With the near-saturation on the metro routes, domestic airlines have started looking at expanding on the regional sector to propel growth and profits, along with complying with the government’s route dispersal guidelines (RDG) and earn credits under the proposed domestic flying credit (DFC) rule for flying abroad.
A senior airline executive, who did not want to be named, said the economics of flying on regional destinations has started to make sense with the revenues earned on them easily covering the operational costs, reports DNA.
“Many of the airports in some of these remote places are offering better rates and even the jet fuel taxes are lower. Most airlines operating on these routes use smaller aircraft that weigh under 40 tonne and so taxes on aviation turbine fuel (ATF) are lower at 4%. All these incentives keep the cost low and so they have to earn lower revenues to make profit,” he said.