives. So there will not be any landing/parking charges or PSF at these airports and airlines will be allowed to do self ground handling. But will these concessions, even when taken together with some others be enough to compensate loss making large airlines from incurring further losses?

The other proposed concessions include states providing free security and fire-fighting services, reduced VAT on fuel uplifted, infrastructure for proper access to airports, waiver of municipal charges for five years and underwriting of seats. Earlier too, the issue of states underwriting seats in any such arrangement has been a thorny one.

But regional airlines or those which are only now aspiring for a regional operation permit may find this scheme somewhat lucrative. Proposed regional airlines like Air Carnival and Zav Airways and an unnamed one from Captain Gopinath will now have the option to convert themselves into national scheduled airlines within three years under the new policy.

The norms suggest that airlines operating under Regional Scheduled Operating Permit (RSOP) will have the option to convert themselves either into National Scheduled Airlines or Scheduled Commuter Airlines in three years. Operators under Non-Scheduled Operator Permit (NSOP) will have the option to convert themselves into Scheduled Commuter Airline or Air Charter Operator.