Shillong, Sept. 3: Attempts by the North Eastern Council to provide air connectivity to this landlocked region have failed as crores of rupees in taxpayers’ money has been disbursed to a particular aviation company.
Since 2001, the council had collaborated with Alliance Air. The routes were subsidised and funds were given to ensure that the company did not run losses.
“From 2001 there has been a collaboration with Alliance Air and we have been subsidising routes which are supposedly not profitable to run commercially because of less number of passengers. They identified such kind of routes and we used to fund so that they do not run losses. Unfortunately over the years, we have found that the performance of Alliance Air was not up to the mark,” NEC secretary U.K. Sangma told reporters.
Citing an example, he said the Nagaland government had complained to the council that the morning flight from Guwahati to Dimapur, which operates thrice weekly, was always getting cancelled.
“We asked for their explanation. They only quoted operational reasons. We discontinued our association with Alliance Air in December last year,” Sangma said.
Initially, the council had paid Rs 35 crore annually as viability gap funding to Alliance Air, but the amount was later increased to Rs 49 crore.
“Alliance Air was interested as our contribution was around Rs 49 crore a year. They were running into a loss, but this Rs 49 crore was like pocket money for them,” Sangma stated. Earlier, in view of the poor performance of Alliance Air, the council tried to put in place what was known as intra-Northeast flights by having dedicated airlines for the region.
“We issued notice inviting tenders thrice, but none of the big players responded. Only small players responded and when we scrutinised their proposals, we found them to be wanting. They first wanted to get the project advance from us, and then they would buy the aircraft. But we do not do business in that way. That is why this dedicated airlines for the Northeast also failed,” Sangma said.
However, the council secretary expressed the hope that someday big players would agree to set foot in the region to ensure proper air connectivity. Sangma said the aviation sector has to be market driven. “You cannot keep on subsidising. Market forces should drive. This is a precious public revenue,” he said.
Moreover, he said the council has been investing a lot of money in development of airports like Shillong and Guwahati and also the greenfield one at Tezu, Arunachal Pradesh. Alliance Air was set up in April 1996 as a separate company envisioned to function as a profit centre of erstwhile Indian Airlines Ltd.
It had taken a lease of four ATR-42 aircraft and commenced scheduled operations in the Northeast from January 2003. These aircraft were deployed exclusively in the region in accordance with the terms of the MoU signed with the North Eastern Council.
In return, a budgetary support of Rs 175 crore was provided over a period of five years (2002-07) by the NEC during the Tenth Plan.