Govt Levy for regional connectivity to make air travel expensive

The government plans to impose a levy of around Rs 7,500 per flight for travel up to a distance of 1,000 kms


Domestic air travel is set to get costlier as the government has decided to impose a new levy per flight operation to fund its regional connectivity scheme (RCS).

The government plans to impose a levy of around Rs 7,500 per flight for travel up to a distance of 1,000 kms. Similarly the levy per flight journey between 1,000 kms and 1,500 kms would be Rs 8,000 and for distances above 1,500 kms the levy will be Rs 8,500.

According to the Ministry of Civil Aviation, the objective of RCS christened as UDAN (Ude Desh ka Aam Naagrik) is to enhance air passenger traffic in the country by stimulating demand on regional routes.

“Amount collected as Regional Connectivity Fund (RCF) will be used to provide financial support to airlines in the form of Viability Gap Funding (VGF) for operations under the scheme,” the ministry said.
As per the directions of the ministry, RCF will be funded by a small levy per departure on all domestic flights other than the ones on Category II / Category IIA routes under RDG, RCS routes and aircraft having maximum certified takeoff mass not exceeding 40,000 kg. The purpose of RCF is to channel funds generated from air travel to stimulate further growth and development of the air travel industry itself.

A part of the fund will also be contributed to by the states that have signed the UDAN MoU, as of date 19 states have either signed or given their consent. “The national scheduled airlines providing services on domestic routes where such fee per departure is levied would also be eligible under the scheme to avail benefits of RCS. Similarly, even the passengers would be benefited through additional connectivity on regional routes at prices which are at or below the airfare caps.”

The ministry added that the proposed levy is a small amount but which can go a long distance in bringing more travellers and cities to the Indian aviation network.

Given the high growth in the sector we expect that the airlines could be in a position to absorb a part of the levy and not adversely impact the passengers significantly, a ministry statement said. It is estimated that RCF will collect around Rs 500 crore. Recently, on October 21, Civil Aviation Minister, Ashok Gajapathi Raju had said that the first flight under RCS is expected to be operated by January 2017.

The UDAN scheme will be in operation for a period of 10 years.

The operations under the scheme are intended to provide air connectivity to un-served and remote routes with airfare being capped at Rs 2,500 for an hour’s journey of around 500 km.

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