Regional Connectivity Scheme (RCS) unveiled by the Government on Friday envisages capping of airfare at Rs2,500 for one-hour flights, which connect unserved and under-served airports and proposes levy as a result flyers will soon have to shell out slightly more for tickets.
“The fare for a one-hour flight of approximately 500 kilometre on a fixed-wing aircraft or on a 30-minute helicopter ride has been fixed at Rs2,500. Fares for other route lengths or durations will be priced proportionately (though not linearly),” said Union Civil Aviation Minister Ashok Gajapathi Raju while unveiling the draft scheme here.
"The states are interested in connectivity. Their feedback will also be taken into account. We will take them into confidence and work along with them to make this (RCS) happen," Raju said.
Giving detail of the regional connectivity scheme, Minister of State for Civil Aviation Dr Mahesh Sharma said: “Airlines, which plan to fly on regional routes, will have to deposit a bank guarantee of Rs50 lakh per route to the Government and the airline will get exclusive rights to fly on the route.
The regional connectivity scheme will be in operation for 10 years with individual route contracts to be for a 3-year span. limited period exclusive route rights will be allotted to selected operators.
As per the policy, un-served and under-served airports would be revived to boost regional connectivity. There are 394 unserved and 16 under-served airports in the country. Other measures include extending concessions, giving viability gap funding for operators as well as providing cost-effective security solutions by Bureau of Civil Aviation Security (BCAS) and state Governments.
The selected airline operator would have to provide a minimum of 9 and a maximum of 40 seats on the RCS flights. On each such route, the minimum frequency would be three and maximum, seven per week. Route networks would also be encouraged under the scheme to achieve economies of scale and optimal usage of aircraft.
To reduce the cost of operations, Central Government would be providing concessions in the form of reduced excise on VAT, service tax and flexibility of code sharing at the RCS airports. Similarly, the State Governments would have to lower the VAT on ATF to 1 per cent or less, besides security and fire services free of cost and electricity, water and other utilities at substantially concessional rates. Similarly, landing and Parking charge and Terminal Navigation landing Charges shall not be imposed by the airport operator.
A Regional Connectivity Fund would be created to fund the VGF requirements under the scheme. The same would be funded through a levy on certain domestic flights. The partner State Governments would also contribute a 20 per cent share to this fund (10 per cent for North Eastern States). For balanced regional growth, the allocations under the scheme would be equitably spread across the 5 geographical regions of the country viz North, West, South, East and North-east.
The cap on airfares will be applicable on half of the seats and passengers will get subsidised fare on a first-come-first-serve basis. While the Centre will provide 80 per cent of the subsidy by setting up a regional connectivity fund, the rest 20 per cent will flow from the states
"Of the total 410 airports, 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 RN Choubey said.
Choubey added that there are about 30 such airports which can be used for operations without incurring any extra cost on their revival.
The Government has also announced that it would provide funds for revival of another 60 airports, Choubey said, adding that 90 airports are already targeted of the total 410.
Raju said RCF would be created for funding RCS "through levy on certain flights".
In this regard, the Government would be charging a levy in the form of per domestic departure from the airline and the move is expected to push the airfares marginally higher. The Ministry would contribute 80 per cent of the VGF, while respective State Governments would chip in with the remaining 20 per cent.
When asked how much levy is likely to be charged, Choubey said, "We are giving final touches to that aspect (levy amount), that will be announced very soon."
The Government on Friday unveiled the draft RCS for consultations with the stakeholders', including State Governments, airlines and airport operators.
The stakeholders have been given three weeks time to submit their comments and suggestions on the draft scheme, which is expected to be finalised by August.