Govt dangles subsidy carrot to private airlines

The State Government plans to subsidize operations of private airlines in order to ensure airline traffic at minor airports coming up across the State. If the draft minor airport (operation and maintenance) policy formulated by the State Infrastructure Development department is approved by the State Cabinet, the Government will bear the cost of some important components of O&M of minor airports, including fuel cost, personnel cost, depreciation cost and airport charges. The aim is to woo private firms in taking up O&M of minor airports by making it financially viable, officials sources. The draft policy is likely to be placed before the next meeting of the State Cabinet for its approval. With the crash of aviation sector in the country, private companies are shying away from taking up O&M of minor airports in the State. The Government has had a bitter experience with Mysore and Belgaum airports. Though they are ready for operation, no private company is showing interest to take up O&M. For, private firms are not finding the operations viable. There are complaints from public that ticket prices are on a higher side to Bangalore-Hubli sector. The cost goes up if the load is less, officials pointed out. Officials sources said the Government is worried about the fate of airports projects already taken up. Work has commenced on five new airports in Shimoga, Gulbarga, Hassan, Bijapur and Bellary on public-private partnership basis. The existing Hubli (into an international airport), Belgaum and Karwar airports are to be expanded. Moreover, 13 airstrips for small towns, including Davangere, Raichur, Bagalkot, Chikmagalur, Gadag, Chitradurga and Kollegal have been lined up. Aimed at providing air connectivity at every 100 km distance across the State, the airports are expected to be completed in next two years. “But the big question now before the Government is: Will private firms find these projects financially viable to take up their O&M once they are completed? Minor airports were planned during 2006-07 when the country was witnessing aviation boom and private companies were eager to invest. Even private airlines had seen immense potential in tier- II cities. Now, it is feared that private firms may not show any interest,” officials explained. Nodal agencies The department appointed the Infrastructure Development Corporation (Karnataka) Limited (iDeCK) as the nodal agency to implement airstrip projects in Chitradurga, Karwar, Haveri, Kollegal, Yadgir and Koppal. The Karnataka Housing Board will be the nodal agency for implementing proposed airstrips in Raichur, Gadag, Chikmagalur, Bagalkot, Udupi and Davangere. The two nodal agencies have been entrusted with the responsibility of determining the type of airstrips required, identify and acquire the required land and getting the required clearance from Airport Authority of India, officials said. The department has planned to develop airstrips in three phases. In the first phase, it will take up about four important places. Each of the airstrip is estimated to cost Rs 40 crore.

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The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).