Aviation Ministry may provide subsidies to airlines operating on unprofitable routes

The Civil Aviation Ministry recently said that airlines operating unprofitable flights to remote destinations may be given subsidies to help boost regional connectivity without affecting the carriers’ finances. The ministry recommended setting up a Rs 100 crore (USD 19 million) fund to provide the financial assistance, according to a report to the Planning Commission, an agency that designs five-year economic and social programs in India. The commission’s 12th Five-Year Plan will run through 2017.

Airlines offering regional connectivity at the lowest cost to passengers can become eligible to bid for the subsidy from the fund, the ministry proposed. In November, the owner of Kingfisher Airlines, Vijay Mallya, criticised India’s policy, which requires carriers to fly on unprofitable remote routes after losses at his airline widened amid high fuel costs and a price war, as per a report by Financial Chronicle.