India Govt Unveils Regional Airlines concept to Boost Connectivity

Flying could soon become the preferred mode of travel for people in small towns and cities throughout the country. To give a boost to regional connectivity, the Government on Thursday unveiled the concept of regional airlines which seeks to boost air connectivity between tier-II and tier-III cities.

A regional airline would only be allowed to operate flights from any airport in the four designated regions to any airport in the country. Most of them would, however, be prohibited from operating flights to a metro airport outside their region. The exception to the rule is in South India where a regional airline would be allowed to operate among the three existing metro cities of Hyderabad, Chennai and Bangalore.

In effect this would mean that a regional air pline operator would be permitted to fly from Jaipur-to-Coimbatore but would be prohibited from operating from Jaipur to Kolkata. In the South an operator would, however, be permitted to operate flights connecting Hyderabad, Bangalore and Chennai.

“The South already has three metro airports. There is not much the Ministry can do,” the Minister for Civil Aviation, Mr. Praful Patel, said, while addressing a press conference.

Technically speaking, an entrepreneur would be allowed to become a regional airline with one aircraft although they would be required to have a fleet of three aircraft within a year and must scale up to five by the end of the second year of operations. The existing equity requirements for setting up an airline at present would also apply to those seeking to set up a regional airline.

“We will not encourage existing national airlines to operate under the regional airline banner. The idea is to increase air connectivity which could in the years to come become aviation hubs around the country,” the Minister said.

While there is no bar on the number of regional airlines that each region could have, the Government initially does not expect to see more than one-or-two such airlines in each geography. “We will not prevent any airline from setting up but we will closely examine the business plan. This is a heavy investment industry and we do not want sickness,” the Minister said.

The latest announcement of the Ministry of Civil Aviation does not offer any sops for operators planning to utilize the larger Boeing 737 or Airbus A-320 family of aircraft. The policy could benefit entrepreneurs planning to set up an airline using smaller aircraft seating up to 80 passengers as the Union Budget 2007-08 has a provision for providing concessional sales tax of four per cent on aviation turbine fuel for smaller aircraft, including jets. Besides, smaller aircraft are also not charged any landing and parking charges throughout the country. At present, ATF costs account for between 30 per cent and 35 per cent of the operating cost of airlines.