Government gets 20 registrations for regional air connectivity

New Delhi: The government on Friday said its ambitious regional connectivity scheme (RCS) has received a healthy response from the aviation industry.

Civil Aviation Secretary Rajiv Nayan Choubey said the government has so far received 20 registrations from air operator permit holders to participate in the upcoming reverse bidding round for allocation of RCS routes.

Currently the pre-bidding round for RCS routes is underway. The government has set December 5, 2016, as the proposal due date (PDD) for the process. 

Choubey spoke at the two-day Aero Expo India-2016 organised by the PHD Chamber of Commerce and Industry.

According to Choubey, by December 2016 dozens of scheduled commercial operations could begin to connect small towns in the country under the regional connectivity drive.

The state-run Airports Authority of India (AAI) has been designated as implementing agency for the scheme. 

The objective of RCS christened as UDAN (Ude Desh ka Aam Naagrik) is to enhance air passenger traffic in the country by stimulating demand on regional routes.

The UDAN scheme will be in operation for a period of 10 years.

The operations under the scheme are intended to provide air connectivity to un-served and remote routes with airfare being capped at Rs 2,500 for an hour`s journey of around 500 km.

The allocation of routes under the scheme will be based on a reverse bidding mechanism, with selected airlines getting a VGF (viability gap funding), apart from various other financial concessions for a period of three years.

The central government is expected to provide concessions in the form of reduced excise duty and service tax, state governments will have to lower the VAT (value added tax) on ATF (air turbine fuel) to one per cent or less.

Besides, the state governments would not charge on security and fire services and electricity, water and other utilities would be provided at concessional rates. 

On their part, airport operators shall not impose landing and parking charge and terminal navigation landing fees. They would also offer discounts on route navigation facility charges.

The scheme is a key component of the recently approved National Civil Aviation Policy (NCAP), whose main objective is to "enhance regional connectivity through fiscal support and infrastructure development." 

On October 21, Civil Aviation Minister P. Ashok Gajapathi Raju said that the first flight under RCS is expected to be operated by January 2017.

RCS is also expected to make domestic air travel costlier as the central government has decided to impose a new levy per flight operation to fund the scheme from December 1, 2016.

The government plans to impose a levy of about Rs 7,500 per flight for travel up to a distance of 1,000 km.

Similarly, the levy per flight journey between 1,000 km and 1,500 km would be Rs 8,000 and for distances above 1,500 km the cess will be Rs 8,500.