New Delhi, Feb. 13: The civil aviation ministry is considering a proposal to subsidise airlines flying to smaller airports by Rs 400 crore.
According to civil aviation ministry officials, subsidies will encourage domestic carriers to start operations to smaller cities such as Meerut, Jhansi, Bareilly and Hubli. Airlines have till now shied away from these cities as they find cost recovery on these routes difficult.
Sources said the government planned to give subsidies for three years. The move is part of a consolidated project by the civil aviation ministry to link smaller cities.
The ministry has recently announced its plan to focus on developing low-cost airports, saying lack of infrastructure is responsible for poor connectivity to the cities in the interiors.
Civil aviation minister Ajit Singh had also said the government was augmenting airport infrastructure and had approved the construction of 15 more airports.
The ministry is awaiting a viability report that will help in understanding which cities can be brought under this project. At present, the ministry provides a host of benefits to airlines, which fly smaller aircraft to these cities. These include a lower 4 per cent value-added tax on aviation turbine fuel.
"We want more small planes flying to smaller cities so there could be an increase in exemptions on airlines buying smaller aircrafts," said a senior civil aviation ministry official.
Northeast to gain
Ministry officials said the Airport Authority of India (AAI) had planned to develop Guwahati as an inter-regional hub for the Northeast and Dibrugarh, Imphal and Agartala as intra-regional hubs for the region.
To begin with, the AAI will develop Daparizo Airport in Arunachal Pradesh for 20-seater aircraft in the first phase.
The 12th Five Year Plan observed the importance of the development of civil aviation in the Northeast and said a new policy centred on small aircrafts was required to implement a hub-and-spoke model. A hub-and-spoke model is a system which makes transportation much more efficient by simplifying a network of routes.