India launches regional aviation scheme to get more people flying | Reuters

By Tommy Wilkes | NEW DELHI NEW DELHI Aviation ministry said on Friday the first flights under a scheme to boost air travel between smaller cities should take off in January, after it finalised rules to make flying more affordable in the world's fastest-growing aviation market.Under the 'Regional Connectivity Scheme', air fares on routes between towns and cities currently poorly connected will be capped - at 2,500 rupees ($37.4) for every 500 km of travel - and service and fuel taxes reduced.A small levy will be slapped on existing routes to help pay for the scheme, while the government will provide funding to make the project viable and spend 40 billion rupees ($598 million) to reopen 50 disused airports within four years.Some industry executives have expressed reservations about the levy, but the ministry defended the scheme, saying it will boost the overall market.'When we jump start the regional aviation market, the beneficiaries will be the airlines themselves. They will get a lot more traffic,' Jayant Sinha, the junior civil aviation minister, told reporters. India's air travel market has boomed in the last decade as it opened up to competition

Reuters October 21, 2016 22:15:06 IST
India launches regional aviation scheme to get more people flying
| Reuters

India launches regional aviation scheme to get more people flying
 Reuters

By Tommy Wilkes
| NEW DELHI

NEW DELHI Aviation ministry said on Friday the first flights under a scheme to boost air travel between smaller cities should take off in January, after it finalised rules to make flying more affordable in the world's fastest-growing aviation market.Under the "Regional Connectivity Scheme", air fares on routes between towns and cities currently poorly connected will be capped - at 2,500 rupees ($37.4) for every 500 km of travel - and service and fuel taxes reduced.A small levy will be slapped on existing routes to help pay for the scheme, while the government will provide funding to make the project viable and spend 40 billion rupees ($598 million) to reopen 50 disused airports within four years.Some industry executives have expressed reservations about the levy, but the ministry defended the scheme, saying it will boost the overall market."When we jump start the regional aviation market, the beneficiaries will be the airlines themselves. They will get a lot more traffic," Jayant Sinha, the junior civil aviation minister, told reporters.

India's air travel market has boomed in the last decade as it opened up to competition. Ticket prices were slashed and the number of people wealthy enough to travel ballooned.Passenger numbers on domestic flights run by carriers including InterGlobe Aviation Ltd's IndiGo, SpiceJet Ltd, Jet Airways (India) Ltd and state-owned Air India Ltd jumped 21 percent in 2015 to more than 80 million. The government aims to increase that number to 300 million by 2022.Still, India's annual trips per capita, at 0.04, compares with 0.3 in China, and flying remains unaffordable for the overwhelming majority.

The ministry's top bureaucrat, R.N. Choubey, said airlines could now start bidding to run specific routes.Successful bidders will have exclusivity for the route for three years, after which government support would tail off as the market becomes sustainable on its own. The scheme will run for 10 years."We expect flights to commence in January," Choubey said.

The most popular routes, such as New Delhi to financial capital Mumbai, will not be affected by the price cap.($1 = 66.9000 rupees) (Reporting by Tommy Wilkes; Additional reporting by Aditi Shah; Editing by Douglas Busvine and Christopher Cushing)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

also read

Joe Biden announces Indo-Pacific alliance AUKUS with UK, Australia ahead of Quad summit
World

Joe Biden announces Indo-Pacific alliance AUKUS with UK, Australia ahead of Quad summit

The new security alliance is likely to be seen as a provocative move by China, which has repeatedly lashed out at Joe Biden as he's sought to refocus US foreign policy on the Pacific

SC slams Centre for 'cherry-picking' names for tribunals, directs govt to make appointments in two weeks
India

SC slams Centre for 'cherry-picking' names for tribunals, directs govt to make appointments in two weeks

There are around 250 posts lying vacant in various key tribunals and appellate tribunals

What's awaiting on the sidelines of 76th session of UNGA in New York
World

What's awaiting on the sidelines of 76th session of UNGA in New York

Of all the events the outcome of a meeting on Wednesday of the foreign ministers of the five veto-wielding permanent members of the Security Council is eagerly awaited