New Delhi: The Regional Connectivity Fund (RCF) proposed to offset the losses incurred by airlines for connecting un-served airports is likely to have a corpus of ?500 crore per annum.
The Fund will be aided through a cess in order to subsidise flights connecting un-served airports under the Regional Connectivity Scheme proposed in the Civil Aviation Policy. The scheme has proposed capping air fares at ?2,500 for one-hour flights connecting un-served airports.
“We will give this subsidy for three years, time enough for the airlines to know whether the route will work or not,” said Civil Aviation Secretary RN Choubey, adding that “ideally I would have liked the fiscal incentives to be in sync with the aviation policy period of 10 years, as most of the acquisition of planes happens through leasing and not outright purchase. For leasing to be successful, it normally should be for 10-12 years.”
“However, we have promised that the fiscal incentive can be extended for 10 years. But, people don’t invest on promise. This is one aspect where I succeeded only partly. But, there are several aspects where the ministry succeeded quite well,” he said.
Choubey told BusinessLine that the amount that will help subsidise flyers from tier-II and tier-III cities. It will be collected from all passengers except those flying to the North-East, island territories, and from flights on aircraft smaller than 80-seaters.
17/06/16 Navadha Pandey/Business Line
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The Fund will be aided through a cess in order to subsidise flights connecting un-served airports under the Regional Connectivity Scheme proposed in the Civil Aviation Policy. The scheme has proposed capping air fares at ?2,500 for one-hour flights connecting un-served airports.
“We will give this subsidy for three years, time enough for the airlines to know whether the route will work or not,” said Civil Aviation Secretary RN Choubey, adding that “ideally I would have liked the fiscal incentives to be in sync with the aviation policy period of 10 years, as most of the acquisition of planes happens through leasing and not outright purchase. For leasing to be successful, it normally should be for 10-12 years.”
“However, we have promised that the fiscal incentive can be extended for 10 years. But, people don’t invest on promise. This is one aspect where I succeeded only partly. But, there are several aspects where the ministry succeeded quite well,” he said.
Choubey told BusinessLine that the amount that will help subsidise flyers from tier-II and tier-III cities. It will be collected from all passengers except those flying to the North-East, island territories, and from flights on aircraft smaller than 80-seaters.
17/06/16 Navadha Pandey/Business Line
