1. Regional connectivity scheme: Flying set to get costlier as Modi govt announces new levy

Regional connectivity scheme: Flying set to get costlier as Modi govt announces new levy

Flying is set to get costlier as Narendra Modi-led government on Friday announced new levy for regional connectivity scheme.

By: | Updated: November 11, 2016 2:17 PM
The government hopes to collect Rs 400 crore from this levy which will be used to promote regional air connectivity. The government hopes to collect Rs 400 crore from this levy which will be used to promote regional air connectivity.

Flying is set to get costlier as Narendra Modi-led government on Friday announced new levy for regional connectivity scheme. To fund its plan to connect smaller cities in the country, the government has announced new fees that will have to be paid by airlines on popular routes. But if your flight is full, you’re unlikely to pay more than Rs 50 each way; if all seats are not sold out, you’ll pay an extra Rs 100. According to Times Now, “A levy of Rs 7,500 for flights of up to 1000 km, Rs 8,000 for flights between 1000 to 1500 km and Rs 8,500 for flights beyond 1,500 km will be imposed.” The government hopes to collect Rs 400 crore from this levy which will be used to promote regional air connectivity, says the channel. The levy amount would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight.

Civil Aviation Secretary R N Choubey today said the levy would be up to Rs 8,500 per flight depending on distance. The ambitious scheme — UDAN (Ude Desh ka Aam Naagrik) –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 the regional connectivity scheme, the Ministry would impose a levy on every departure on major air routes such as the national capital, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.

“The levy for an up to 1,000 kilometre length of scheduled flight will be Rs 7,500 per flight, Rs 8,000 for a 1,000 to 1,500 kilometre flight and Rs 8,500 for flights above 1,500 kilometre,” Choubey said here. For UDAN, the government would be creating the Regional Connectivity Fund (RCF). With the levy, the government estimates to have Rs 400 crore for RCF, Choubey said. “In addition to this, another 20 per cent (funding) will come from state governments. We are roughly looking at around Rs 500 crore per year available in the kitty,” he noted.

The move would push airfares slightly higher as airlines are expected to pass on the burden to fliers. 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. 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. RCF is to be funded by the Centre and respective state government participating in UDAN.

(With PTI inputs)

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