Akhilesh Yadav-led Uttar Pradesh government is inviting proposals from air service operators for intra-state connectivity to five cities — Agra, Varanasi, Gorakhpur, Lucknow and Allahabad. This comes after the Centre proposed regional connectivity scheme with airfare of Rs 2,500 per ticket per hour. According to an Indian Express report, under the UP govt scheme, state will provide fiscal incentives to operators, including viability gap funding, lower value added tax at 4 per cent on aviation turbine fuel, and no landing or parking charges.
These concessions will only be available for airlines operating within the state. “The state government will bear all the costs for intra-state connectivity. Air operators who bid the lowest in terms of per hour of subsidy, and satisfy technical and financial parameters, will get permission to fly. The ticketing will be done by the state,” said Avinash Chandra Misra, Joint Director, Travel Trade, Uttar Pradesh Tourism.
Misra further added that they are looking at ticket collection of Rs 5-10 crore in first year. He also added that that the ticket price will be kept reasonable, and when the scheme picks up, the government hopes that the VGF component will fall.
Airline operators will not have to pay landing/parking costs for Allahabad, Gorakhpur and Agra airports, which are under the Indian Air Force. Narendra Modi-led government approved the National Civil Aviation Policy 2016 last month to be run in coordination with the states.
The Centre had also proposed to provide VGF to airlines, while asking states to give tax sops in the form of lower excise duty at 2 per cent and VAT at 1 per cent on aviation turbine fuel.
On July 6, the state government invited proposals, through the UP State Tourism Development Corporation Ltd, from scheduled and non-scheduled airline operators.