Regional air connectivity scheme

Author: 
Devsagar Singh

If all goes well, the first flight of the much awaited regional connectivity scheme (RCS) of the civil aviation ministry will take off any day this month. Expectedly, it will be the PSU carrier Alliance Air, a subsidiary of Air India, which will begin the operation between Bathinda (Punjab) and Delhi for a ticket price of Rs 2500 one way.
Among other routes the Alliance Air will fly include Ludhiana-Delhi, Shimla-Delhi, Agra-Jaipur, Bikaner-Delhi and Gwalior-Delhi – all business or tourist hubs with immense potential. There is no question of the flights losing money if they operate strictly on schedule, ie, if they maintain their on-time performance.
In all likelihood, Alliance Air will operate in these short haul routes   twin-engine fixed wing turboprop like ATR 72-500 aircraft in which 70 to 80 per cent occupancy will give it good profit.  These flights will be of a maximum of one-hour duration and the ticket price has been kept at Rs 2500 for half the seats with the rest half going at a market price. This is where the problem may arise. The RCS operators will be free to charge “market” rates which could be disproportionately more. They may begin to charge at whims in the absence of a fixed limit.
Indeed, this is not how it was planned when the scheme was conceived. Since the objective was to promote regional routes and give benefits of cheaper travels to people, the fare was capped at Rs 2500 for one-hour flights. It was altered somewhere along the way under pressure from the operators’ lobby.
Judging by the routes granted to five operators so far, the Government would have done well to keep the ticket price at Rs 2500 uniformly. Take a look of these routes cursorily: Low cost carrier Spicejet will operate flights between Delhi-Adampur, Kandla-Mumbai, Pondicherry-Hyderabad, Mumbai-Porbandar, Jaisalmer-Jaipur and Kanpur-Delhi, among others. All these routes are expected to give good number of passengers for small size aircraft. There is no question of flights losing money on these routes, knowledgeable circles feel.
It is the same story for Air Deccan which has won 34 routes including Kolkata-Burnpur, Kolkata-Cooch Behar, Bagdogra-Durgapur, Kolkata-Jamshedpur, Kolkata-Rourkela, Mumbai-Kolhapur, Mumbai- Nashik, Mumbai- Sholapur, among others. The airline has also got north-eastern routes connecting cities and towns like Shillong, Aggartala, Aizawl, Dimapur etc.
Air Odisha Aviation, similarly, will be operating in routes like Gwalior-Delhi, Gwalior-Lucknow, Jamnagar-Ahmedabad, Puducherry-Chennai, among others.  There is no question of losing money in these routes if operated   professionally. It is, therefore, considered to be a wrong decision to allow half the seats to be sold at market rates.
As it is, the government is committed to provide hefty concessions in fuel prices, landing and parking charges, other taxes in order to help the carriers. It would have been wiser to keep a uniform price for all seats maybe on an experimental basis to begin with.
Now the civil aviation ministry will be obliged to keep a tab on the ticket prices because of the market rate mechanism. Who will fix the market rate? Some operators may go for what they say dynamic fare. It is will known how passengers are fleeced in the name of dynamic fare. There are bound to be complaints of overcharging etc. Freeing half the seats will create more problems than they will solve.
Surely, the government’s record on managing airline company is no secret. The example of Air India is before us. Even so, the government should have kept its word of capping the RCS fare as Rs 2500 uniformly without introducing market rate element for half the seats.
While Alliance Air is likely to be operational soon, Air Deccan is scheduled to start its operations in May, Spicejet in June and Air Odisha in September. Trujet, another aviation company, is waiting for final approval from the government.
Regional Connectivity Scheme will be a game changer if it is implemented well. A large number if tier II and tier III cities and towns of the country are waiting for air connectivity for long. So many unutilized and underutilized airports/airstrips in the country will become operational. They are expected to create jobs in the hinterland and push tourist and business traffic in the long run. (IPA)

Sunday, 9 April, 2017