SHILLONG, July 13: The Meghalaya government has wasted a substantial amount on FlyBig airlines whose regular flight services between Shillong and New Delhi began with a bang and ended with a whimper.
The misadventure on the part of the state government was recently admitted by none other than Transport Minister Dasakhiatbha Lamare who had candidly admitted in the Assembly that the government’s move to sign a deal with FlyBig was a mistake and the department has learnt a hard lesson after spending over Rs 2 crore on the same.
The Meghalaya Transport Corporation (MTC) paid Rs 2,00,36,000 to FlyBig from December 21, 2020, to April 29, 2022. The airline flew 732 passengers in 19 days of operation till October 11 last year before pausing its services.
After resumption, the airline flew 1,164 passengers in 25 days of operation till April this year.
The MTC and the Mumbai-based Big Charter Pvt Ltd, which operates FlyBig, signed a three-year agreement on September 22, 2020. It was subject to renewal annually based on the MTC’s review.
As per the agreement, a copy of which is available with The Shillong Times, FlyBig was required to operate Shillong-Delhi flights twice a week (Monday and Friday) for three years but there were several instances when it did not operate twice a week.
The contract also said a Shillong-Delhi-Shillong round trip should not take more than six hours except for delays caused to airport traffic, air traffic controller approvals and weather. But the flights were often delayed.
The MTC was lenient towards the airline; it did not charge Big Charter for landing, parking or housing at Shillong Airport. The ticket price for each of the 78 seats under viability gap funding (VGF) was capped at Rs 7,000 per seat for a one-way flight.
“MTC shall make payment to the airline operator at the rate of Rs 6,500 per VGF seat one-way flight for all the 78 seats opted by the operator for VGF and for the sponsored seats if applicable,” the agreement said.
It was also stated that the VGF shall be disbursed by MTC to allow the airline operator for all the committed 78 VGF seats, irrespective of the occupancy for every flight operated on the Shillong-Delhi-Shillong route during the contract period, after adjustments for any default by the airline operator under the contract.
In another instance of leniency, the government agreed to sponsor 15 seats per one-way flight for three months from the date of commencement of operation based on the request of the operator.
“Due to the unprecedented COVID-19 pandemic situation and as per request from the airline operator, the state government agreed to sponsor 15 seats per one-way flight for a period of three months from the date of commencement of operation,” the agreement stated.
According to the contract, the sponsorship of 15 seats meant that if the occupancy of any one-way flight was less than 15, the state government would sponsor the unoccupied seats at the rate of Rs 7,000 per unoccupied seat.
“For illustration, if only five seats are booked for a one-way flight, then MTC shall pay for the 10 unoccupied sponsored seats to the airline operator at the rate of Rs 7,000 per unoccupied sponsored seat which would amount to Rs 70,000,” the contract said.
The contract further stated that if 16 seats or more are sold for a one-way flight, then no sponsorship for any seat shall be applicable for that one-way flight even as it was added that the payment for sponsored seats shall be over and above the usual VGF seats payable amount (Rs 6,500) as per the payment terms.
It was also stated in the contract that if the operator’s aircraft is grounded or is not operational for more than two consecutive operational days, the operator will replace, at its own expense, the aircraft with an identical aircraft acceptable to the MTC within two calendar days of such demand, failing which a penalty of Rs 1 lakh per operational day will be imposed and shall be deducted from the running bills of the operator.
The catch here is that MTC paid a 100% subsidy to FlyBig on all 78 seats.
The MD of MTC, KL Nongbri said the request for the proposal for the service was on the UDAN model and many of the terms were tougher after which interested parties such as Zoom Air, FlyBig and India Fly Safe said that the terms were too strict.
He said one of the terms was that the aircraft should not be more than 15 years old but the bidders said aircraft even older than 15 years are allowed to operate under the UDAN scheme.
Flybig told the government that DGCA and AAI allow those companies to operate which do not have a flight and the government had to go without following UDAN rules.
Nongbri said these companies maintain the service would not be feasible without subsidy and the government decided to support the company with Rs 6,500 per seat while making it clear that they cannot charge more than Rs 7,000 per seat from passengers. The government allowed them to take subsidies of even up to 100% of a flight’s capacity on this condition.
According to Nongbri, Zoom wanted a subsidy of Rs 9,750 per seat after which the government revised the request for proposal.
The other companies said the terms were not feasible. It was at this time that FlyBig came into the picture.
The government wanted a Bombardier 400 aircraft while the other bidders had aircraft that could take 33 passengers.
Admitting that the government cannot open a single tender until the Finance department gives its approval, Nongbri said FlyBig wanted a 100% subsidy and the government agreed to it.
The official said FlyBig was paid only for their services.
“We pay them if they fly,” he said, adding that FlyBig had requested the Transport department to terminate the agreement. The MoU is yet to be scrapped.
