Why Is Cheaper Domestic Air Connectivity Critical?

If you place your baby in a safety seat, the probability of her dying in a plane crash would be lower. Would you still place her on your lap? It seems humane to ask parents to place their babies in a child safety seat. But, what if following this practice could save 0.4 lives every year?

So, if a law, of placing babies in child safety seat is enforced, more babies would die. This is because parents would prefer cheaper modes of transport, which may be fatal, for instance, roadways. These deaths are likely to happen among people who would have otherwise travelled in regional flights.

Why bring this up? If the cost of airfare is lower, it would save many lives. There will be greater connectivity between Indian cities, and greater interactions between people. Productivity in Indian cities will raise because greater interactions will lead to more trade and mutually beneficial transactions. This will raise the value of property in India's cities.

In the new civil aviation policy unveiled on October 30, the government proposed tax incentives for airline and maintenance works. The government also proposed foreign direct investment (FDI) in domestic airlines. According to the regional connectivity scheme, airfare between cities would be capped at Rs 2,500, if the distance between them is less than one hour. How would this matter?

• Air travel is faster. Fatalities are much lower, too. Subsidising air travel would not lower flight charges in the long run. But, if the government allows more FDI in domestic airlines, there will be greater competition among airlines, which in turn, will call for lower prices.

• As migration between Indian cities is important to make India prosperous, greater interactions and trade between Indian cities are important, too. Long commuting times and high flight charges makes such interactions extremely difficult.

• In a modern city, about 25 per cent of the space is devoted to streets. This means that 25 per cent of the real estate in India would be consumed by vehicles and pedestrians even if roads are well-developed. But road travel is slow. Once streets are established, it is difficult to change their structure. Even though the capacity of vehicles on roads is less, the infrastructure investment needed for them is high. Cheaper air travel and greater competition among airlines will lower these costs.

• Many metropolises in the Middle East such as Dubai, Qatar, and Abu Dhabi were built around aviation hubs, and around the success of airlines. If there is more competition among airlines in India, this would make Indian metropolises competitive too.
  
  Post Script: As the Finance Ministry is in support of the government's policy, the draft aviation policy is likely to be funded by scrapping excise duty and service tax. The government may also impose a 2 per cent cess on domestic and international flights to strengthen regional air connectivity.