Regional connectivity

The NDA government’s plan to promote regional air connec­tivity continues to be met with resistance, with private airline oper­ators citing their current financial state to oppose the move. Though many airline operators are looking to increase regional connectivity, poor load factor, apart from profitability, has been the main concern inhib­iting them from responding posi­tively to the government’s intention of connecting remote areas. Though the current low global crude prices have come as a blessing for all car­riers, there is no guarantee that the fuel prices will stay at this level.

Currently, air traffic in the coun­try is focussed around bigger cities and the six key metros – Delhi, Mum­bai, Chennai, Kolkata, Hyderabad and Bengaluru – constitute over 65 per cent of the total air traffic in the country. Last fortnight, Prime Min­ister Narendra Modi asked the civil aviation ministry to improve regional connectivity to smaller cities and pro­mote regional airports and airlines. This has put pressure on the civil avi­ation ministry to deliver the results.

The ministry, on its part, is try­ing to improve connectivity at non- operational airports by waiving off landing and parking charges at these airports. These waivers will be appli­cable at about 32 smaller airports that are managed by AAI and have not received any flights in the past 18 months. The ministry has also
asked state governments to work towards improving regional air con­nectivity, by providing financial sup­port to smaller carriers on the lines of Madhya Pradesh, which under­writes about three seats every flight and also waives off tax paid on fuel purchased in the state.

But private carriers have long demanded the reduction of state taxes on aviation turbine fuel (ATF), which have lowered their operational margins. No state government is will­ing to concede the demand yet. The Business Aircraft Operators Associa­tion (BAOA) is reported to have asked the government for capital subsidies, soft interest loans and complemen­tary ground-handling services in Tier II and Tier III airports, among other demands, to ease their burden.

Remote area connection

Analysts feel that regional connectiv­ity will not become viable unless the government provides subsidy to fly to these destinations. “Remote area connectivity is extremely important for a large country like India,” says Amber Dubey, partner & India head, aerospace & defence, KPMG. “It is cur­rently unviable given low demand and high cost of operations. This needs to be facilitated by way of an essen­tial air services fund (EASF), as recom­mended by the NDA-appointed Naresh Chandra Committee in 2003.”

 

 

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