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Final Report Promotion of Regional and Remote Area Air Connectivity in India Ministry of Civil Aviation Submitted by Deloitte Touche Tohmatsu India Private Limited Final Report: Study on Promotion of Regional and Remote Area Air Connectivity in India Disclaimer This document and the information contained herein have been prepared by Deloitte Touche Tohmatsu Indian Private Limited (DTTIPL) for Ministry of Civil Aviation, Government of India as part of Study on Promotion of Regional and Remote Area Air Connectivity. The contents of this document should not be copied or reproduced by any third party or otherwise quoted or referred to, in whole or in part, without the prior permission of DTTIPL in writing. DTTIPL disclaims any responsibility for any loss or damage suffered by any entity by taking reliance of this document. Furthermore DTTIPL will not be bound to discuss, explain or reply to queries raised by any agency other than the intended recipients of this document. 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Final Report: Study on Promotion of Regional and Remote Area Air Connectivity in India Table of Contents 1 Summary of Recommended Actions ............................................................................................... 8 Definitions .......................................................................................................................................... 8 Towns for promoting Regional / Remote Air Connectivity ........................................................... 8 Route Dispersal Guidelines .............................................................................................................. 9 Promotion of Regional and Remote Area Air Connectivity through a Regional Air Connectivity Fund (RACF) ................................................................................................................ 9 Central Government Actions .......................................................................................................... 11 State Government Actions ............................................................................................................. 11 Regulator (DGCA / BCAS) Actions ................................................................................................ 12 Airports Authority of India (AAI) .................................................................................................... 13 2 Coverage of the Study ................................................................................................................... 14 3 Regional & Remote Areas ............................................................................................................. 16 3.1 Contexts drive definitions .................................................................................................. 16 3.2 Definition of Regional Air Connectivity for this study .................................................... 16 3.3 Definition of Remote Area Air Connectivity for this study ............................................. 17 4 Existing Status of Air Connectivity in India .................................................................................... 18 4.1 Growth in Air Traffic ........................................................................................................... 18 4.2 Nature of the Connectivity ................................................................................................. 19 5 Imperative of Regional Air Connectivity ......................................................................................... 23 5.1 Multiplier Economic Benefits ............................................................................................. 23 5.2 Social Cohesion .................................................................................................................. 25 6 Parameters for selection of towns for promoting Regional Air Connectivity .................................. 26 6.1 Drivers for Air Connectivity ............................................................................................... 26 6.2 Population ............................................................................................................................ 27 6.3 Economic Potential ............................................................................................................. 28 6.4 Tourism Potential ................................................................................................................ 30 6.5 Prioritisation Parameters ................................................................................................... 31 6.6 Remoteness of Areas ......................................................................................................... 37 7 Aircraft Sizes and Airport Infrastructure ......................................................................................... 39 7.1 Aircraft deployment over Regional Routes ...................................................................... 39 7.2 Aircraft Size for Regional Air Connectivity ...................................................................... 40 7.3 Airport Infrastructure .......................................................................................................... 42 Page 3 of 170 © 2013 Deloitte Touche Tohmatsu India Pvt. 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Final Report: Study on Promotion of Regional and Remote Area Air Connectivity in India 8 Issues impacting Regional Air Connectivity ................................................................................... 46 8.1 Demand of air transport services ...................................................................................... 47 8.2 Supply .................................................................................................................................. 49 8.3 Commercial Factors ............................................................................................................ 54 8.4 Policy and Regulatory issues ............................................................................................ 59 9 International Experiences in Promoting Regional Air Connectivity ............................................... 66 9.1 Support Schemes / Mechanisms ....................................................................................... 66 9.2 Policy and Regulatory Measures ....................................................................................... 68 9.3 Comprehensive Aid Packages ........................................................................................... 68 9.4 Regional Aviation in China ................................................................................................. 69 9.5 Key Observations ................................................................................................................ 69 10 Strategic Options for Promoting Regional and Remote Area Air Connectivity .............................. 72 10.1 License Based Approach ................................................................................................... 72 10.2 Direct Subsidy Approach ................................................................................................... 73 10.3 Other Key Enablers ............................................................................................................. 74 10.4 Evaluation of Strategic Options......................................................................................... 74 10.5 Way Forward .......................................................................................................................