Air MoU signed, But Himachal seeks 90:10 VGF
Shimla, Sept 23,
Himachal Pradesh has signed a 10-year tripartite Memorandum of Understanding (MoU) with the Union Ministry of Civil Aviation and the Airports Authority of India (AAI) to strengthen air connectivity and aviation infrastructure in the state under the revised Regional Connectivity Scheme (UDAN).
The agreement, signed in New Delhi in the presence of Union Civil Aviation Minister Kinjarapu Ram Mohan Naidu and Minister of State for Civil Aviation Murlidhar Mohol, provides a framework for supporting existing and new UDAN air services as well as eligible aviation infrastructure in Himachal Pradesh.
However, even as the agreement provides for a 20:80 Viability Gap Funding (VGF) arrangement, with 20 per cent contributed by the state and 80 per cent by the Centre, Himachal Pradesh is seeking a more favourable 90:10 funding formula.
Under the proposed arrangement, the Centre would bear 90 per cent of the VGF while the state’s contribution would be limited to 10 per cent.
Tourism and Civil Aviation Secretary Sandeep Kumar said the demand has been made in view of Himachal Pradesh’s difficult geographical terrain and the higher cost involved in operating air services in mountainous areas.
Chief Minister Sukhvinder Singh Sukhu recently urged the Union Civil Aviation Minister to consider the revised funding ratio for the state.
The issue of VGF assumes significance as expanding air connectivity in a hill state involves a different cost structure from relatively accessible regions. Limited passenger volumes on some routes, weather-related disruptions and operational constraints at mountain airports can make commercial viability difficult without government support.
The 10-year MoU is intended to provide a longer-term framework for the development and operation of air services. However, the proposed 90:10 VGF formula has yet to become part of the present arrangement, making the Centre’s response to Himachal’s demand an important factor in determining how extensively the state can expand subsidised regional air connectivity.
The state government said improved air connectivity would boost tourism, facilitate the movement of tourists and business travellers and improve access to remote and difficult-to-reach areas.
For Himachal, the larger challenge will therefore be to translate the new framework into regular, financially sustainable and affordable air services, particularly for destinations where difficult terrain and seasonal demand make conventional commercial operations challenging.
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