Policy to boost regional air connectivity in 3 months: Ajit Singh

New Delhi, Jan 2:  

The Government hopes to have a plan ready to promote regional air connectivity within the next three months, Minister for Civil Aviation Ajit Singh said on Wednesday.

In an informal interaction with the media, the Minister said a committee appointed by the Ministry to give recommendations to promote regional connectivity would submit its report by January 31. “We hope to be able to have some policy in place in about two months after the report is submitted. The idea is to make these operations more commercially viable,” he said. Declining to get into specifics of the report, officials of the Ministry of Civil Aviation said it was unlikely that the existing sops provided to airlines to improve connectivity to far-flung areas and small towns would be done away with.

To promote regional connectivity, the Government has stipulated that airlines operating small aircraft seating up to 70 passengers will be provided aviation turbine fuel (ATF) throughout the country at uniform rate of sales tax of four per cent. This is a big fiscal incentive for airlines, as the level of taxation on ATF varies from four per cent to over 30 per cent in the country. The high rate of sales tax along with the high domestic cost of ATF means that fuel accounts for between 40-45 per cent of the operating cost of domestic airlines.

The Minister said that the report would also relook at the route dispersal guidelines for operating flights keeping in mind the need to promote connectivity throughout the country, not just between major metro cities.

Air India

The loss-making Air India is likely to become cash positive this financial year even though it would continue to make an overall loss, official sources said.

“The national carrier might report EBITDA positive performance in 2012-13 as its financial performance has shown considerable improvement due to the implementation of the turnaround and financial restructuring plans,” the sources said.

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