Prime Minister Narendra Modi’s ambitious plan to boost regional air connectivity seems to have run into trouble.
Prime Minister Narendra Modi’s ambitious plan to boost regional air connectivity seems to have run into trouble. Under the regional connectivity scheme (RCS), the government is pushing the development of airports across the country, especially in unserved and underserved areas, but nearly three-fourths of the airports managed by Airports Authority of India are incurring losses.
“The cost of infrastructure and operational cost of managing an airport is extremely high. An airport in a small city needs the same equipment as are required for large airports like Mumbai. It requires the same kind of air-conditioning and amenities,” a former board member of Airport Authority of India told Financial Express Online requesting not to be named.
At present, there are 129 operational airports in the country. However most of them, nearly three-fourths, are incurring losses, raising questions about the viability of their business model.
“Airports Authority of India (AAI) owns and manages 129 airports out of which 94 were running into loss in the financial year 2017-18,” civil aviation minister Suresh Prabhu informed the Lok Sabha today in response to a question.
In October 2016, the government announced a special scheme called UDAN to boost air connectivity in the unserved and underserved areas of the country. Under the first and second round of regional connectivity scheme, 73 airports located in unserved and underserved areas have already been awarded to scheduled airlines.
“Under the UDAN scheme, a cap has been fixed for air tickets and airports charges for these airlines have been kept low to make the scheme viable. However, this scheme may pick up in next three to four years and airports will also start generating revenue alongside the airlines,” said the former board member of Airport Authority of India.
Civil aviation minister Suresh Prabhu said the losses were mainly due to low revenue generation to meet the total expenditure of the respective airports.