5 private operators to bid for NEC tender

Shillong, Jan. 4: Passengers with a desire to fly from Shillong, Tezpur and Lilabari to Guwahati, Calcutta and New Delhi will have to be patient at least till April 1 this year.

After the discontinuation of subsidy worth crores of rupees to Alliance Air, at least five private operators have apparently shown their inclination to participate in the expression of interest floated by the North Eastern Council (NEC) to provide air connectivity from Shillong airport at Umroi, as well as Tezpur and Lilabari to Guwahati/Calcutta/New Delhi.

The five private operators include two scheduled operators and three non-scheduled ones ' Pawan Hans, Indo Power Projects, Quickjet Cargo, Seven Sisters Airlines and Northeast Shuttles.

However, having paid nearly Rs 350 crore to Alliance Air as subsidy for nearly 10 years without satisfactory service, the subsidy that NEC will provide this time to the successful bidder will be "much less" compared to what was given to the Air India subsidiary. "Big private players like Jet Airways are also likely to participate in the bid. But this time, the subsidy to be given to the airlines for flying to and from the three airports will be much lesser," NEC secretary U.K. Sangma said here today.

From 2003 to 2007, the council had provided subsidy to Alliance Air in the form of Viability Gap Funding (VGF) amounting to Rs 35 crore per annum.

For 2008 and 2009, the funding was around Rs 38.5 crore per annum, and for 2010 and 2011, it was Rs 47.07 crore per annum. However, with effect from December 31, 2011, the memorandum of understanding entered into between the NEC and Alliance Air came to an end and from then onwards, the agreement was not renewed, Sangma said.

He said the reasons not to extend the funding in 2012 include non-adherence by Alliance Air to the terms and conditions laid down in the memorandum of understanding, unsatisfactory service, poor public perception, disincentive to private players, absence of impact on passenger fares and unjustified VGF support. "These issues were also deliberated in the 61st NEC plenary held in June 2012 and it was decided not to extend VGF support to Alliance Air in 2012 and beyond," the NEC secretary said.

He added that the demand of Alliance Air of Rs 60 crore VGF support from NEC for 2012, without entering into a memorandum of understanding, was not in order.

"Any subsidy support beyond December 2011 does not arise," Sangma said.

Recently, it was announced that Alliance Air would re-deploy its aircraft from Shillong, Tezpur and Lilabari on other profitable routes.

In the recent expression of interest, the NEC has specified that one of the key objectives include intra-region air connectivity using fixed wing jet/turboprop aircraft with short take-off and landing capability.

"The expression of interest will allow market forces to bring out clearly minimum subsidy support required to air-service the three airports," Sangma said, while stating that even Alliance Air can participate in the bid.

He said the Union ministry of civil aviation may expedite policy intervention based on recommendations made by the Rohit Nandan Committee to boost air connectivity in the region.

The committee had recommended the setting up of a regional air connectivity fund and permission of the directorate general of civil aviation to non-scheduled operators for regional service in the northeastern states according to their published schedule. Also, scheduled airlines should be allowed to have code-sharing with non-scheduled operators for providing feeder service in the region.

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