India may subsidise flights to remote areas

India's civil aviation ministry said airlines operating unprofitable flights to remote destinations may be given subsidies to help boost regional connectivity without affecting the carriers' finances. The ministry recommended setting up a Rs1 billion (Dh69 million) fund to provide the financial assistance, according to a report to the Planning Commission, an agency that designs five-year economic and social programmes in India. The commission's 12th five-year plan will run through 2017. Criteria to qualify Article continues below Airlines offering regional connectivity at the lowest cost to passengers can become eligible to bid for the subsidy from the fund, the ministry proposed. In November, billionaire Vijay Mallya had criticised India's policy that requires carriers to fly on unprofitable remote routes after losses at his Kingfisher Airlines Ltd. widened amid high fuel costs and a price war. The current route dispersal guidelines require airlines to operate services equivalent to at least 10 per cent of their metropolitan network to destinations in north-eastern states, the state of Jammu and Kashmir, and to the Andaman and Nicobar Islands. Essential air services The aviation ministry said the current arrangement for ensuring essential air services to remote and inaccessible areas wasn't satisfactory. Two government panels, in separate reports in April, had also suggested setting up a similar fund for this purpose. "In order to achieve the social objectives of providing air connectivity to remote and inaccessible areas, an innovative mechanism needs to be evolved to achieve maximum impact," according to the report. "A sustainable and durable solution in the long run could be found only in direct intervention."