Mumbai: Regional connectivity scheme (RCS), as proposed in the draft aviation policy, is a big negative for the heavily indebted and loss-making airlines as it would cap fares on regional routes, says a report.
"We believe capping fares on regional routes, under the proposed RCS, to be effective April 2016, is a negative for airlines. Even with the 2 percent cess on other tickets, we expect domestic air fares to decline by 5-7 percent in FY17," Crisil said in a report, after the government sought comments on the new aviation policy.
The report, however, said the proposed 2 per cent levy on tickets for regional connectivity fund and freedom to charge ancillary services would marginally add to overall ticket cost and this would slightly offset the impact of price control.
It also said RCS needs more explanation as there is no clarity on whether a fare of Rs 2,500 per hour would be capped even for last-minute booking, identification of specific routes and associated regional impacts, and specific modalities to be adopted in administering this scheme.
01/11/15 PTI/Zee News
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"We believe capping fares on regional routes, under the proposed RCS, to be effective April 2016, is a negative for airlines. Even with the 2 percent cess on other tickets, we expect domestic air fares to decline by 5-7 percent in FY17," Crisil said in a report, after the government sought comments on the new aviation policy.
The report, however, said the proposed 2 per cent levy on tickets for regional connectivity fund and freedom to charge ancillary services would marginally add to overall ticket cost and this would slightly offset the impact of price control.
It also said RCS needs more explanation as there is no clarity on whether a fare of Rs 2,500 per hour would be capped even for last-minute booking, identification of specific routes and associated regional impacts, and specific modalities to be adopted in administering this scheme.
01/11/15 PTI/Zee News
