1. Govt makes flying more expensive, imposes Rs 8,500 levy on each flight

Govt makes flying more expensive, imposes Rs 8,500 levy on each flight

Domestic fliers commuting on major routes will have to shell out as much as R100 more per ticket as the government has decided to impose a levy of up to R8,500 per flight on such routes to fund the regional connectivity scheme (RCS) announced earlier this year.

By: | New Delhi | Published: November 12, 2016 6:28 AM
The government aims to raise R400 crore for the regional connectivity fund (RCF) through the levy. (Reuters) The government aims to raise R400 crore for the regional connectivity fund (RCF) through the levy. (Reuters)

Domestic fliers commuting on major routes will have to shell out as much as R100 more per ticket as the government has decided to impose a levy of up to R8,500 per flight on such routes to fund the regional connectivity scheme (RCS) announced earlier this year.

“The levy for an up to 1,000 km length of scheduled flight will be R7,500 per flight, R8,000 for a 1,000 to 1,500 km flight and R8,500 for flights above 1,500 km,” civil aviation secretary RN Choubey said.

For an A320 aircraft with 180 seats, a commuter on major routes will pay R45 per seat if all the seats are sold out. However, if the flight is running at a passenger load factor (PLF) of around 50%, the levy could go up to R100 seat for a 1,000-1,500 km flight. While the levy will be inversely proportional to the number of sold-out seats, it’s still not clear how airlines would charge passengers without knowing the final utilisation factor.

The government aims to raise R400 crore for the regional connectivity fund (RCF) through the levy. Additionally, another 20% of the contribution to the fund would come from the state government making the fund worth R500 crore per year, Choubey said.

The scheme — UDAN (Ude Desh ka Aam Naagrik) — seeks to promote air travel in smaller cities that have unserved or under-served airports. The flights originating or ending at such destinations will be made affordable by capping the fare at R1,420-3,500 per seat depending on the distance.

Airlines operating under the scheme would be compensated by way of viability gap funding (VGF) from the fund collected through the said levy on major routes like Delhi, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.

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