Centre wants measures by states to improve air connectivity

New Delhi: Describing state governments as major stakeholders in improving air connectivity in the hinterland, the Centre wants them to take certain financial measures like slashing VAT on jet fuel uplifted by airlines and underwriting of some seats to encourage aviation growth.

It also wants the state governments to waive electricity and municipal charges like house and property taxes for five years for airport infrastructure.

The Civil Aviation Ministry has also identified 87 regional "incentive destinations" and made it mandatory for scheduled airlines to mount capacity "which is at least equal to the capacity deployed on trunk routes" by October 2015.

Scheduled airlines would have to deploy at least six per cent of their capacity on trunk routes on connective these newly-identified destinations, like within Jammu and Kashmir between Srinagar, Leh and Jammu.

A draft policy to promote regional and remote area connectivity says the development of airport in strategic and remote areas by the Airports Authority of India (AAI) would be guided by "the support provided by state governments".

In order to promote air connectivity across the country as a priority, the ministry has proposed a major shift in the route dispersal policy, promising airlines, which fly to these regions exemption from various charges and other incentives.

The new policy aims to encourage airlines to operate to airports in remote and strategic areas where infrastructure has been developed for operations but have remained unserved or were under-served.

The government plans to offer the airlines concessions and incentives or provide viability gap funding for such operations and making it obligatory for the carriers to fly to such destinations.

The draft also suggests setting up of an Air Connectivity Fund as a long-term measure to provide financial support to promote air connectivity to remote and strategic areas.

The size of the fund, its tenure and an institutionalised mechanism to administer it would be notified by the government separately, it said.

Among the "incentive destinations" are cities and towns spread across the country, including those in the northeast, Jammu and Kashmir, Andaman and Nicobar and Lakshadweep islands.

The states also include Andhra Pradesh, Jharkhand, Punjab, Maharashtra, West Bengal, Bihar, Karnataka and Uttarakhand.

Recognising state governments as "important stakeholders" in improving air connectivity, the draft policy said they "will be asked to provide" services like security, fire-fighting, proper infrastructure access to airports.

Apart from this, the state governments would have to reduce value added tax (VAT) on fuel uplifted from a state, waive duty on electricity charges, municipal charges and underwrite a number of seats per airline.

Among other concessions proposed to be provided to the air carriers are exemption from landing and parking charges, Route Navigation Facility Charges, passenger service fee, fuel throughput charges and "any other charges levied by Airports Authority of India," the draft said.