The MP government has decided to give a fresh lease of life to air taxi operations, which had turned out to be financially non-viable in the state.
After the contract with Air Ventura — the previous air taxi operator — which ended on September 6, the state government has decided to float a fresh tender to engage a new air taxi operator for the next four years.
While the move will ensure better air connectivity between Madhya Pradesh’s cities and capitals of the adjoining states, the contract would however translate into higher expenditure for the exchequer as the state government has decided to continue subsidising the cost of operations.
Tourism secretary, Hari Ranjan Rao said that the new policy will be presented before the cabinet soon, following which the new tender will be floated. As per the proposal, the state would pay a part of the 'per hour flying' cost as a subsidy.
Moreover, 40% of the taxi’s operations would have to cover destinations in other states — a new condition to ensure regular air connectivity to neighbouring states.
The subsidy cap has also been raised from Rs 1 crore per month to Rs 1.5 crore and the VAT waiver on Aviation Turbine Fuel (ATF), which was granted to the former operator would be applicable for the new contractor too.
Madhya Pradesh was the first state in the country to hire an air taxi operator. The former contractor connected Bhopal, Gwalior, Rewa, Jabalpur, Indore and Khajuraho. However, most cities did not receive adequate passengers, and the government continued to pay for three seats during each flight whether or not the seats were occupied.
However, after the contract ended, Air Ventura has scaled down its operations soleley to the Bhopal-Jabalpur-Bhopal sector, as the government has stopped paying for the three seats. But, VAT on ATF is still being waived.