Subsidy scheme likely for regional airports

Domestic airlines are likely to get a waiver in landing, route navigation and security charges as part of government policy to encourage regional air transport.

Aviation Minister Ajit Singh chaired a meeting with officials here today on plans to boost regional air connectivity. Naresh Chandra, a former cabinet secretary, and Deepak Parekh, chairman of Housing Development Finance Corporation, also attended.

The new policy would replace the existing route dispersal guidelines. The latter make it mandatory to deploy at least 10 per cent of an airline’s total capacity to the northeast and Jammu & Kashmir, and at least one per cent of the capacity within the northeast.

Under the new plan, airlines plying to tier II-III towns will not have to bear landing and parking charges or a navigation charge. Plus, no user development charge on passengers.

"We will  give subsidy to  regional airports. We have identified 85 such towns with economic potential. In some of these, there are air strips; in others, new airports will have to be constructed,'' Singh said. He said the Airports Authority of India (AAI) will reimburse the costs incurred on airports in these smaller towns.

The minister said financing the smaller airports would not be a problem. "AAI gets a share of revenue from Mumbai, Delhi, Bangalore and Hyderabad airports. In the current year, it will earn about Rs 3,000 crore in revenue share from the Mumbai and Delhi airports.  If necessary, we might have to create a fund. We have to work out estimates,'' he said.

Adding: "Instead of giving subsidies to airlines, we will give it to airports. In a way, we are subsiding passengers. An airline will have the choice on which town it wants to start services. The government will not decide city pairs for airlines.'' A committee, he said, would formulate the plan.

The government has been considering various plans to promote regional connectivity. One involved a subsidy to airlines under the Essential Air Services Fund floated recently. This could be funded partly by central government budgetary support and partly by a cess on passengers flying between the country’s metros. Also, state governments would be asked to underwrite some seats on these routes to support domestic carriers. Singh estimates it would require about Rs 300 crore each year.

The  civil aviation ministry has also mooted a carbon credit-like system, allowing airlines to trade seat capacity as a part of its plan to promote regional routes.

Airlines unable to operate flights to certain towns under government mandates could trade seats with other operators under that policy.