Government may levy cess on N-E airfares

By: | Published: February 2, 2015 10:39 AM

Air fares for passengers travelling on domestic routes may increase with the government considering a proposal to levy a cess to subsidise air transport services in the region.

Air fares for passengers travelling on domestic routes may increase with the government considering a proposal of the North Eastern Council (NEC) to levy a cess to subsidise air transport services in the region.

A senior official in the ministry of civil aviation said, “The north eastern council has demanded that a cess be levied on passengers travelling on domestic routes to mobilise resources for a regional connectivity fund. The resources can be utilised to subsidise air transport services in the north-eastern region. We are considering the proposal.”

The proposal was made during a two-day visit of civil aviation minister Ashok Gajapati Raju Pusapati to meet chief ministers of Northeastern states. The visit was aimed at speeding up airport development and improving air connectivity in a region considered extremely sensitive because of its international borders with China, Bangladesh and Myanmar and internal security issues.

“Almost all states in the NEC have raised concerns about high airfares. Road connectivity is poor in the region. They want fares to be regulated and some kind of assistance provided to operators so that air connectivity improves in the region”, added the official.

The eight sister states in NEC arguably have one of the worst road network in the country. Air connectivity too is poor in the region prompting the NEC to sign a memorandum of understanding (MoU) with Alliance Air in September 2014 to increase services in the region.

Under the arrangement, NEC currently provides viability gap funding (VGF) to Alliance Air for air services to Shillong, Tezpur, Lilabari, Silchar and Guwahati with ATR 42 type of aircraft till  March 31, 2016. However, other airlines operating in the region have also been demanding similar concessions to make services viable.

NEC assists Alliance Air in obtaining concessions on ATF, landing, RNFC rates. The actual cost of operations is reviewed every three months based on the proposed cost and VGF amount fixed accordingly.

Alliance Air has been operating flights to the Northeast since January 2003, under VGF to cover losses on the operations in the Northeast.

Alliance Air continued services in the Northeast upto December 31, 2012 when it was operating 65 flights per week. However, from January 2013, due to outstanding VGF, the airline restructured its ATR operations in the Northeast and consequently services were discontinued on some routes. Alliance Air continued operations only between Kolkata-Silchar, Kolkata-Guwahati and Silchar-Imphal with ATR aircraft. In July 2013, it also restored five times weekly flights on the Kolkata-Shillong route.

Improving infrastructure in the Northeast states has emerged as a priority area for the NDA government led by Prime Minister Narendra Modi. Jitendra Singh, (minister of state, Prime Minister’s Office, and MoS (independent charge) at the ministry of development of Northeastern region), has recently written a letter directing several union ministers to visit the region and monitor development projects.

“In consonance with the Union Government’s commitment to accelerate the pace of development in the N-E Region and also to maximise the efficacy of projects/schemes being implement, it has been decided to request the Union ministers to undertake visits to NE States,” the letter said.

Besides Raju, other ministers asked to visit N-E region on a regular basis are minister of mines and steel, Narendra Singh Tomar, law and justice minister DV Sadananda Gowda, minister of state for drinking water and sanitation Ram Kripal Yadav and minister of state for agriculture, Sanjeev Kumar Balyan.

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