RCS levy to be demand-driven, says Civil Aviation Ministry

The quantum of levy for funding the government's ambitious regional air connectivity plan will be decided on the basis of "overall requirement", seating capacity and routes where the flights are to be operated.

UDAN (Ude Desh ka Aam Naagrik), launched by the government last week, seeks to connect small cities by air as well as make flying more affordable for the masses.

To provide viability gap funding for the flights operated under regional connectivity scheme, the Civil Aviation Ministry would be charging a levy on every departure in major air routes such as the national capital, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.

While the quantum of levy is yet to be announced, the Ministry maintains that it would be "very small" amid most of the domestic airlines opposing the idea of cross subsidisation on grounds that airfares in general could go up.

The funding is being provided since the fares of half of the seats operated in a particular flight under UDAN would be capped at Rs 2,500 for one-hour duration.
This cap would be applicable for distance of 476-500 kilometres.

As per a notification, the central government may impose a levy on scheduled flights being operated within India to fund the RCF.

The government would notify the rate of levy from time to time after taking into consideration "the seating capacity of the aircraft used for the scheduled flights and the routes on which such flights are operated and the overall requirement of Regional Air Connectivity Fund," the notification issued on October 21 said.

It has been issued after seeking the views of the stakeholders, including airlines and airport operators.

For UDAN, the government would be creating the Regional Connectivity Fund (RCF) by way of a "levy or fee per departure on all domestic flights" subject to certain exemptions.

There would be no levy on departures on routes which fall in Category II/ Category IIA under the route dispersal guidelines. Besides, flights on RCS routes as well as those using small aircraft with less than 80 seats irrespective of routes would be exempted.

"The premium realised, if any, from the allotment of additional capacity entitlements on international routes will also fund the RCF, as provided under New Civil Aviation Policy 2016", the final RCS guidelines issued on October 21 said.

The limit of RCS airfare would vary from Rs 1,420 to Rs 3,500 for fixed-wing aircraft. For helicopters, half-an-hour ride under the scheme would cost Rs 2,500 and for over one- hour duration, the cap would be Rs 5,000.

While launching UDAN last week, Minister of State for Civil Aviation Jayant Sinha had said the scheme aims to make even a common man to travel by air.

"Hawai chappal wale ko bhi hawai jahaz mein hume bithana hai (We want even a person wearing slippers to travel in a plane)," he had said.