Madhya Pradesh is leading by example in air-connectivity. Here’s how

Madhya Pradesh is the only state in India which provides subsidy to an airline operating regional flights, and now other states may follow suit soon.

The Civil Aviation Ministry wants states to underwrite a fixed number of seats per flight operated by local airlines to boost intra-state connectivity.

"We have told states that regional connectivity cannot be achieved without states pushing for it. They have been asked to study the MP model to ensure smaller cities in their respective states get air connectivity," a ministry official told Economic Times on the condition of anonymity.

Last month, the ministry held a meeting that was attended by representatives of Madhya Pradesh, Bihar, Uttar Pradesh, Gujarat, Maharashtra and Rajasthan on the matter.

The Government of central Indian state provides financial backing to airline company Ventura Airconnect, which connects cities including Bhopal, Gwalior, Indore, Jabalpur, Satna, Khajuraho and Rewa.

However, industry executives and experts stressed on other initiatives also, in a bid to ensure profitability on regional routes.

"Apart from underwriting seats and infrastructural support, state governments should provide capital side subsidies in the form of access to cheaper capital or lower interest rates, which will help operators add more aircraft to the fleet and expand route deployments," Jayant Nadkarni, president of Business Aircraft Operators' Association, told ET.

Nadkarni said states should share an updated list of all operational and uncontrolled airports and appoint a single point of contact in each state aviation department.

He also suggested states should tighten the evaluation process and focus on core operations and financial strengths apart from the lowest commercial bidder for subsidies and underwriting seats.

The financial daily reported Madhya Pradesh Government underwrites three seats on each sector, reimburses VAT on the fuel uplifted from any city within the state, provides free security for operations to airstrips owned and operated by the state government, and offers marketing support by MP State Tourism Development Corporation.

The ministry official informed that the state government paid an average Rs 4,402 per seat subsidy towards underwritten seats and Rs 1.49 crore towards VAT reimbursement to the private operator in the past three years that it has implemented the scheme.

Madhya Pradesh Government has sought concession in landing, parking and air traffic control charges from the Airports Authority of India for the first five years of operations to make the assistance viable.

The provincial government subsidises operations of Ventura Airconnect, which says on its website that it is the first intrastate airline in the country and operates in Madhya Pradesh and Gujarat. According to a message on the website by the airline's chairman Pradeep Agarwal, the carrier has operated 8,000 flights with 35,000 passengers since it commenced operations in Madhya Pradesh in 2011.

(Image: Indiatimes)