Air charter and non-scheduled operators? association, BAOA, has sought access to cheaper loans for small aviation firms from the government for its new policy that seeks to expand air connectivity in regional and remote areas. It said that though overseas lenders offer lower rates, they are reluctant to lend to the Indian aviation sector, and without softer loan terms it would become tough to add more small commuter aircraft to meet the targets under the policy.
The policy, for which the civil aviation ministry sought comments last month, states that by the winter of 2016 all scheduled commercial airlines like IndiGo and Spicejet will have to match capacity deployed on a new category of 30 trunk routes, with that deployed on regional/remote routes. To do this, these airlines will be forced to tie-up in a code-share with smaller non-scheduled operators/air charter providers like Invision Air or Ligare Aviation, which operate smaller aircraft and offer last mile connectivity to remote airports.
?(The draft policy) talks of cost side subsidies and revenue side subsidies. We request there should be capital side subsidies as well, in the form of access to cheaper capital / lower interest rates, which will significantly reduce monthly interest paid by Scheduled Commuter Airlines (SCA) for aircraft payments,? the letter sent by BAOA to the ministry said. At present, 33 different NSOPs have 46 aircraft between them ranging from 7-9 seaters like the Beechcraft Super King Air, to 18 seaters like the Dornier 228.
It added, ?Only the strongest & largest Indian companies manage access to cheaper international capital. If the government gives capital side subsidies from Indian banks (possibly supported by the proposed air connectivity fund), it will go a long way to make the SCA sector profitable. And without profits to show, no operator will have the muscle to add more aircraft to its fleet/expand route deployments, which is the objective of the policy.?
Airlines have also written to the ministry highlighting the fact that matching capacity across trunk routes with regional/remote routes would harm profitability severely at a time when the sector is reeling under accumulated losses of almost R50,000 crore and is operating on wafer thin margins of around 5%. Current rules, under the Route Dispersal Guidelines (1994), have far lower requirements ? scheduled airlines have to deploy just 10% of the capacity of Category I routes to Category II routes. Category I routes are largely the same as the new category of 30 Trunk Routes that includes all major metros like Delhi and Mumbai, besides smaller destinations such as Goa, Cochin, and Patna.
For code share with larger scheduled air lines, the new policy will allow non-scheduled operators (NSOPs) to convert to a SCA, where they will have to publish operating schedules and be mandated to operate at least four movements per week on at least one regional route.