As financial trouble disrupted the operations of two regional carriers, a top official said the airlines operating under the regional connectivity scheme will not face such difficulties unlike others in the market.
As the Civil Aviation Ministry draws up the final contours of the ambitious Regional Connectivity Scheme (RCS), turbulent financial weather faced by Air Pegasus and AirCosta have sparked off concerns over the viability of such airlines.
Assuring that the government would be open to examining any request for help from airlines, Civil Aviation Secretary R N Choubey said RCS provides for “huge concessions and benefits” for regional carriers.
On whether the episodes of Air Pegasus and AirCosta could be a negative for RCS, Choubey said the two airlines were functioning under the template of market forces.
“RCS, it gives huge concessions by way of “fiscal concession and also by way of viability gap funding… This is something which is not available to regional airlines which are operating purely in a market dynamics.
“Therefore, difficulties which regional carriers may be facing in the market forces, those difficulties would not happen when they work in the template of RCS,” he told PTI.
Embarking on ambitious plans to enhance regional air connectivity, the government has come out with RCS in the national civil aviation policy.
Under RCS, the Civil Aviation Ministry has proposed a mix of financial incentives as well as concessions along with viability gap funding.
The proposed RCS, which is expected to be operation from mid-August, would see the Centre pitching with 80 per cent share and states concerned making up the remaining 20 per cent towards viability gap funding. In case of Northeastern region, the state’s share would be 10 per cent.
After suspending operations for a day on Aug 4 and then operating a curtailed scheduled on Friday, AirCosta yesterday announced resumption of full-fledged operations. The services were disrupted for two days in the wake of financal issues with its lessors over alleged non-payment of rental dues.
The development close on the heels of another regional airline Air Pegasus deciding to suspend services indefinitely following financial turmoil.
In the past, a few regional airlines have folded up on account of operational and financial troubles.
Among others, Religare group-promoted Air Mantra shut down its operations in March 2013. Back in 2009, another regional carrier MDLR Airlines had stopped services.