1. Regional Connectivity Scheme suffering as scheduled carriers not paying the levy

Regional Connectivity Scheme suffering as scheduled carriers not paying the levy

The scheduled carriers have not started paying the Regional Connectivity Scheme (RCS) levy to the Airports Authority of India (AAI).

By: | Updated: April 10, 2017 11:33 AM
The proceeds from the levy were to be used to subsidise flights on the unconnected routes. (Reuters)

The scheduled carriers have not started paying the Regional Connectivity Scheme (RCS) levy to the Airports Authority of India (AAI). Barring Air Asia, all other carriers are not paying a levy of Rs 7, 500 to Rs 8,500 per departure flight on the major routes. The regional connectivity scheme was started for providing air services to small towns. The proceeds from the levy were to be used to subsidise flights on the unconnected routes.

An Indian Express report said that the AAI, which is the nodal agency for managing the RCS Fund, has collected only about Rs 2 crore through the levy against the claim of around Rs 150 crore for period December-March, the sources said. The government last week awarded 128 routes to five airlines under the RCS, also known as Udan or Ude Desh ka Aam Naagrik scheme.

Airlines including TruJet, SpiceJet, Air Deccan, Air Odisha and Air India subsidiary Alliance Air, won bids to operate on the routes that will connect 70 airports, including 31 unserved and 12 under-served ones under the scheme. Cities such as Agra, Bathinda, Ludhiana, Shimla, Jaisalmer, Gwalior, Puducherry, Porbandar, Kanpur, Burnpur, Cooch Behar, Bagdogra, Shillong, Jagdalpur and Dehradun, among others, will get connected through air services over the next few months.

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The report also stated that the Airlines operating RCS flights will sell 50 per cent of the tickets at fares not exceeding Rs 2,500 for one-hour flights, while they are allowed to charge market prices for the remaining 50 per cent seats. Under the scheme, the government is providing viability gap funding (VGF) to airlines to ensure that 50 per cent of the seats are sold at subsidized rates.

To boost air connectivity, the government had prepared an action plan to revive 160 airports and airstrips, each of would cost about Rs 50-100 crore. Presenting the Union Budget for 2016-17, Finance Minister Arun Jaitley said the government is drawing up an action plan for revival of unserved and underserved airports.

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