Centre proposes new model to make air travel more affordable

New Delhi: The Centre, on Tuesday, proposed a new financial model for building greenfield airports aimed at making air travel more affordable and addressing concern of disputes related to tariff.

Under the new financial model, the concession fee given by the airport operator to the concession authority will be based on a ‘per passenger aeronautical model’.

“The passenger-based model will also be the base of the bidding process,” civil aviation minister Suresh Prabhu told reporters here while unveiling the transaction structure. The new model will encourage increased private investment, the minister outlined.

Currently, the transaction structure for airports, run under joint venture route, is based on revenue sharing model.

MoS for civil aviation Jayant Sinha said the new concession agreement is aimed at realising the government’s dream of achieving one billion passenger trips a year in the coming years.

This necessitates massive investment in the aviation space and construction of more greenfield airports. The new structure will make travel more affordable as the yield per passenger will be pre-determined by the concessioning authority, he said.

“Its guiding principles are affordability, sustainability and predictability,” he added.

You can give your feedback till September 14

  1. The proposed model will be placed in public domain for feedback till September 14. Significantly, 10% of the total area has been earmarked for real estate development.
  2. Under the proposed model concession agreement, the total aeronautical collections by concessionaire (airport operator) like landing and parking charges when measured per passenger basis will not exceed Rs 400.
  3. The concessionaire has to give Rs 20 per passenger per year to the concessioning authority plus an additional amount as the concession fee. The addl amount could range from Rs10 to Rs50 depending on how attractive the concession is.
  4. The concession period will be 40 yrs. There would be a moratorium on the concession fee for three years from the commercial operation date. Both the concession fee and the total aeronautical charges of Rs 400 will be escalated annually by half the inflation rate.

Suresh Prabhu bats for GST on jet fuel

  • Suresh Prabhu said that inclusion of jet fuel in GST will give relief to airlines who are struggling with high cost of fuel.
  • Prabhu said that not only airlines operating in India are struggling with high cost of fuel, the other international airlines are also struggling with the rising cost of jet fuel.
  • On the issue of bailout package to airlines, Prabhu said that aviation sector is deregulated and government has little to do with the operations of private airlines.

(With inputs from Agencies)