Forget Trains, Fly Instead!

You may soon get to fly more often and that too at affordable rates. No Kidding!

People from smaller cities will now have something to look forward to. The civil aviation policy has announced a great scheme — Regional Connectivity Scheme, which aims to connect smaller cities to the main hubs. Also, it has quoted a fare of Rs. 2,5oo per passenger for a one-hour flight on RCS routes. In other words, for instance, a destination which is not connected from Delhi at present, gets connected tomorrow will incur a fare of Rs. 2,500 per passenger. However, there would not be any change in fare for a Delhi-Chandigarh flight (for example).

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“AirAsia India also flies on routes which take less than one hour and costs less than Rs 2,500. We think on the face of it the regional connectivity scheme seems to be viable, but we need to wait for the government to come up with the intricacies of the scheme before deciding on anything,” said Amar Abrol, CEO AirAsia India.

As per Ashok Gajapathi Raju, Union minister for Civil Aviation, “We have right now only come out with the broad contours of the RCS, we will be coming out with the detailed scheme within 10 days. He further added, “We have approached different states in pursuance to make the RCS a success and only those states will be included in the RCS routes which are ready to assist the ministry in giving these various tax sops, which includes reducing the excise duty on ATF”.

The government’s objective is to renew 160 airstrips and airports (each at a cost of Rs. 50 to 100 crore) so the policy can be implemented. It will also provide Viability Gap Funding to airlines ( with RCS routes) so there’s no gap between the actual and capped fare. It is learnt that the funding will be shared between the Ministry of Civil Aviation and state government. While the sharing ratio will be 90:10 for the northern eastern states, it will 80:20 for RCS airports. The VGF will be funded by a small levy per departure on all domestic routes as per a rate decided by the ministry from time to time.

The government aims at providing different tax sops that fall under the RCS routes, so service tax on tickets could be reduced. Also, it plans to lower excise duty at 2% on Aviation Turbine Fuel (ATF) picked at RCS airports.

“The scheme will connect India’s remote unconnected regions, boost tourism, create jobs and stimulate the economy in tier 2-3 cities. Sub-sectors like MRO, cargo, helicopters, general aviation and Make in India, etc, will get a fillip with liberalised operational norms and tax breaks,” said Amber Dubey, Partner and Head, Aerospace and Defence, at KPMG India.

As told by the Civil Aviation Secretary, Rajeev Nayan Choubey, “We plan to impose a small levy per departure on all domestic flights other than CAT II /CAT IIA routes”.

It is learnt that airlines that will fly on the RCS routes will be provided with free fire and police services by the state government. Also, the government is expected to provide water, power and other utilities at concessional rates in case they want their airports to be a part of the Regional Connectivity Scheme.