Govt gets 45 initial bids for more than 200 regional routes

The initial bid proposals submitted before January 16 deadline cover more than 200 routes and as many as 65 airports, 52 of them not served by any airline and 13 under-served airports.

The Airports Authority of India (AAI) has received 45 initial bids from 11 parties to fly routes under the regional connectivity scheme (RCS) launched last year, the Ministry of Civil Aviation said in a statement on Wednesday. AAI is the implementing authority for the RCS, which aims to boost air travel in Tier II and Tier III cities by capping fares at Rs 2,500 per one hour flight.

The initial bid proposals submitted before January 16 deadline cover more than 200 routes and as many as 65 airports, 52 of them not served by any airline and 13 under-served airports. The government has now invited counter-bids against these initial proposals by February 1. After that, the routes would be awarded to bidders who quote the lowest Viability Gap Funding (VGF) requirement against the routes. Under RCS, the participating airlines would be extended VGF — that would be jointly funded by the Centre and the State government concerned.

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To build a corpus for VGF, the government has started charging Rs 8,500 levy per departure of flights on major routes. “To ensure that operations on ground start with minimum time-gap after the bidding is completed, parallel action has also been initiated by the Ministry of Civil Aviation with AAI, state governments, DGCA (Directorate General of Civil Aviation) and Bureau of Civil Aviation Security,” the government said.

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The airfare cap fixed by the government for RCS routes varies from Rs 1,420 per seat (for flight covering distance of 151-175 km) to maximum of Rs 3,500 per seat (for a flight covering distance of 800 km) for airlines using fixed-wing aircraft.

For a one-hour flight covering roughly 476-525 km of distance, the government has put the fare cap of Rs 2.500 per seat. The
cap on air fares on RCS routes will be reviewed periodically based on inflation rate, price of aviation turbine fuel and foreign exchange rate. Apart from VGF, the will provide a slew of tax benefits and concessions to enable airlines to offer flights on these routes at subsidised rates.

An applicant was allowed to submit an initial proposal for either one-way connectivity (a route) or to-and-fro connectivity (two routes) between two airports. Airlines could also submit a network proposal, to connect a minimum of three and up to a maximum of seven distinct airports.

As per the RCS policy, the number of RCS flights to be operated in a week with VGF shall be a minimum of three and a maximum of seven departures per week from the same RCS airport. State-owned company MSTC Ltd was entrusted with the task on inviting applications and conducting bids online.