March 13--HYDERABAD -- The next generation of aviation growth in India will be triggered by regional airports, according to a report by consultancy firm KPMG Advisory Services Pvt. Ltd conducted in association with industry lobby Federation of Indian Chambers of Commerce and Industry (Ficci) and released on Thursday.
"At present, there are around 450 used, unused, and abandoned airports and airstrips spread all over the country," the report said.
Many states, especially in eastern India, have started taking measures to promote air connectivity. The report said these initiatives include reduction in sales tax on jet fuel, development of no-frills airports, promotion of aviation academies and supportive policies for airlines and tourism.
"West Bengal deserves a special mention as it is the first large state in the country to declare zero per cent sales tax on ATF (aviation turbine fuel) at its regional airports and 15% sales tax on ATF used by additional flights started at its metro airport in Kolkata," the report said.
The report comes at a time when India's Air Costa, a new passenger airline run by Air Costa Aviation Pvt. Ltd, has placed a massive order with manufacturer Embraer SA of Brazil in February to buy 50 jets, with potential orders for another 50 jets worth $5.88 billion (for 100 planes) based on 2014 list prices.
Air Costa, promoted by Vijayawada-based construction firm LEPL Group, is the first regional airline of southern India.
The aviation ministry introduced so-called scheduled operator permits for regional airlines in August 2007 to increase air services to small cities. Regional airlines are required to operate in the small towns within one of the designated regions -- north, south, west, east and the northeast. But they are not allowed to connect to more than one major city, except those licensed to fly in the southern region.
Airlines with non-scheduled permits are not allowed to publicise their flight schedules the way airlines such as Jet Airways (India) Ltd or Air India Ltd can.
Significantly, Religare Voyages Ltd, which runs Air Mantra, stopped operations of the regional airline eight months after its start because of poor bookings, Mint reported on 1 April.
Air Mantra started operations in July with daily flights connecting Amritsar and Chandigarh.
It became the first regional airline to be launched in India in five years. MDLR Airlines Pvt. Ltd, the only regional carrier that started operations, stopped flying on 1 October 2009.
The latest report said India has the potential to become the third largest aviation market by 2020 and the largest by 2030. There is large untapped potential for growth due to the fact that access to aviation is still a dream for nearly 99.5% of its population, the report said.
"The central government and the eastern states have brought in many reforms in the aviation policy, procedures and taxation. We hope this trend continues", said Amber Dubey, partner and India head of aerospace and defence at KPMG, referring to promotion of smaller airports.
Copyright 2014 - Mint, New Delhi
