Proposal for intra-State services with Kochi as hub

After Air India (AI)’s failed intra-State connectivity experiment of 2011, the State government is actively considering its revival by wooing airline companies with tax sops.

The State government is sceptical about AI reviving the services linking Thiruvananthapuram, Kochi, and Kozhikode, prompting it to open channels of communication with other airlines.

Chief Minister Oommen Chandy told The Hindu that the State government was in consultation with AirAsia, the Kuala Lumpur-based, low-cost airline. “We have already held first-round discussions with AirAsia and the airline has positively responded to the proposal for intra-State services and to make Kochi its hub of operations in India,” Mr. Chandy said.

The proposal was to operate daily services connecting all three airports in the State, with one of the services being operated to Mangalore, Bangalore, and Coimbatore alternatively. Mr. Chandy said the State government was willing to offer considerable concessions in terms of tax on aviation turbine fuel (ATF) to facilitate intra-State services.

“At present, the State charges 29 per cent VAT on ATF, which we are willing to bring down to as low as four per cent for airlines willing to operate intra-State services,” he said.

While all three airports in the State were well connected to the Middle East, there was not even a single flight between these airports, which was a major shortcoming, Mr. Chandy said.

Minister for Airports K. Babu expressed doubts about AI reviving its intra-State services despite active persuasion by the State government. He shot down the airline’s argument that the services were t unfeasible. The airline should have given some time for the services to turn feasible, he said.

“How can you judge the utility and feasibility of a service before offering it consistently? Even when the services were being operated, they were not regular,” Mr. Babu said. Industry sources said AI’s intra-State services were doomed from the very outset despite the State government granting 50 per cent tax concession on ATF.

The airline launched a daily service connecting all three airports using a 40-sat ATR aircraft. The aircraft operated from Kozhikode to Thiruvananthapuram and back. Services were also operated from Kozhikode to Kochi from where it was used to take passengers to Agatti in Lakshadweep.

“The airline charged about Rs.2,200 for the service at a time when its operating cost of flying the ATR per hour was in excess of one lakh. This meant that they could not break-even even if all the 40 seats were occupied, which never once happened. In fact, most of the times it operated with just a handful of passengers,” sources said.

Except for the Gulf-based expatriates, Malayalis did not really favour flying within the State, especially when they had the comfort of numerous trains to choose from at a much lower cost, they added.

  • State to offer tax concessions on ATF

  • AI had operated such a service in 2011