UDAN cap on airfares: Govt should ensure prices are determined by the market

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Updated: October 29, 2016 7:36:10 AM

Proposal to cap short-distance air fares not correct

The government believes a levy imposed on people flying regular routes will help fund UDAN. (PTI)The government believes a levy imposed on people flying regular routes will help fund UDAN. (PTI)

It aims to go way ahead of what GR Gopinath achieved with the launch of Air Deccan in 2003. The NDA government’s regional connectivity scheme—Ude Desh ka Aam Nagrik (UDAN)—plans to have flights capped at R2,500 for an hour’s flying time to and from regional airports. As minister of state for civil aviation, Jayant Sinha says, “Hawai chappal wale ko bhi hawai jahaz mein hume bithana hai.” While the idea is commendable, the means being adopted to make it viable are not. The government believes a levy imposed on people flying regular routes will help fund UDAN. While the first flight is expected to take off in January and 16 airports are ready to fly under the scheme, airlines are not particularly enthused by the proposal. As part of the plan, airlines will be offered waiver of landing and parking charges at smaller airports.

Without the government imposing a cap on airfares, India has emerged as the fastest growing passenger airline market globally. In the first nine months of 2016, air passenger traffic has risen 23.17% over the same period in 2015. There is no reason for the government to stem that growth by imposing fresh levies on flyers. Instead, it should look at means to make flying affordable for all. One way out is to ensure that ATF prices for domestic airlines are on a par with global rates. The government should ensure that prices are determined by the market.

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