Power sector has lessons for regional air connectivity

In order to boost air connectivity to remote and unviable regional centres, Civil Aviation Minister Ajit Singh is working on a novel idea.

His ministry may soon come up with a code-sharing and seat-credit mechanism to try and enable strong regional air connectivity across India.
 
If this new thinking turns into a policy, it will spare the likes of IndiGo and Jet Airways having to fly many unviable but mandatory routes, classified in airline parlance as Category I (big cities), and category II, IIA and III routes. The policy will strengthen their profitability.

Airlines lost about Rs 10,000 crore in 2011/12 due to steep operating costs in India.
 
What Singh is looking at for the aviation sector, a sort of credit-swap policy, is already in place in the power sector, and the Civil Aviation Ministry may do well to take a leaf out of it.

Every distribution utility, large captive consumer and open access consumer is required to buy a portion of power from renewable energy sources. Those that cannot or have fallen short have an option: they can make up the deficit by buying renewable energy certificates (RECs) sold by green energy companies. One REC is equivalent to 1,000 units of green energy.
 
Operating long distance domestic routes calls for a business strategy as well as an aircraft type that is vastly different from short-distance domestic routes. A small aircraft can connect Mysore and Salem in the South or Ludhiana with Shimla in the North, and still make a profit. Such small city-pairs don't generate volumes for a Boeing or Airbus aircraft.
 
If Ajit Singh gives a meaningful push to the policy, there is every chance of small regional airlines taking birth, turning many small airports into hubs of activity, and possibly, exploiting tourism potential.

These small operators can have code-sharing with big airlines, and may also serve as a meaningful feeder to their volumes. Like power distribution utilities buy certificates to meet their green power obligations, large airlines can buy credits from small operators and, honour their own connectivity obligations.
 
It is too early to say whether the idea will spark off a wave of regional air connectivity, but who knows - it just might.