Airlines likely to be allowed to operate with smaller aircraft
To improve air connectivity in remote areas, the civil aviation ministry is considering a proposal to allow scheduled regional airlines to induct smaller aircraft for deployment on regional routes. Under the existing guidelines, regional airlines can fly aircraft with 19 seats (excluding the pilot’s seat) or more.
The ministry is also considering a recommendation to waive the interim requirement to induct a fleet of three aircraft within two years from commencement of regional operations with at least one aircraft, while retaining the requirement of having an operational fleet of five at the end of five years.
In what would be a reprieve for passengers, the ministry has decided against levying a cess on travellers flying out of metropolitan cities to cross-subsidise air fares in regional and remote areas.
“The ministry has shelved the proposal to levy a cess on passengers flying on metro routes to support the Essential Air Services Fund (EASF), meant to promote air connectivity in regional areas, a senior ministry official said, requesting anonymity. “The fund would be supported through budgetary resources from the government on a year-to-year basis, besides route-specific support from state governments and the Airports Authority of India (AAI).”
AAI is proposed to earn and share revenues from privatisation of existing and future airport infrastructure as being undertaken by the ministry for EASF.
The ministry is considering providing direct financial support to airlines operating
in regional areas with EASF resources, while it has initiated talks with state governments to underwrite seats on new routes between towns.
“The cost of security is Rs 200 per passenger. We are asking state governments to bear the cost of security by CISF (Central Industrial Security Force) or state police. They are also being asked to provide land, access infra and utilities like water and power connection free of cost, for development of low-cost airports,” the official said. Negotiations are also on to reduce the value-added tax (VAT) on aviation turbine fuel (ATF) to four per cent for aircraft weighing less than 40 tonnes.
Fuel costs account for as much as 50 per cent of the operational expenses of an airline. The VAT on ATF, which varies from state to state, currently ranges from four to 30 per cent. “We are talking with state governments to reduce VAT to four per cent. We are also considering an exemption of fuel throughput charges levied by airport operators on oil marketing companies at regional airports,” said another ministry official, asking not to be named.
To make air fares cheaper on regional routes, the aviation ministry is also looking at doing away with landing, parking and route navigation charges at regional airports. These measures are expected to reduce the operational expenses of airlines flying to regional and remote areas by 15-20 per cent.
EASF has been created under the aegis of the civil aviation ministry to provide direct and indirect financial support to air transport service providers for operations on unviable routes. According to initial estimates, the fund would require an annual provision of Rs 250-300 crore to support connectivity in 40 regional Tier-II and -III towns and cities identified for implementation of the policy in its first phase.
In what would be a reprieve for passengers, the ministry has decided against levying a cess on travellers flying out of metropolitan cities to cross-subsidise air fares in regional and remote areas.