As government considered ending most airport charges in non-metro cities to encourage regional connectivity, the Airports Authority of India (AAI), which owns most airports in the country, wants free land, tax exemption and other freebies to help it waive these charges for airlines.
While free land should be provided by state governments for developing or extending runways, state-run airports body AAI should be exempted from municipal taxes, officials said.
The state or local authorities should also ensure power and water supply and proper roads to the airports if enhancement of air connectivity to Tier-II and III cities has to be promoted, they said.
However, the navigation and parking charges would not be waived by the AAI, which owns or partners in managing close to 90 airports around the country, at 15 major airports including those in six metros. The rates here are decided by the Airports Economic Regulatory Authority, they said.
The AAI could waive these charges if these conditions were met by state governments, the officials said, adding that the move could lead to a reduction in the operating costs of the airlines by 8-10 per cent.
The ministry has been considering exempting airlines from landing, parking and navigation charges to promote regional connectivity. Such charges account for about 10 per cent of airline costs.
Airlines operating to Tier-II and III cities could also enjoy a flat four per cent sales tax on jet fuel, as against an average of 25-35 per cent in several major cities.
The ministry has engaged global consultant Deloitte Touche Tohmatsu India to identify the factors inhibiting the growth of domestic connectivity, especially to the remote areas and smaller cities.
In its report, Deloitte has identified some 85 to 100 secondary cities with good economic prospects that could ensure a customer base for airlines, but most of them do not have airports.