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Major policy shift on anvil to promote air connectivity

New Delhi:  In a bid to promote air connectivity across the country, government has proposed a major shift in its route dispersal policy, promising airlines which fly to these regions exemption from various charges and
PTI August 26, 2014 21:12 IST
New Delhi:  In a bid to promote air connectivity across the country, government has proposed a major shift in its route dispersal policy, promising airlines which fly to these regions exemption from various charges and other incentives.

Under the draft policy on regional and remote area air connectivity, the Civil Aviation Ministry has also proposed to allow conversion of regional airlines, which operate within a state, into scheduled national carriers.

The draft makes it mandatory for all scheduled airlines to deploy capacity on 87 identified regional destinations “which is at least equal to the capacity deployed on trunk routes” by October next year. These destinations include cities and towns in Andhra Pradesh, Jharkhand and Maharashtra.

Official sources said the draft has been circulated among all stakeholders, including airlines, charter and non-scheduled operators, asking them to submit their responses by September four.

In order to promote air connectivity to various regions, especially the Northeast, Jammu and Kashmir and the islands of Andaman & Nicobar and Lakshadweep, which have remained unserved or were under-served, “it is necessary that new measures be taken to encourage airlines to introduce or increase flights to such airports,” the draft said.

Heightened penetration of civil aviation in such regions would require “changes in regulations which govern airlines operating under regional scheduled operator permit and non-scheduled operator permit, including their structure, equity requirement, minimum number and size of aircraft fleet.”

The objective was to encourage airlines to fly to these areas where infrastructure has been developed “by offering concessions/incentives, making it obligatory to fly to certain areas or providing viability gap support for operations.”

Among the concessions proposed to be provided to the air carriers are exemption from landing and parking charges, Route Navigation Facility Charges, passenger service fee, fuel throughput charges and “any other charges levied by Airports Authority of India,” the draft said.

The draft policy also recognizes state governments as “important stakeholders” in improving air connectivity and said they “will be asked to provide” services like security, fire-fighting, proper infrastructure access to airports.

Apart from this, the state governments would have to reduce VAT (value added tax) on fuel uplifted from a state, waive duty on electricity charges, municipal charges and underwrite a number of seats per airline.

It also proposes to establish an Air Connectivity Fund as a long-term measure to provide necessary financial support to promote air connectivity to remote and strategic areas.

The size of the fund, its tenure and mechanism to administer it would be decided and notified separately later, the sources said.

Regarding the proposal to allow conversion of regional scheduled and non-scheduled air operators, the draft gives them option to convert either to national scheduled airlines or scheduled commuter airlines which would operate small aircraft like turbo-props.

The equity or paid-up capital requirement for a scheduled commuter airline and charter operator would be Rs two crore if they have up to two aircraft, Rs five crore between 3-5 planes, Rs 10 crore for having 6-10 planes and Rs 15 crore for over 10 aircraft, the draft proposes.

Non-scheduled operators would have the option to convert themselves to scheduled commuter airlines or air charter operators.

The government also proposes to allow all airlines to do self-ground handling during operations at these airports.

The draft policy has identified 87 cities and towns across the country as “incentive destinations” and 30 routes as trunk routes.

The new policy revises the route dispersal guidelines (RDGs) which were evolved in 1994. The RDGs mandated ten per cent of capacity deployed on major routes to be deployed in identified remote areas and one per cent in the intra-remote region like the Northeast.

“As the country moves to the next phase of economic reforms and growth that provide an impetus to regional development and a balanced distribution of growth, it is imperative that airlines continue their role as responders to rising demand for better connectivity, as well as their catalytic role of inducing development as a driver of growth,” the draft said.