New Delhi: The Union government will provide a subsidy to airlines, to charge passengers Rs 2,500 for an hour’s flight on remote routes, through a reverse bidding process. This means an airline company which seeks the least financial support through bidding will be given the subsidy, to enable it to charge a low fare. Also, government sources said, a limited number of seats at each regional airport will be put up for reverse bidding.
“Subsidies may not be necessarily provided on all the regional air tickets. Airlines will be free to avail of the subsidy and may even choose to charge passengers based on market forces,” a civil aviation ministry official said. In its proposed aviation policy, issued last Friday, the Union government had proposed an airfare of Rs 2,500 for an hour’s flight on airports to be revived through a Regional Connectivity Scheme. To do so, a subsidy to airlines would come from a proposed Regional Connectivity Fund (RCF).
Government officials said viability gap funding would be provided to the airlines on limited seats “through a competitive bidding process”.
The Centre and the state government concerned would together provide the subsidy to airlines, to recover the cost of operations on specific routes. The RCF is proposed to be set up by levying a two per cent cess on domestic and international tickets, and by collecting the proceeds from auction of bilateral seats. The Centre will give 80 per cent of the subsidy. The government hopes to collect Rs 1,500 crore each year for the RCF.
06/11/15 Somesh Jha/Business Standard
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“Subsidies may not be necessarily provided on all the regional air tickets. Airlines will be free to avail of the subsidy and may even choose to charge passengers based on market forces,” a civil aviation ministry official said. In its proposed aviation policy, issued last Friday, the Union government had proposed an airfare of Rs 2,500 for an hour’s flight on airports to be revived through a Regional Connectivity Scheme. To do so, a subsidy to airlines would come from a proposed Regional Connectivity Fund (RCF).
Government officials said viability gap funding would be provided to the airlines on limited seats “through a competitive bidding process”.
The Centre and the state government concerned would together provide the subsidy to airlines, to recover the cost of operations on specific routes. The RCF is proposed to be set up by levying a two per cent cess on domestic and international tickets, and by collecting the proceeds from auction of bilateral seats. The Centre will give 80 per cent of the subsidy. The government hopes to collect Rs 1,500 crore each year for the RCF.
06/11/15 Somesh Jha/Business Standard
