Need policy boost for regional air connectivity

Several international alliances and tie-ups are taxiing for take-off in domestic civil aviation. The move would step up investment, shore up connectivity and yield competitive airfares. The policy change allowing airlines abroad to invest in domestic carriers has been the game changer.

However, we need more: we need to boost regional air connectivity in our vast hinterland to reap manifold direct, indirect and catalytic benefits of air services in a host of tier III and IV cities.

An International Civil Aviation Organization study finds that the output multiplier of aviation is 3.25, and the employment multiplier 6.10. It implies that every Rs 100 spent on air transport contributes Rs 325 worth of benefits, and every 100 direct jobs in air services leads to 610 jobs in the economy. The relevant benefits for India would surely be far higher given the infrastructural deficit.

It points at the pressing need to firm up proactive policy so that regular air services are available in the hitherto unconnected larger towns of the country. What’s required is a policy for low-cost airports and regional airlines, with the objective of reducing entry and operational costs. We need to rationalise the tax on aviation fuel and withholding tax on aircraft lease, and other flying and take-off charges.

The Centre does mandate much lower tax on fuel used in aircraft below a threshold weight, but only for scheduled service providers.

Extend that to regional air taxi operators, even as states converge on a uniform, low rate of tax on fuel. Also, state governments need to form dedicated agencies for speedy regional connectivity.

Further, scheduled regional airlines should be permitted operations to other regions, other than metro airports, and to trade off their available seat kilometres and code share with scheduled airlines.