Air ticket at Rs.2,500 for 500 km travel proposed in the draft civil aviation policy will be a game changer for the sector with India expected to add 50 new airports every year, Civil Aviation Secretary R. N. Choubey said on Wednesday.
He believes the 350 million strong middle class offer an opportunity for 500 percent growth against the existing 20 percent growth.
Talking to reporters at India Aviation 2016 here, he said the process for implementation of plans for regional connectivity and affordable air tickets would be set in motion once the civil aviation policy is announced next month.
Stating that 350 airstrips built since World War II and scattered all over the country are a goldmine for India, the official said 50 of them will be developed in no-frill airports every year for the next three to four years.
Choubey said for the airlines connecting an unserved airport with the served airport, the government proposed to offer several concessions like no landing parking charges, no excise duty, no Value Added Tax (VAT) and no central tax.
As even these concessions may not bring down price to tipping point of Rs.2,500 for 500 km travel, the government will provide Viability Gap Funding (VGF).
Choubey said the issue came up for deliberations earlier in the day, where all aircraft manufacturers were present. He said all the firms believe that India is the country to go as it has 350 million middle class whose purchasing power parity is equal to European countries.
He pointed out that currently 70 million were flying. "It means that on an average a middle class Indian travels once in five years. This figure is shocking. In purchasing power parity terms it is not as if average middle class India can't buy air ticket once a year for Rs.2,500," he said.
The official said this was not happening because the people have to drive six hours from their place of stay to catch a flight and also the fares are not affordable. "If one has to pay Rs.5,000-Rs.5,500 for 500 km, this will not happen," he added.
