Monday, October 24, 2016

We have dramatically cut entry barriers for regional carriers: Jayant Sinha

Civil Aviation Minister Jayant Sinha says the intent behind his government’s ambitious ‘Udan' scheme is to create a viable business model for regional and smaller players where they will be offered subsidies to reduce their cost of operation, which, in turn, will give them the leeway to reduce fares. Udan is an acronym for ude desh ka aam nagrik or the common man should fly. The scheme was unveiled on Friday. Sinha tells ET that he is optimistic that the scheme will “jumpstart” the regional aviation market. Edited excerpts:

Can you elaborate on how the scheme has been made attractive?
Regional airline business model was not viable and UDAN (acronym for ude desh ka aam nagrik or the common man should fly) will make it viable. That will happen through subsidies that will help reduce cost of operations and reduce cost of flying by easing the way business is done in the leasing market. And with these three interventions, the regional market will jump-start.

The three important things that have completely transformed the regional connectivity scheme are the exclusivity period on a route has been increased to three years from one, we are looking at reducing airport charges at metro airports for regional flights and we are working with lessors to ensure that aircraft is available for the regional airlines. With these, the entry barriers will reduce dramatically. We are looking at a viable business model where the regional players operate on a hub and spoke kind of a model, where smaller airlines feed to these hubs. We are cautiously optimistic but we have to support the development of the market.
24/10/16 Mihir Mishra/Economic Times