Modi’s Regional Connectivity Gambit: Breathing Life Back Into India’s Ghost Airports
The Civil Aviation Ministry last week made public the Modi government’s plan to drastically boost regional air connectivity, an attempt that if successful will revive wasting and abandoned aviation infrastructure while proving to be a major shot in the arm for regional tourism and commerce. While the decision to cap regional air-fares is being sold and viewed in some quarters as a populist or aam-aadmi measure, according to experts and industry insiders The Wire spoke with, it will also be a test of how well the Modi government will be able to conquer the white elephants it has been saddled with and ultimately a test of the prime minister’s infrastructure-driven growth strategy. From 2009, by a number of estimates, the country’s central governments have spent over $50 million on eight airports that currently do not receive scheduled flights. The most well-known case is the Jaisalmer airport, which cost over $17 million to build but never operated any scheduled flights. “Across India, it’s easy to see the end results of the previous government’s plan to open 200 no-frill airports as a means of boosting regional connectivity. They [the airports] are all, for the most part, in various states of disuse. They were opened up due to political pressures, with various local parties thinking if you opened up an airport in a town, flights would automatically follow,” one aviation analyst who helped in drafting the document said. Michael Grabner Authentic Jersey
FDI in airlines may hit air pocket with Centre’s circular on ownership
Experts have described as ‘contradictory’ and ‘confusing’ a circular issued by the Centre stating substantial ownership and effective control (SOEC) of airlines should vest with Indian nationals as it runs contradictory to its decision to raise foreign direct investment (FDI) limit in airlines to 100 per cent. The Department of Industrial Policy and Promotion (DIPP) had issued the circular retaining the clause which said substantial ownership and effective control (SOEC) should vest with Indian nationals. “Hundred per cent FDI with substantial ownership and control lying with Indian nationals is contradictory, baffling and has created needless confusion,” said Amber Dubey, Partner and India Head of Aerospace and Defence, KPMG. While the DIPP circular mentions that 100 per cent FDI equity is permitted for scheduled domestic airlines and regional air transport services, it also adds that “there is no change in the Other Conditions mentioned in the FDI policy for this sector.” The other conditions for the civil aviation sector, in the FDI policy (2016), clearly mention that an air operator permit will be granted to a company only if it is registered in India, the Chairman and two-thirds of its directors are Indian citizens and substantial ownership and effective control is vested in Indian nationals. “Either the government has to change the conditions (of the FDI policy) or amend some rules,” said Devraj Singh, Executive Director – Tax and Regulatory Services, EY. “Unfortunately or fortunately, they have deliberately mentioned that other conditions will remain the same.” There was no clarity on the ownership clause for foreign airlines among both the civil aviation ministry and the DIPP. “Please ask the civil aviation ministry about the other conditions. As far as we are concerned, the conditions remain the same,” a senior DIPP official said. James Van Riemsdyk Authentic Jersey
NCR gets its second airport in Jewar, Uttar Pradesh
The National Capital Region(NCR) is going to have its second international airport in Jewar, Uttar Pradesh in three years time. The Civil Aviation Ministry has taken an in-principle decision for setting up an international airport at Jewar in Gautam Budh Nagar district. The availability of land in the area and upcoming Assembly elections in Uttar Pradesh may have heavily tilted the balance in Jewar’s favour, which was competing with Bhiwadi in Haryana for the second international airport in the region. Right now, the NCR depends on Indira Gandhi International Airport in Gurugram which will need capacity overhaul in the coming days. As the government’s regional connectivity scheme takes off, the load on IGI Airport is expected to rise. Minister of State (MoS) for Civil Aviation Mahesh Sharma has maintained that once the Regional Connectivity Scheme takes off, the need for a new airport, that would have felt after 5-7 years from now, may be felt in the next three years. Indian Express had reported on Sunday that Mahesh Sharma last week said that over 2,200 acres of land for a second airport has been acquired at Jewar and that the GMR Group, which operates the Indira Gandhi International Airport, would be preferred for developing the project. The proposal would soon be sent to the Cabinet for approval. Jaden Schwartz Authentic Jersey
Civil aviation policy proposals: Hybrid till model across airports will inflate airfares, say experts
