New Delhi: Airlines which do not expect the government to help them financially while launching flights under the proposed Regional Connectivity Scheme (RCS) need not adhere to the Rs 2,500 per hour fare cap. Explaining a provision in the draft civil aviation policy which has riled some airlines and raised concerns about possible fare regulation, civil aviation secretary RN Choubey said today this fare cap applies only if an airline wants to avail of the Viability Gap Funding (VGF) to bridge the gap between the cost of operations and revenue generated through this fare on routes which are otherwise not viable.
The policy, once it comes into effect after various clearances, provides for many concessions under the RCS scheme to encourage regional connectivity. The Centre and states will bear VGF costs in an 80:20 ratio, state governments will have to lower VAT on jet fuel at such airports to just 1 percent besides providing subsidised water, electricity and some other facilities. But to avail all these concessions, airlines must promise a fare not more than Rs 2,500 per hour of flying.
Choubey said this cap has been suggested after exhaustive discussions with airlines and in case more than one airline is willing to mount flights to such routes, there will be reverse bidding process to identify the operator which wants the least financial assistance. All told, this scheme should come into operation by 1 April next year and will depend on how many states come forward with concessions.
06/11/15 Sindhu Bhattacharya/First Post
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The policy, once it comes into effect after various clearances, provides for many concessions under the RCS scheme to encourage regional connectivity. The Centre and states will bear VGF costs in an 80:20 ratio, state governments will have to lower VAT on jet fuel at such airports to just 1 percent besides providing subsidised water, electricity and some other facilities. But to avail all these concessions, airlines must promise a fare not more than Rs 2,500 per hour of flying.
Choubey said this cap has been suggested after exhaustive discussions with airlines and in case more than one airline is willing to mount flights to such routes, there will be reverse bidding process to identify the operator which wants the least financial assistance. All told, this scheme should come into operation by 1 April next year and will depend on how many states come forward with concessions.
06/11/15 Sindhu Bhattacharya/First Post
