New Policy, New Routes
REGIONAL THROUGH AIR
CONNECTIVITY
was in the election manifesto of the Bharatiya Janata Party-led National Democratic Alliance. The need to connect India through multi-modal transportation has been sacrosanct with the Narendra Modi-led government and accordingly the draft National Civil Aviation Policy ( NCAP) has laid greater emphasis on this subject, knowing pretty well that economic momentum would not only come from the major metros but also from Tier-II and Tier-III cities.
Several industry analysts, operators and other stakeholders are pinning their hopes on regional aviation and termed it the ‘next big wave’.
The Vice President, Asia Pacific, Embraer Commercial Aviation, Mark Dunnachie, has aptly responded on what the impact of the policy will be to boost regional connectivity in India. He said, “The potential new policy in India to boost regional connectivity can open up routes that currently do not have nonstop flights. This figure currently stands at around 40. This would be a very positive development for travellers in India.”
“The routes have a PDEW (passengers daily each way) density of 25 to 100 and the average distance for these routes are estimated to be 980 nm — way beyond the typical optimum economic range of a turboprop but suitable for jets between 70 and 130 seats such as Embraer’s E-Jets family or our second generation E-Jets E2s.”
“Jets fly faster and offer a more comfortable passenger experience, complementing the operation of larger narrow bodies, and can, in addition, offer substantial cargo revenue benefits.”
In sync with this growth opportunity, the regional players have already started looking at newer routes and these routes can be best served by regional jets and for extremely thin routes, the turboprops. Air Costa has plans of opening up new routes as soon as it gets its fourth E190 aircraft and so are the plans of Air Pegasus and TruJet who operate ATR aircraft.
Thanks to the regional connectivity plan, the operators are now looking at under-served and un-served destinations. The policy states that the Regional Connectivity Scheme ( RCS) will come in to effect from April 2016. To encourage passenger movement, the policy has put an allinclusive airfare not exceeding ` 2,500 per passenger, indexed to inflation for a one-hour flight on RCS routes. The boost to regional connectivity is like to come by way of revival of un-served or under-served aerodromes and airstrips; concessions by different stakeholders; Viability Gap Funding (VGF) for scheduled commuter airlines, etc.
Efforts are on to develop airports to cater to regional connectivity. Currently around 75 out of 476 airstrips/airports have scheduled operations. Revival of airstrips, depending on demand, as no-frills airports will be done at a cost not exceeding ` 50 crore, mostly through the Airports Authority of India.
The RCS will be made operational only in those states which reduce VAT on the aviation turbine fuel (ATF) at these airports to 1 per cent or less. The state governments are expected to provide free land and multi-modal hinterland connectivity as required.
For 10 years from the date of commencement of flight operations under RCS, there will be no airport charges levied on scheduled commuter airline (SCA) for their operations under RCS. Similarly, service tax on tickets under RCS will be exempted. The state governments will provide police and fire services free of cost. Power, water and other utilities will be provided at substantially concessional rates. And ATF drawn by SCAs from the RCS airports shall be exempt from excise duty. Also the VGF indexed to ATF prices and inflation will be provided for a particular route, on a competitive bidding basis if necessary, for a period of 10 years from commencement of operation.
The policy is expected anytime soon and will certainly transform the landscape of Indian aviation, by not just bringing in first time flyers to the market, but also opening up the economy like never before.