Indian government to subsidise air travel to Asia

The Indian government is working on a scheme to subsidise flights to Asian cities such as Singapore, Bangkok, Dhaka and Kuala Lumpur to spur growth in international traffic.

The proposed international UDAN scheme will be partially funded by state governments that opt for the scheme. According to the draft, state governments will identify the routes to be connected and airlines will assess demand on the identified routes and submit proposals for providing flights to such destinations. The domestic UDAN scheme that aspires to make flying accessible to the common man by offering tickets priced below Rs. 2,500 is being funded by levying a fee on each departing flight connecting major cities.

The state of Assam has shown an interest in supporting international flights from its capital city of Guwahati and is learnt to have in-principle committed Rs. 1 billion for promoting international air connectivity from the state. Until now, the travellers form Assam and the north east India region use Kolkata airport as the international gateway.

Apart from financial support from states, the airline selected to operate subsidised flights could also get discounts from state-owned Airports Authority of India for landing, parking and housing of aircrafts. The international air connectivity scheme UDAN International proposes to provide exclusive rights to the selected airline for three years from the date of commencement of a flight. During this period, no other airline will be granted any subsidy on the same route.

The crux of the subsidy scheme is that the subsidy support would be provided to selected airlines only for the passenger seats which remain unsold at the time of flight operation from the total number of passenger seats for which subsidy is requested.

The draft scheme has laid down eligibility criteria for bidding of the international routes. Under this, the airline operators which are designated airlines of India would qualify for participation in the scheme. Operations under the scheme will be permitted through fixed wing aircraft only with passenger seating capacity of more than 70 seats. The selected airline shall be obligated to commence flight operations within 90 days from the issuance of letter of award.