The government is considering a
provision for providing viability gap funding (VGF) to encourage airlines to offer connectivity to remote regions, civil aviation minister Ashok Gajapathi Raju said on Tuesday after a meeting with CEOs of major carriers like Tata-SIA, Spicejet, Jet Airways and IndiGo.
?There is a proposal for
viability gap funding to encourage airlines towards remote area connectivity, especially in the northeastern region. We don’t want to compromise on regional connectivity,? Raju said. Incidentally, the North East Council used to provide VGF, but payments have been irregular since 2012.
In separate letters to the ministry last week, airlines like Jet Airways, Spicejet and the yet-to-start Vistara had expressed opposition to the government?s proposed new route policy for remote/regional regions, arguing that the move will push the industry deeper into losses and lead to overcapacity in regions which have very low demand.
The government?s new policy mandates that by end-2016 airlines will have to match capacity deployed on 30 trunk routes with that deployed in the rest of the country ? more specifically, the regional and remote routes.
An airline executive present at the meeting said, ?The meeting was constructive, frank and candid. The minister asked us what the government could do to help, and he was told that it will not be possible for carriers to change their network overnight. However, older airlines and the newer players had slightly different views. No specific announcements were made, so there will be follow-up meetings for that.?
The meeting, the first such after the NDA government took charge at the Centre this May, also deliberated on several other issues. These include high state taxes on jet fuel, and the removal of 5/20 rule that says that only those domestic airlines with over five years of operations and a fleet of 20 aircraft can start international operations.
?Airlines discussed regulatory, infrastructure issues today. There were differences between new and old airlines on the 5/20 rule. The government will take a call, it cannot please everybody. On lower ATF taxes, states with low aviation activity are positive,? Raju said, while adding that the government also wants Indian airlines to take up more international routes, as large chunks of bilateral air traffic rights have remained unutilised.
Most recently, Andhra Pradesh has joined the list of states like West Bengal, Jharkhand and Chhattisgarh that offer lower ATF by cutting taxes to 1%.
