NEW DELHI • Indian airlines will soon offer dirt-cheap fares to dozens of new regional destinations - some for the very first time - as the world's fastest-growing aviation market tries to encourage millions more passengers to the skies.
The government awarded flying rights to five Indian airlines on Thursday to connect large metro cities to 70 small towns, nearly half of which have never been reached by plane. Tickets will be capped at 2,500 rupees (S$55) per hour of flying time to keep fares low for new customers through a slew of subsidies and tax incentives.
India unveiled a plan in 2015 to make air travel more affordable for the millions who never fly, by reviving struggling airports and connecting rural areas to big cities.
"It's a great day for Indian aviation," said Mr Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG. "This will give a huge fillip to investments, tourism and job creation in the interiors of India."
Alliance Air, SpiceJet, Turbo Megha, Air Odisha and Air Deccan won the flying rights, said a government spokesman who declined to be named as he is not authorised to speak to the media.
India's burgeoning middle class is taking to the skies in ever greater numbers, with passenger growth of 23.3 per cent last year, according to industry body Iata. That was double China's 11.7 per cent increase over the same period.
Low-cost airlines are rushing to expand their fleets to take advantage of that growth, encouraged by a fall in fuel prices.
Experts say India's aviation sector holds vast untapped potential, with 100 million of its 1.2 billion people taking to the skies last year, but woeful infrastructure and high operating costs could threaten expansion.
Winners of the first round of bids will receive three-year exclusive rights for the routes, with auctions conducted twice a year. The winners are required to commence services within six months or face a penalty.