 "Revised aviation guidelines to propel regional connectivity")
Also, the route dispersal guidelines (RDG) first notified in March 1994, have been revised. The revised guidelines will also recalibrate the capacity scheduled air transport operators need to deploy for connecting Tier-II and -III cities.
A senior official told Business Standard that the ministry had identified 20-25 cities where airlines would not have to pay landing, parking and navigational charges (these account for around five per cent of carriers’ cost).
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He added, according to the revised guidelines, airlines would be required to deploy six per cent of their total capacity on routes in the Northeast, Kashmir, Lakshadweep and Andaman & Nicobar Islands. Towns like Bagdogra and Jammu would be de-clubbed from the regions and there would be no binding norm for capacity deployment for these cities.
At present airlines are required to deploy ten per cent of their capacity on metro routes on category II routes which include the Northeast, Kashmir and other areas.
The ministry has identified 52 towns and cities to promote regional air connectivity and decided to offer 50 per cent discount on night parking charges at all airports (except Chennai and Kolkata). Night parking charges have been waived at airports in the states that levy five per cent or less value-added tax (VAT) on aviation turbine fuel (ATF). Negotiations are on with other state governments to reduce VAT on ATF to four per cent. It is also considering an exemption of fuel throughput charges levied by airport operators on oil marketing companies at regional airports, a move that would benefit airlines.
These measures are expected to bring down airfares on regional routes by reducing operational expenses of airlines flying to these areas by 15-20 per cent.
According to the proposed guidelines, airlines will be permitted to carry out self-handling of flights. They could also enter into code-share agreements with carriers or non-scheduled companies operating on regional routes and purchase or sell miles (credits) among one another.
“This will be a win-win proposition for all. Regional connectivity will get a boost and airlines that cannot deploy the stipulated capacity can have arrangements with other airlines and charter companies,” the official added.
Earlier, a committee headed by Naresh Chandra, which was asked to review the route dispersal guidelines, had pointed out that scheduled operators with larger aircraft incurred losses on deploying services on regional and remote routes, as airlines had to subsidise fares to bring in traffic. The committee had further pointed out that services on shorter routes within these regions were unviable for large carriers due to competition from alternative modes of transport, such as roads and railways.
The proposed guidelines will enable large carriers to purchase miles from smaller regional air transport operators, who could deploy appropriate aircraft type and run more commercially viable operations.
“We will need to assess whether the new rules will be good for airlines. As regards the code-share pacts, we need to be careful who we tie up with. There could be fly-by-night operators; we need to be cautious,” said an official with an airline.
The ministry has also 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.
This fund will be supported with budgetary resources from the government on a year-to-year basis, through route-specific support from state governments and by the Airports Authority of India (AAI).
AAI is proposed to earn from privatisation of existing and future airport infrastructure by the ministry and share revenues for EASF. While the ministry is considering providing viability-gap funding by way of direct financial support to airlines operating in regional areas by utilising the EASF resources, talks of indirect subsidy have been initiated with state governments to underwrite seats on new routes between towns identified for promoting regional air connectivity.
EASF is being created under the ministry to provide direct and indirect financial support to air transport service providers for operations on unviable routes.
According to initial estimates, the fund might require an annual provision of Rs 250-300 crore to support connectivity in 40 regional Tier-II and -III areas in the first phase.
Minister of State for Aviation K C Venugopal told Parliament in the Budget session that an airline planning to start a new flight between a Tier-I and Tier-II or -III city or between Tier-II and -III cities will be given priority over others in allocation of slots. Besides, the civil aviation ministry is considering a proposal to enable scheduled regional air transport operators to induct more alternatives of smaller aircraft for deployment on regional routes.
Under the current guidelines, regional air transport operators can fly aircraft with 19 or more seats (excluding the pilots’) in such areas. The ministry is also looking to waive the interim requirement to induct a fleet of three aircraft within a period of two years from commencement of regional operations by a scheduled air transport service provider, while keeping intact the requirement of having an operational fleet of five aircraft at the end of five years.