New Delhi: Ashwini PhadnisCarrying forward the government’s Regional Connectivity Scheme (RCS) or UDAN, Budget 2018-19 provides, ₹ 1,014.09 crore for operating flights to tier II and tier III cities within the country during 2018-19. This is a five-fold increase from the ₹200 crore made available in the previous year.
The over ₹1,000-crore corpus will be used to provide Viability Gap Funding (VGF) for flights being operated under RCS. The scheme hopes to get the common man fly by connecting tier II and tier III cities in the country.
The scheme seeks to incentivise airlines and operators with the government providing Viability Gap Funding to make operations to these cities profitable. Under the scheme, airlines are required to provide at least 50 per cent of the seats on every flight at ₹2,500 for one hour of flying. The ceiling of subsidised seats is 40, while the minimum number of seats on an aircraft which have to be offered to avail VGF is 9.
The ₹1,014.09-crore for VGF will come from the dividend that Airports Authority of India will be paying to the government in 2018-19. The Ministry of Civil Aviation had written to the Finance Ministry seeking that a portion of the dividend being paid by AAI be used to part fund the VGF requirements for UDAN.
The Budget also talks about NexGen Airports for National Accreditation Board for Hospitals & Healthcare Providers (NABH), but what these will look like was not immediately clear as officials declined to comment on the proposed structure of these airports.
Sea-plane investments
The Finance Minister also announced that for promoting tourism and emergency medical care, government will make necessary framework for encouraging investment in sea-plane activities. Welcoming the statement, Ajay Singh, Chairman and Managing Director, Spicejet said “This project has the potential to convert every river into a runway and every pond into an airport thus providing hundreds of thousands of airports to the country”. SpiceJet has indicated that it plans to acquire 100 sea-planes from Setouchi in Japan to start sea-plane services in the country.
VVIP aircraft
The Budget makes provisions for the President, Vice-President and the Prime Minister travelling in greater comfort as it provides ₹ 4,469.50 crore for purchase of two new aircraft for ‘Special Extra Section Flight Operations,’ an acronym for the flights taken by the VVIPs normally on their visits abroad.
The funds have been made available in the Notes on Demands for Grants, 2018-19 for the Ministry of Civil Aviation. Currently the dignitaries use a Boeing 747 aircraft for their foreign travel and the Boeing 777 is expected to replace this, which has been in use for several decades.
01/02/18 Ashwini Phadnis/Business Line
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