The civil aviation ministry has proposed a five-year exemption for 'regional airlines' from airport and navigation charges for destinations they fly.
To improve regional connectivity and create regional hubs, the ministry has mooted a proposal to set up 'regional airlines,' defined as carriers with aircraft having less than 80 seats and which operate exclusively on regional routes from any one metropolitan airport, which includes Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad.
This proposal is a part of the comprehensive aviation policy that the ministry has submitted to the Cabinet and which has now been referred to a Group of Ministers.
The ministry has also suggested that the first airline to connect cities that are not linked by air should be exempt from all airport and navigation charges at both airports for the first year of operation. For regional airlines, navigation and landing charges could constitute around 10 per cent of overall costs.
Under the new policy, the ministry has also proposed the establishment of an Essential Air Services Fund to provide subsidy to airlines that operate on 'uneconomical but essential routes' like the northeast. The subsidy support from the fund will be established through a transparent process of minimum subsidy bidding.
Under this system, the bidder who seeks minimum subsidy from the fund, will get all or the maximum number of routes. This would enable subsidies to be paid to the most efficient operator at the lowest cost to the public and might lead to the development of specialised smaller airlines as well, the policy states.
The fund, however, is to be created through a cess levied on both domestic and international air travel.
After the new system is put in place, the route dispersal guidelines, the policy says, would be progressively replaced.
The current route dispersal guidelines of the Directorate General of Civil Aviation make it mandatory for all scheduled carriers to deploy at least 10 per cent of the total capacity of their trunk routes on Tier-II routes comprising the North-East, Jammu and Kashmir, Andaman & Nicobar Islands and Lakshwadeep.
A further 10 per cent of the capacity deployed on Tier-II routes must be reserved for interconnectivity within these regions.
The proposed policy has also suggested that as part of the restructuring of the Airports Authority of India, the government should consider hiving off some of its services by setting up subsidiaries or through joint ventures with international players
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