This runs contrary to the new policy’s objective of making air travel more affordable. Airport charges are universally determined under single till, double-till and hybrid-till mechanisms. In all cases, airport operator gets a predetermined internal rate of return (IRR) as per the concession agreement. Under single-till mechanism, revenues from both aeronautical (landing, parking and ground handling) and non-aeronautical (duty-free shops, hotels, restaurants and airport infrastructure) segments are taken into account to determine the IRR. However, under the hybrid till method, which is currently being used by joint venture airports, only 30 per cent of non-aeronautical revenue is taken towards IRR, allowing the operator to pocket 70 per cent of the non-aeronautical revenue. The idea is to encourage the operators to expand airport infrastructure. But the lower revenue base compared to single-till method practically prompts the operators to levy higher charges (UDF) on passengers and airlines. Deion Sanders Womens Jersey
All You Need to Know About New Regional Air Connectivity Scheme
The Draft Regional Air Connectivity Scheme will be placed in public domain for three weeks to enable Stakeholders to give their suggestions. After this the details of the scheme would be finalised. To operationalise the Scheme Aircrafts and helicopter operators would be required to assess the demand on various routes and submit their proposal for providing connectivity on such routes. They would be required to earmark certain number of seats on every flight for the RCS. The fare for such seats would be capped based on flight distance and time. An index has also been prepared for airfare caps for the RCS seats for fixed wing aircrafts and helicopters depending upon the distance. Conditions set: Airport Authority of India will be the implementing Agency for the Scheme. The RCS route would have to include un-served airports i.e. airports where there is no scheduled commercial flight or under-served airports i.e. airports which have 7 or less scheduled commercial flights per week. The RCS routes would cover a length between 200 to 800 km. But these criteria would not apply to hilly areas, islands, North-east region and for helicopter operations. The procedure for selecting Airline Operators would be based on reverse bidding mechanism. Two half-yearly cycles would be the basis for inviting and evaluating the proposal. The selected Airlines will enjoy a period of exclusivity on the awarded routes. The exact period would be fixed on the basis of suggestions by Stakeholders. Benefits to airlines: The Central Government will support the RCS Scheme by levying an excise duty of only 2% on Aviation Turbine Fuel (ATF) purchased at RCS Airports for a period of three years. The service tax will be levied at only 10% of the taxable value of tickets for RCS seats for a period of one year. The operating Airline will be free to enter into code sharing arrangement with domestic and international airlines. The State Governments will charge Vat of 1% or less on ATF at RCS Airports for a period of 10 years. It will also provide security and fire services free of cost, besides providing electricity, water and other utility services at concessional rates. Airline Operators will exempt RCS flights from landing charges, parking charges, and terminal navigation landing charges. The selected airlines on their part would be expected to commit 50% of the seats on RCS flights to be sold at the specified airfare cap. They would also be required to maintain a frequency of minimum, three flights per week and maximum seven flights per week. A Regional Connectivity Fund would be created to subsidise the operation of the RCS. The Viability Gap Fund (VGF) would be calculated on normative basis. Lamar Miller Authentic Jersey
Modi push to air-link policy despite NITI demurral on sops
The government’s policy think tank, NITI Aayog, had serious objections to the civil aviation ministry’s Regional Connectivity Scheme (RCS), the draft policy of which was announced last week. The Aayog’s main objection was on the cross-subsidy idea, of levies on trunk routes to fund connectivity to places where an airline would not otherwise wish to go. But Prime Minister Narendra Modi’s support saved the day for the draft scheme. The ministry had suggested such connectivity through revival of near or fully defunct airports. It appealed to the Prime Minister’s Office (PMO) and was, after presentations and questions, able to get the support of the PM. Improving of regional connectivity was a key feature of the National Civil Aviation Policy, unveiled last month. The concept also found place in the ruling Bharatiya Janata Party’s manifesto during the 2014 general elections. RCS proposes to reduce the cost of operation for airlines to places off the main routes through concessions, including through a Viability Gap Fund (VGF). For the latter, the Centre plans a levy on airlines in the trunk routes, pushing up air fares in those. Logan Cooke Authentic Jersey
15 airports in Karnataka can opt for regional link plan
Fifteen unserved airports or airstrips in Karnataka have found a place in a list of 394 facilities across the country that could opt for the regional connectivity scheme. According to an official draft, in south India, Karnataka has the highest number of unserved airstrips of airports that could opt for the ambitious scheme drafted by the Ministry of Civil Aviation “to connect the unconnected” and “serve the unserved or underserved”. The unused airports or airstrips in Karnataka include Ammasandra, Baldota/Koppal, Ballari, Bidar, Ginigera (Hospet), Hassan, Jakur, Kolar, Mysuru (Mandakalli), Raichur, Shahbad, Vidyanagar, Yadgir and Yelahanka. While Tamil Nadu has 13 such facilities, Telangana has 10, AP 4 and Kerala one. West Bengal and Rajasthan have the highest number of facilities (35), followed by Bihar (32) and Uttar Pradesh (29).
