The aviation sector is set to get a leg up with the government working on a proposal to invest Rs 6,000 crore this fiscal year to revive and develop 75 regional airports, which currently see little activity.
The civil aviation ministry will soon send a formal proposal to the finance ministry and both have already discussed the matter at a recent meeting, a senior aviation ministry official said. “The project will be implemented by the Airports Authority of India,” the official told ET, speaking on the condition of anonymity
The proposal is in line with the government’s stated plan to take flying to the masses, by boosting air connectivity to small cities and towns, and subsidizing fares to such destinations.
In his budget announcement in February, Finance Minister Arun Jaitley had said the central government would partner with states to develop some of these airports to improve regional connectivity. These facilities “can be revived at an indicative cost of Rs 50 crore toRs 100 crore each”, he had said.
But the aviation ministry official said the government’s estimate is a little low. “Even AAI (Airports Authority of India) feels that each airport cannot be revived in just Rs 100 crore and the allocation should be more.”
Analysts said the government should look at the viability of an airport before investing money in reviving it.
“The government would want to provide infrastructure for air connectivity to as many points as possible, which is a laudable objective,” said Sanjay Sethi, who runs Nector Consulting and was head of the infrastructure group at Kotak Investment Banking. “But at the same time, it would not make sense to develop or revive airports in areas which do not have the potential for new flights. Only those airports should be developed where there is a viability.”
The proposal is in sync with the plans outlined in a draft of the aviation policy made public late last year. The government wants to fix fares on regional flights, to a maximum of Rs 2,500 for flight lasting an hour, to attract more people to fly. The rest of the cost would be met through a viability gap fund. The National Civil Aviation Policy 2016 is likely to be taken up for clearance by the Union Cabinet this week. K.J. Wright JerseyShare This