Regional air connectivity is one of the promises the Modi government made in its election manifesto. From the draft Regional Connectivity Scheme (RCS) unveiled today, it is clear that a lot of work has been done on coming up with a scheme which encourages airlines to start flights to remote destinations, to airports which are right now lying unused and to those airports where there are few flights but not adequate in number.
In intent, the draft policy cannot be faulted. But how successful will it be in reality? Will airline operators who have till now found no viability in connecting Chandigarh to Bhatinda, Mumbai to Mehsana or Jamnagar, Delhi to Ambala, now found these quaint routes viable?
AFPAFP
Remember, there are close to 400 ghost airports in India, airports which have not seen a single flight in the last two schedules. There are another 16 airports which are termed "under-served" which means they do not have more than a flight a day. The government wants to kill two birds with one stone: make sure that these ghost and under-served airports become active while also ensuring that small cities and India's hinterland gets on to the aviation map.
Whether the scheme will ultimately work or not will depend entirely on route economics. For its success, the complicated math given in the draft RCS today should ultimately ensure a viable rate of return for airline and helicopter operators. That is the bottomline.
The scheme has capped fares for RCS routes, which means maximum fares on these routes are pre-decided by the government based on the route length. Though the scheme provides caps for viability gap funding (VGF) too on these routes - this is the amount of assistance or subsidisation the government will offer airlines to start flights to airports which till now have been lying unused - viability will be the determiner.
Civil Aviation Secretary R N Choubey said today that the fare and VGF caps have been decided keeping a reasonable rate of return in mind for airlines and this could be as high as 16 percent. Separately, DGCA M Sathiavathy said she has received enquiries from new players who are keen to start flights with small aircraft to the RCS routes but are awaiting guidelines.
To Read the News in Full 01/07/16 Sindhu Bhattacharya/First Post
In intent, the draft policy cannot be faulted. But how successful will it be in reality? Will airline operators who have till now found no viability in connecting Chandigarh to Bhatinda, Mumbai to Mehsana or Jamnagar, Delhi to Ambala, now found these quaint routes viable?
AFPAFP
Remember, there are close to 400 ghost airports in India, airports which have not seen a single flight in the last two schedules. There are another 16 airports which are termed "under-served" which means they do not have more than a flight a day. The government wants to kill two birds with one stone: make sure that these ghost and under-served airports become active while also ensuring that small cities and India's hinterland gets on to the aviation map.
Whether the scheme will ultimately work or not will depend entirely on route economics. For its success, the complicated math given in the draft RCS today should ultimately ensure a viable rate of return for airline and helicopter operators. That is the bottomline.
The scheme has capped fares for RCS routes, which means maximum fares on these routes are pre-decided by the government based on the route length. Though the scheme provides caps for viability gap funding (VGF) too on these routes - this is the amount of assistance or subsidisation the government will offer airlines to start flights to airports which till now have been lying unused - viability will be the determiner.
Civil Aviation Secretary R N Choubey said today that the fare and VGF caps have been decided keeping a reasonable rate of return in mind for airlines and this could be as high as 16 percent. Separately, DGCA M Sathiavathy said she has received enquiries from new players who are keen to start flights with small aircraft to the RCS routes but are awaiting guidelines.
To Read the News in Full 01/07/16 Sindhu Bhattacharya/First Post
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