Draft scheme for regional air connectivity

Govt contemplates levying other routes to fund the initiative

The government on Friday released a draft scheme to improve regional air connectivity that fix a cap of Rs 2,500 for a one-hour flight but contemplates a levy on other routes to fund the programme.

 Though the draft does not specify any levy, a separate rule could be brought at a later stage where a levy would be imposed on tickets on metro routes. The Rs 2,500 cap on one-hour flight on fixed wing aircraft and 30-minute chopper service could also change as it is linked to inflation.

 Unveiling the draft, Civil Aviation Minister Ashok Gajapathi Raju said Regional Connectivity Fund would be created for funding the scheme through imposing the levy in the form of per domestic departure from the airlines on certain routes. This could push up the airfare.

 The ministry would contribute 80% of the Viability Gap Funding while state governments would chip in with the remaining 20% to the fund which will have a corpus of Rs 500 crore each year. It aims to target 90 airports for rolling out the “demand-driven” scheme.  “The scheme is demand-driven. Wherever the state governments and airlines are coming forward for making them functional, we would be very happy to revive those airports,” Civil Aviation Secretary R N Choubey said.

 As per the draft, which has been put up for stakeholders’ comments for three weeks, one of the destinations would be an unserved or underserved airport.

 The procedure for selecting  airline would be based on reverse bidding mechanism. The selected airline operator would have to provide a minimum of nine and a maximum of 40 seats on regional connectivity flights.

 The successful bidder would have exclusive rights to operate the route for the defined period. Such support would be withdrawn after a three-year period, according to the draft.

 Once selected, the airline will also have to serve the route for a particular period. Airlines will have to give a bank guarantee of Rs 50 lakh per route and if they fail to complete the period, the money will be forfeited.

The government is also offering major concessions for airlines in the form of reduced excise on VAT, service tax and flexibility of code sharing. Similarly, the draft looks at state governments to lower VAT on ATF to 1% or less, free police and fire service, as well as, water and electricity at concessional rate.