Air India Could Suspend Services to North East Airports

Friday, 28th December 2012 at 01:48am

Air travelers to and from India's northeastern region may soon find themselves seeking for more flights as Air India threatens to suspend services to several routes such as Shillong, Lilabari and Tezpur. This follows after the Northeast Council (NEC) failed to settle their payment obligations to the airline.

As a result of non-payment of more than Rs 100 crore by the NEC to the carrier, its subsidiary, Alliance Air, refused to renew its lease contract with its provider involving three ATR turboprops which are being used for the said routes.

Each year, Alliance Air receives financial support, through viability gap funding (VGF), from NEC under a signed memorandum of understanding (MoU) signed by the two parties.

Under the agreement signed between the two parties, NEC should provide Alliance Air Rs 52 crore and Rs 55 crore for 2012 and 2013, respectively. The funds come as the government's counterpart in providing air travel access to the public in the region in partnership with the private transport provider, in this case, the Alliance Air. However, reliable sources from the low-cost carrier confirmed that they have not received the amounts until now.

The regional airline has been doing its obligation to the public by providing them air access based on the agreement from which they will get funds from the local council.

This year alone, sources disclosed, the VGF payable to them is estimated to be at Rs 60 crore which has not been paid yet, making them in dire need of cash to keep their operations efficient enough.

Alliance Air has decided to extend its service in the northeastern region following successive accidents involving Pawan Hans helicopter crashes in April this year. Alliance Air, since then, has flown to cities like Dimanpur, Jorhat, Lilabari and Tezpur using four ATR turboprops, usually seating 46 passengers.

The airline still continues flying to the region despite its low yields caused by lower seat factors making the additional service to these northeastern cities a financial burden to them as VGF tend to be high.

To complicate matters, the lease of two ATR turboprops is about to expire soon following the expiry of one ATR in September this year. This leaves only one turboprop in their fleet serving the region.

If NEC still fails to give them funds, they will be forced to cease operations in the region as they won't be able to renew the leases of the aircraft with the lessor. They already informed the local council about the impending stoppage of service to the region as early as first week of January next year shall they fail to settle their obligation to them.

The commercial air services to the region is under the government's Route Dispersal Guidelines in which all participating local airlines offer air access as a social obligation, rather than for financial gains.

By: Pete Lee.