Sops for budget airlines flying to smaller towns

MUMBAI: Corporates and local governments have begun offering financial incentives to airlines to fly to smaller towns. Companies, whose people suffer most from long road journeys in the absence of air-connections, have begun underwriting seats for airlines to sustain the airline operations.

Tata Steel, for instance, guarantees 30 seats daily on Air Deccan’s ATR flights to Jamshedpur. In a similar deal at Kandla, Welspun Gujarat has taken up 20 seats to make travel easier to its plant at Anjar. The companies, usually have several executives or visitors travelling to the sites daily. They guarantee to fill up the seats or pay for them at a pre-determined fare level.

“The concept is much more evolved in Europe, where local governments compete for airline business by offering financial sops to airlines, particularly low-cost carriers,’’ says Air Deccan COO Warwick Brady. The municipal authorities at the city of Blackpool were willing to offer Ryanair e3 per passenger, an offer that was turned down for a higher bid by Liverpool.

Indian cities still have a long way to go in this direction and the importance of air linkages are being realised only recently. State governments are baiting airlines by offering lower sales tax on aviation fuel. Tax rates at Raipur, for instance, have been brought down to 4% by the Chattisgarh government.