Air fare likely to go up as regional air connectivity scheme unveiled

Air fares will be capped at Rs 2,500 for one-hour flights on unserved and under-served routes and flyers will have to shell out more as air fares are likely to increase as per the government’s ambitious Regional Connectivity Scheme (RCS). The RCS, unveiled on Nov 11, was mooted in the New Civil Aviation Policy as part of the government’s plan to serve smaller cities, has been put up for stakeholders’ consultations including state governments, airlines and airport operators. It will target 90 airports. The stakeholders have been given three weeks time to submit their comments and suggestions on the draft scheme, which is expected to be finalised by August. Also as part of the proposed scheme, a new category of airlines, scheduled commuter airlines, is being created where a new operator may be allowed to start operations with just one plane. Under the proposed scheme, the government would be providing Viability Gap Funding (VGF) – which would be financed through Regional Connectivity Fund (RCF). Union Civil Aviation Minister Ashok Gajapathi Raju while unveiling the draft policy said RCF would be created for funding RCS “through levy on certain flights.” In this regard, the government would be charging a levy in the form of per domestic departure from the airlines on certain routes, a move which is expected to push the airfares marginally higher. The Ministry would contribute 80 per cent of the VGF, while respective state governments would chip in with the remaining 20 per cent to the fund which will have a corpus of Rs 500 crore each year. When asked how much levy is likely to be charged, Civil Aviation Secretary R N Choubey said, “We are giving final touches to that aspect (levy amount), that will be announced very soon.”