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Business News/ Companies / Aviation industry airs concerns about regional connectivity scheme
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Aviation industry airs concerns about regional connectivity scheme

Among the various concerns raised by the aviation industry, one was non-availability of slots at major airports such as Delhi

Mumbai International Airport, which sees 48-52 flights take off or land on a single runway every hour, has stopped giving new slots. Photo: Aniruddha Chowdhury/MintPremium
Mumbai International Airport, which sees 48-52 flights take off or land on a single runway every hour, has stopped giving new slots. Photo: Aniruddha Chowdhury/Mint

Mumbai: Chief executives of airline companies, aircraft lessors and executives in the maintenance, repair and overhauling of aircraft businesses have expressed multiple concerns over the implementation of guidelines for the aviation ministry’s ambitious regional connectivity scheme (RCS) due to be issued on Friday.

The executives voiced their fears at a CEO’s roundtable hosted by minister of state for civil aviation Jayant Sinha in Delhi on Thursday, according to two officials who attended the meet and asked to remain anonymous.

In a bid to make flying more affordable, the new civil aviation policy (NCAP) cleared by the Union cabinet on 15 June includes a complex scheme that seeks to connect currently unlinked towns. The key components of the RCS, like capping of passenger fares and Viability Gap Funding (VGF) period, are expected to be announced on Friday, the ministry of civil aviation said.

In the hour-long discussion, invitees expressed scepticism over the implementation of the scheme: one reason was the non-availability of slots at major airports like Delhi and Mumbai. “There are slot constraints at the larger airports, so how will you connect the smaller airports to the bigger ones?" said the first official.

For meaningful implementation, it is important that some slots be left at the major airports. The hub and spoke model will not work otherwise, he added.

The regional connectivity model will be based on VGF, under which 80% of the cost will be borne by the state government and the rest by the centre. The subsidies will be doled out for a period of three years. The scheme as envisaged in the NCAP, entails capping fares and subsidies at Rs2,500 and Rs3,800 respectively for flights of one-hour duration.

The proposed subsidy is too little for a small 10-20 seat air craft as the cost of seat per kilometre, their acquisition cost, is almost twice that of a regular 80-seater plane, said the official cited above.

With the majority of flights still originating from Delhi, Mumbai, Chennai, Bengaluru and Kolkata, airports at these metros are running to capacity. As a result, they have limited the number of slots for each airline or stopped allotting fresh slots altogether.

Mumbai International Airport Ltd, which sees 48-52 flights take off or land on a single runway every hour, has stopped giving new slots.

India’s domestic air traffic grew 23.5% in September continuing its two-year run of double digit growth and is now expected to surpass the UK in a decade, Mint reported on 20 October.

The whole idea behind the NCAP is to rationalise costs but that doesn’t seem to happening as all the overheads are going up -- whether its landing costs, excise on fuel or user development fee, said the first official. The proposed cess on other domestic flights will further escalate costs, he added.

“The RCS, though well-meaning, is just the start of a process. It has to evolve over a period to make it feasible and sustainable for all stakeholders," said the second official.

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Published: 21 Oct 2016, 01:05 AM IST
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