90 new small airports in next 12 months
India will push to get 90 new airports up and running over the next 12 months, under a government plan to service smaller cities that have missed out on the country’s air travel boom, officials said. Prime Minister Narendra Modi wants to accelerate growth in the world’s fastest expanding aviation market while encouraging airlines like IndiGo, SpiceJet and Jet Airways to fly more people to and from smaller, often poorer cities. Scores of new airports have been built around the country but many are yet to open because airlines do not see sufficient demand as ticket prices are too high for a majority of Indians. That has raised worries the government is building infrastructure few can afford to use. Civil aviation ministry officials, however, said the government has identified 30 recently-built airports, and another 60 nearing completion, that it says it can get airlines to start flying to soon. Individual states will offer free land and emergency service support to all newly built airports, while landing charges and taxes on aviation fuel will be kept at low levels, they said. Matthew Spencer Womens Jersey
Air India bars crew from ‘choosing’ flight mates
The Maharaja does not want its crew to get naughty on duty. Air India’s crew management system (CMS), which pairs pilots and cabin crew for flights and prepares rosters, routinely gets requests from crew to be paired with specific members of their choice. Keen to avoid a scandal since some married crew members also make requests, the airline has now banned CMS from accepting such requests and warned of action against crew members who do so. The action comes two months after an AI captain kept 110 passengers, on board an aircraft that was to fly from Chennai to Male, waiting for over two hours as he insisted on flying with a particular lady co-pilot. Terming such kind of requests as “inappropriate”, the order issued by AI general manager (operations) Captain RS Sandhu this Monday says: “It has been observed that CMS crew controllers and schedulers at bases are being approached by some crew, who are not directly associated with CMS functions, for requesting flights for themselves as well as other crew members… during planning or day of operations phase of the roster. The higher management has taken a very dim view of such indiscretion.” “All the crew controllers and schedulers are hereby directed to refrain from entertaining such requests, regardless of position, being held by such crew members. The same should be immediately brought to the notice of the undersigned. The same is for strict compliance, and any deviation will entail strict disciplinary action,” Sandhu’s strongly worded circular says. A senior AI commander, who has worked with several airlines, said: “Insistence to be paired with crew members of choice, including by married people, is common across all airlines —Indian and foreign — and not just unique to AI. It may be called the underbelly of our profession.” “Our top management has clamped down on the practice of pairing requests as it can play havoc with rostering system with people refusing to fly at the last minute unless sent with a member of their choice. And also we wanted to avoid any scandal,” he added. Mikael Backlund Jersey
Regional Connectivity Scheme fineprint for airlines: 10 facts
Civil Aviation Minister Ashok Gajapathi Raju, on Friday, revealed the fine print of the regional connectivity scheme which is expected to bolster air connectivity by promoting affordable flying. In the new Civil Aviation Policy, the government has capped passenger fares for flight journeys from unserved and underserved airports at Rs 2,500 per hour of flying for approximately 500 kilometres under the regional connectivity scheme. Here are the 10 salient features of the regional connectivity scheme, which is aimed at making flying affordable for the masses: 1. The regional connectivity scheme will be applicable on route length between 200 to 800 km with no lower limit set for hilly, remote, island and security sensitive regions. 2. The Central government will provide concessions to the tune of 2 per cent excise on Value Added Tax (VAT) and service tax at 1/10th the rate and liberal code sharing for regional connectivity scheme airports. 3. State governments will become key partners and provide free security and fire service, utilities at concessional rates and reduce VAT on ATF to 1 per cent. 4. No landing charges, parking charges and Terminal Navigation Landing Charges will be imposed for regional connectivity scheme flights. 5. A Regional Connectivity Fund (RCF) will be created to fund the scheme via a levy on certain flights. States are expected to contribute 20 per cent to the fund. 6. For balanced regional growth, allocations will be spread equitably across 5 regions – North, West, South, East and North East with a cap of 25 percent. 7. A minimum of 3 and a maximum 7 regional connectivity scheme flights per week per route with minimum 9 and maximum 40 seats per flight 8. The regional connectivity scheme will be in operation for 10 years with individual route contracts to be for a 3-year span. Limited period exclusive route rights will be allotted to selected operators. 9. Interested operators can submit initial route proposals. The gap in costs and revenues, if any, will be compensated through Viability Gap Funding. (VGF) 10. Market-based reverse bidding mechanism to determine least VGF to select the airline operator with the right to match to the initial proposer. The government said VGF will be reduced if passenger load factor remains high and will be discontinued after 3 years when route becomes self sustainable. Will Compton Authentic Jersey