Permits will be issued to carriers operating

NEW DELHI:  In what could be a second wave in the aviation sector, after an era of low-cost fares, the government on Thursday created a separate category of scheduled operator-permit for regional airlines to strengthen connectivity to smaller towns and cities.

For the purpose of the policy, the country has been divided into northern, western, southern and eastern and north-eastern regions.

Permits would be issued to airline firms operating turbo-prop and 80-seater planes and helicopters.

The companies would have to undertake operations primarily between airports of any of the four regions.

Air carriers would be allowed to operate from only one metro in a region to any non-metro within the region or outside.

The metros identified are Delhi in the north, Kolkata in the east/north-east, Mumbai in the west and Chennai, Bangalore and Hyderabad in the south. They would not be allowed to operate between two metros, except in the case of the southern region.
Announcing the new policy, Union minister of civil aviation Praful Patel said, “As aviation is growing, there’s demand from Tier-II and Tier-III cities. Besides, there is infrastructure which is not being used for big aircraft.”

He said the objective of having this new category is not to allow surrogate use but to truly have a regional network.

“Lot of applicants (for licence for national scheduled operator), who, so far, have not really been serious enough for asking an all-India certificate, can take advantage of this classification,” said Patel. He, however, clarified that existing scheduled airlines would not qualify for the licence.

“Anybody should not be misusing the provision for cheaper operations,” he said.
On being asked whether existing national carriers could float subsidiaries to take advantage of the new category permit, Patel said, “We will examine the proposal.” He added that this was just a beginning.

Among the incentives available would be the lower 4% duty on aviation turbine fuel, under the declared goods category, for those airlines operating with 80 seaters and a take-off mass less than 40,000 kg. The duty concession was declared in the Budget and is available to existing airlines also.

“We will notify incentives (for regional airlines) from time to time,” he said.
The government expects at least 200 aircraft in the next five years to fly on regional sectors. A company seeking the permit would have to acquire at least three aircraft within one year and five aircraft at the end of two years of operation.

In order to ensure viability and presence of serious players, the minimum paid-up equity requirement has been notified. For aircraft with a take-off mass of 40,000 kg and above, the paid-up equity requirement would be Rs 30 crore for three aircraft.
Addition of each aircraft would require Rs 10 crore more. After achieving Rs 50 crore paid-up equity, no further equity enhancement would be required.

Airlines with a take-off mass below 40,000 kg would require to have Rs 12 crore paid-up equity for up to three aircraft. For additional two aircraft, a total paid-up capital of Rs 20 crore would be required.

Other conditions prescribed by the government for scheduled operator permit would be the same as those for regional airlines.