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Apr 18, 2013

Airlines may get direct subsidy for small town

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air India
Planning to take measures to increase regional connectivity from 89 small towns. The aviation ministry is planning to give direct subsidies to airlines, so that they can put these towns on their networks.

To enable this, the existing route dispersal guidelines that makes it mandatory, that “airlines fly a certain percentage of their flights to the northeast, Kashmir and some other areas may be terminated in the coming two to three years.

A senior official said, "We expect an annual subsidy of Rs 400 crore would be required for airlines for flying to these otherwise commercially unviable areas. To fund this, a reasonable amount of about Rs 50 will be levied on all domestic tickets. There will be a bidding process for the flights linking the small towns to bigger cities. Airlines with lowest viability gap funding would be given those routes,"

The ministry has decided that it will not force airlines, but instead pursue them to provide regional connectivity through this route.

This will not make it compulsory for airlines to have small turboprops. But the benefit of the subsidy for flying to small towns in India will motivate the airlines to do so.


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