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The Andhra Pradesh government’s viability gap fund (VGF) support has enabled private aircarrier IndiGo to provide direct flight from Vijayawada to Singapore. The move comes in the backdrop of the State government’s keenness to provide international connectivity and encourage flights to unserved cities in the State.
Deal details
Following a tender process, IndiGo was chosen to operate flights between Vijayawada and Singapore at a cost of ₹3.05 crore per month for six months with an initial amount of ₹18.35 crore. The amount was arrived at based on indicative return ticket price of ₹18,881 per seat and ₹33.98 lakh for operation of two return flights per week with a 180-seater plane.
Ajai Jain, Principal Secretary, Energy, Infrastructure and Investment, told BusinessLine, “We have issued a VGF of ₹3 crore to encourage direct flight connectvity to Singapore. If the flights go even half full, we need not reimburse. And if the flights are more than that, the higher amount collected will come to the government.”
“Basically, if the flight occupancy is about 50 per cent, we need not give any funds. This becomes a revolving fund,” Jain explained.
2 flights a week
More than 50 per cent seats have been reserved for December 2018. The airline will operate two flights a week. Efforts are also on to consider similar connectivity with Dubai.
IndiGo, which operates five daily non-stop flights between India and Singapore, has added flights from Vijayawada to Singapore. It earlier operated flights from Chennai, Bengaluru, Kolkata and Tiruchi. Jain said, “The flight fulfils the dreams of the Telugu Diaspora in Singapore and also provides great convenience for our investors and business community.”
The State government has announced that it is willing to underwrite some flights to provide connectivity to unserved destinations. The VGF offer to international flights is one form of underwriting. Apart from connectivty to Kadapa, the State is also in the process of encouraging flights between Vijayawada and Puttaparthi and Vijayawada and Nagarjunasagar with nine-seater aircraft.
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