Airlines may have to mandatorily fly to smaller cities

Civil Aviation Minister Ajit Singh is thinking of toughening the route dispersal guidelines, so that domestic carriers mandatorily fly to more Tier-3 and Tier-4 cities.

In an interview to Business Standard, he said: "The problem with these cities is not that they are in remote locations but they do not have connectivity. We are looking at creating a new category of such locations in the route dispersal guidelines, so they (carriers) have to fly a certain percentage (of their flights) here. We could also increase the 10 per cent rule."

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Basically, the plan is to recategorise the categories in route dispersal guidelines of 1994 according to the current economic conditions of the cities.

Under the current policy, a domestic carrier has to fly 10 per cent of the number of flights that it does in metropolitan and large cities (category-1) to destinations in the northeast, Andaman and Nicobar Islands and Jammu & Kashmir (category𔃀).

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Singh said as these smaller cities need to be connected with smaller aircraft, the ministry is also looking at allowing code-share agreements between larger carriers and regional airlines, and even non-scheduled operators who fly these destinations.

An Essential Air Service Fund has already been created with a token amount. "We are also looking as to whether states can underwrite a certain percentage of seats in these regional routes," he said.

The ministry has directed the Airports Authority of India to come out with a format to set up low-cost terminals in smaller cities, requiring an investment of Rs 50-100 crore.

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Singh said the ministry was also working to rationalise the bilateral policy under which agreements have been signed with countries based on two criteria - some deals are based on total number of seats and others on the number of flights.

"Earlier, most planes were of similar size. But that has changed, with bigger planes coming in. So, once the bilaterals come for re-negotiations once we utilise seats from our end, we are more inclined to go only for the number of seats," said the minister.

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On monetising real estate with government-owned Air India, the minister said they'd decided to go beyond merely leasing out the properties and were also considering outright sale.

With the headquarters shifting to Delhi, they were expecting to lease out space in the iconic Air India Building in Mumbai. "We have appointed a real estate consultant who will help us in monetising our real estate," he said.

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On AI's request to again start negotiations with the global Star Alliance, even after he had requested them to look elsewhere after they were rejected, Singh said: "Yes, I told them to look for other alliances. But Air India says it is a better deal for them."

He said he'd also asked his department to look into the ownership issues related to Lufthansa's acquisition of Austrian and Swiss airlines.

According to the rules, any airline can only utilise the seats quota of a particular country if the airline's ownership is from that country.

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The government also has the right to designate one or more airlines; however, substantial ownership and effective control should be vested in the party designating the airline.

There have been questions raised on the ownership of Austrian and Swiss carriers acquired by Lufthansa.

"In the case of Austrian (airlines), we have the shareholding figures but about the Swiss, we have not been given the details of ownership and we can take action there. We are looking into the matter and we will talk to them (the airlines)," added Singh.