Regional airlines may get cheaper loans

The civil aviation ministry held a meeting with non-scheduled airlines to address their concerns. File Photo

The civil aviation ministry held a meeting with non-scheduled airlines to address their concerns. File Photo   | Photo Credit: PAUL NORONHA

Plea to increase viability gap funding by 20-30 per cent

The government is exploring ways to assist regional airlines in raising loans at cheaper interest rates to import aircraft as a part of the regional connectivity scheme.

The civil aviation ministry held a meeting with non-scheduled airlines in which concerns related to the regional connectivity scheme were raised by the operators.

“We feel the non-scheduled operators are the most prospective players who will come immediately to become a part of our scheme. Their response in the meeting was encouraging but they had certain concerns which we aim to address,” said a senior civil aviation ministry official.

Raising capital

The official said that the present procedure of leasing aircraft becomes tedious for airlines and ministry is looking forward to resolving this. Under the current norms, an aircraft cannot be mortgaged for raising loans to lease another aircraft. The official said it may propose to the Union finance ministry to allow financial institutions to give loans against aircraft mortgage.

“We raised the issue related to raising capital and lowering interest rate for acquiring aircraft. There is a need for finance to be made available to us at a lower interest rate and financial institutions should come forward,” said Bhupesh Joshi, governing board member of Business Aircraft Operators Association.

“On more than half of the 400-odd airstrips, only a nine-seater or a 20-seater plane can operate due to the runway length. The required paid-up capital for start-up companies to bring in two nine-seater aircraft is Rs.2 crore which is huge,” said Air Odisha founder and its director operation Santosh Pani.

The official said the government will facilitate players to also become a part of the regional connectivity scheme (RCS) while continuing to do their charter operations. “They may continue to operate charter services and in their vacant slots, do RCS flights,” the official said.

Mr. Pani said the operators also requested the government to increase the viability gap funding by 20-30 per cent. “At the present proposed rates, break-even is not possible,” Mr. Pani added. Centre had announced the draft RCS on July 1 which seeks to revive torpid airports and increase air connectivity in towns and cities by making flying cheaper. The government has proposed providing the subsidy to the operators flying under the scheme in a bid to ensure fares are capped at Rs.2,500 for an hour’s flight.

The subsidy amount to the airlines will be in the range of Rs.1,810-Rs.4,170 depending on the air distance travelled from 200 km-800 km, as per the draft policy.

Reach out programme

In a bid to reach out to states and airlines, the civil aviation ministry will also hold a national level seminar in the Capital later this month. Regulator Directorate General of Civil Aviation, the Bureau of Civil Aviation Security and various financial institutions may also be a part of the seminar. The civil aviation ministry will finalise the draft civil aviation policy after holding due consultation with all the stakeholders, another civil aviation ministry official said.

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Printable version | Feb 24, 2020 12:30:57 PM |

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