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Wednesday, 18 October, 2017, 11 : 39 AM [IST]

Rise of Tier-II & III Cities,Emerging Growth Engines

The Tier-II & III cities have started contributing significantly to all sectors of tourism right from outbound to cruising. Even International tourism boards, DMCs etc are increasingly focusing on such cities. The prospects of Tier-II & III cities as emerging destinations have further brightened up with the introduction of Regional Connectivity Scheme by the government.

With the economic growth in top cities in the country beginning to saturate, a number of Tier-II and III cities have come into reckoning as growth engines of the future. What is aiding this is the increasing disposable income of the people that has created immense opportunities for companies looking out for new markets to grow. If the six metros — New Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bengaluru — witnessed the bulk of development in the first phase, the next phase will see the emergence of Tie- II and III cities with a sizeable jump in their economic activities. These cities have some inherent advantages like possessing basic amenities, ample availability of land and skilled manpower.

A closer look says that in the travel industry also such cities have become the area of focus. Take the example of South Africa Tourism (SAT), in order to increase tourist footfall SAT in association with TAAI (Travel Agents Association of India) conducted ‘Learn South Africa’ programme in 17 cities that include metros and Tier-II & III cities of India. SA is often considered as exotic destination and if they start focusing on smaller cities, it clearly indicates importance of smaller cities and towns.

In an interview with TravelBiz Monitor, Hanneli Slabber, Country Head-India, SAT, said, “We are increasingly focusing on mini-metros and Tier-II markets in India. Till few years ago we received maximum tourists from Mumbai, but now the geographical scope has increased. Today, Amritsar, Chandigarh, Ludhiana, Vadodara and Pune have also started to show up on our graphs.” Currently, smaller cities are also significantly contributing to outbound tourism as a result many International Tourism Boards and DMCs are increasingly taking their roadshows in Tier-II and III cities which was not the case till a few years ago. According to Kulwant Singh, CEO & MD, Lama Tours, the Tier-II cities of India like Kochi, Ahmedabad, Pune, etc., are contributing at large to the Indian outbound travel numbers. “Segments like MICE, destination weddings and corporate travel have picked up from the Indian market, especially the Tier-II cities.”

Even cruise tourism is no longer considered the privilege of the rich and elderly, today people from smaller cities are undertaking cruise vacations. “We are even getting enquiries from smaller cities like Kholapur, Nashik, Nagpur, Salem etc,” said Nalini Gupta, MD, Lotus Destinations (GSA for Costa Cruises in India). It is important to mention here that Italian cruise liner Costa Cruises will start 3 and 4 nights sailing from November this year. With this development, Indian travellers can now choose to cruise on 4-night itinerary from Mumbai to Kochi (via Mangalore) or 3-night itinerary from Kochi to Maldives. Commenting on this development Gupta said, “People in this country were hungry for such a travel product. I am sure that travellers from smaller cities will also opt for this sailing. It is no more a dream but reality for them.” It is quite evident now that Tier-II & III cities are contributing significantly to every sector of tourism industry.

Taking due cognisance of the fact, organisers of trade shows exclusively targeting smaller cities. For instance, Global Panorama Showcase (GPS) is being held only in Tier-II cities like Nagpur, Ahmedabad, Kochi, Chandigarh, Pune and Kolkata. Kolkata being the only exception and organising the exhibition here is to cater to the market of North Eastern states which is largely unexplored till now. “I think Tier-II cities offer huge scope in travel eco-system and I am sure everyone is concentrating on them,” said Harmandeep Singh Anand, Co founder, GPS. Even plans are afoot to organise one-day GPS in cities like Surat, Jaipur, Guwahati, Lucknow, etc in the future.

Low Cost carriers (LCC) also playing an important role in this direction as LCCs have provided cheaper connectivity to many tourist locations, which were hitherto accessible only by road or rail, turning even a two-day weekend into a tourism opportunity – something not possible through road or rail travel. “In a way, LCCs have addressed the rising aspirations of the Indian middle class coupled with their high price sensitivity. LCCs have made air travel accessible to many,” Ritika Modi, Regional President, UNIGLOBE Travel (South Asia).

Air Connectivity
Regional air connectivity is the key to unlocking growth potential of a state’s economy because it enables a state to attract business investment. Not only that, regional air connectivity also spurs tourism which is vital for economic prosperity of that region. However, air connectivity to smaller cities with metros was quite inadequate since India became independent. Understanding the importance of this, the current government in a big push to its reform agenda approved the National Civil Aviation Policy (NCAP) which aims at connecting the underserved airports. Through the NCAP, the government has proposed to “take flying to the masses” with the Regional Connectivity Scheme (RCS) UDAN (Ude Desh ka Aam Nagrik), which envisages bringing Tier-II and III cities on the aviation map, launch flights to the underserved airports, and offer affordable airfares on regional routes.

After the announcement of NCAP, the industry had witnessed some important developments in terms of air connectivity to smaller cities and developing new airports, etc., which will go long way to make such cities vibrant ones. For example, SpiceJet announced its third daily direct flight on the UDAN routes of Hyderabad-Pondicherry-Hyderabad which is in sync with the PM’s vision of transforming the lives of middle-class India. Similarly, regional carrier TrueJet which has bagged 18 routes under the Centre’s UDAN scheme, aims to raise its fleet size to up to eight aircraft by March 2018 besides increasing the number of flights to nearly 50 per day by this year end.

Moreover, Emirates and flydubai recently unveiled a partnership which will see the two Dubai-based airlines join forces to offer customers more travel options. This will allow Indians to fly to more destinations globally. The latest announcement by the airlines will, for instance, allow a passenger in Lucknow to board a flydubai flight till Dubai and then fly on Emirates to Seattle. Or a passenger from Hyderabad can take flydubai to Dubai and then fly Emirates to mainland Europe, America, Africa or South America.

As far as airport developments are concerned, the Government of Maharashtra has taken all steps to clear hurdles for development of Kolhapur airport and it will be the first airport in Maharashtra to become operational under the Centre’s Regional Connectivity Scheme (RCS). “We have cleared all the obstacles. The authorities have initiated work and soon commercial air service will start from Kolhapur. Air service in Kolhapur will boost the economy of the district along with tourism,” said Devendra Fadnavis, CM, Government of Maharashtra.

Similarly, West Bengal government will, under the RCS seek to develop two new airports, at Malda and Coochbehar. These will be under a public-private partnership (PPP) model. The state Uttarakhand is also trying their best to gain from the RCS scheme. In this direction, Airports Authority of India (AAI) signed a MoU with Government of Uttarakhand and joined hands with Uttarakhand Civil Aviation Development Authority (UCADA) to develop the civil aviation sector in the state. T These airports would also be part of the RCS and will boost tourism and air connectivity for the local public.

If everything goes in the right direction, it will definitely bring a sea change in the transport segment of India, but industry players are cautiously optimistic about its implementation within a fix time frame and in totality.
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