Low cost, high profit

Low-cost airports have been a success internationally. While they not only ensure better connectivity, they have also proven to be revenue earners. For instance, Stansted airport, currently ranked the No 1 low-cost airport in the world, makes an estimated contribution of £400 million annually to the British economy.

Globally, low-cost airports are basic facilities, which try to promote themselves by offering airlines rates lower than they would pay for operating from the main air terminal of a city.

The idea is that with their cost of operations coming down, airlines will be able to offer passengers a cheaper option. Setting up such airports costs less; they are low-maintenance and have fewer frills such as long corridors and moving walkways. Also, they do not have steel or glass structures, thus reducing air conditioning costs.

Some interest was generated in the concept when President Pranab Mukherjee stated that the Government was planning to develop low-cost airports to enhance connectivity to smaller towns.

Assocham President Rana Kapoor says that most new airports can be developed on the no-frills model, which will have a multiplier effect on exports, trade, travel, tourism and other allied industries. Countries such as Malaysia, the UK and France have already successfully tested this model of infrastructure development, he points out.

While there is no denying that this is a step in the right direction, there is little clarity on what creating the low-cost airports will entail and how soon they will become operational.

The only thing that is clear among senior officials in both the Ministry of Civil Aviation and the Airports Authority of India is that these airports will be basic and are likely to see activity once a day or handle one or two flights, on some days of the week.

Some also maintain that the local administrations in these cities will be asked to provide security at these airports on the days the flights are expected. To promote enhanced air connectivity, these airports will waive parking, landing and navigation charges.

State scheme

Uttar Pradesh has come up with a scheme whereby airlines operating within the State will get aviation fuel at a lower sales tax rate of 4 per cent. This is being done to promote regional air connectivity and make better use of the numerous airstrips in the state.

The state government will also purchase 30 per cent of the seats or six seats per flight. Imagine the scenario if other larger states decide to follow the UP model.

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