AP announces an ambitious aviation policy but it still is an uphill task !!

andhra airportsThe biggest issue with AP today, as far aviation is concerned, is the lack of big cities and industries which would attract flights from big carriers.  Tourism too is only confined to just a few small pockets. It is in this backdrop that AP released a draft aviation policy which can be termed ” very ambitious and forward looking”. It is extremely well meaning. Here are some provisions which are very innovative.

  1. The Andhra Pradesh government will underwrite seats on commercial airline operations that provide connectivity to tier-2 and tier-3 cities, as it seeks to develop six new airports under public-private partnership (PPP) apart from expanding the existing operational airports managed by Airports Authority of India (AAI) in the state.
  2. The state government proposes to set up six green field airports, including an international airport at Bhogapuram in Vizianagaram district adjoining Visakhapatnam. The other five would be no-frills or low cost airports proposed to be set up in Dagadarthi (Nellore), Orvakallu (Kurnool), Kuppam (Chittoor), Tadepalligudam (West Godavari) and Ongole (Prakasham district). While proposing to develop these six airports under the PPP model, the government has also requested the AAI to develop Donakonda, an airstrip built by the British before the independence and the Nagarjuna Sagar airport as part of the national level plans of developing regional no-frill airports.
  3. Underwriting a specific number of airline seats or a certain percentage of the capacity of the aircraft would be provided to encourage the airlines to operate the services on routes that may not be viable. The airline companies would also be given exemptions from aeronautical tariffs to enhance intra and interstate connectivity, it said.
  4. Keeping in line with its ambitious agenda for the development of airport operations, the state government has proposed to create a separate fund with an initial corpus of Rs 100 crore in the name of Andhra Pradesh Regional Airport Development Fund (APRADF) for this purpose.
  5. Fiscal incentives and exemptions and reimbursement of various charges would be provided up to a specific traffic levels, or up to a period of five years from the date of commercial operations of newly commissioned airport facilities, according to the draft policy. The government has already reduced the VAT on Aviation Turbine Fuel(ATF) to 1 per cent in a bid to attract more airline services to the state.
  6. The new airport developers would also get viability gap funding, exemptions from state taxes and lease charges among other things, it said.
  7. The draft also provides a set of incentives for the aircraft maintenance repair and operations (MRO) facilities. For instance, aircraft MRO and air cargo infrastructure and similar other facilities with a minimum of Rs 50 crore investment would be exempted from paying stamp duty while the manufacturing units and R&D services in defence aerospace sector would be given financial incentives as per the existing industrial policy of the government.

The key focus areas also include the expansion of Visakhapatnam, Vijayawada and Tirupathi airports into international airports and expansion and modernisation of Rajahmundry airport, according to the draft policy. AP currently has six operational airports at Visakhapatnam, Tirupati, Vijayawada, Rajahmundry and Kadapa under the AAI and one at Puttaparthi, being managed by Sri Satya Sai Trust.

According to the provisional AAI data, the four operational airports, namely Visakhapatnam, Tirupathi, Vijayawada, and Rajahmundry airports have registered a traffic of 1.66 million passengers during the year 2013-14, an increase of 5 per cent traffic over that in the previous year.

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