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Government imposes levy on flights, seeks to allay fare hike fears

The levy, effective December 1, will be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight.

business Updated: Nov 11, 2016 23:58 IST
PTI
The government’s decision to levy up to Rs 8,500 per flight on major routes is to fund the regional connectivity scheme.
The government’s decision to levy up to Rs 8,500 per flight on major routes is to fund the regional connectivity scheme.(HT File Photo)

Flyers will soon have to shell out more for air travel with the government’s decision to levy up to Rs 8,500 per flight on major routes to fund the regional connectivity scheme even as it sought to allay concerns saying the amount will be small and can attract more travellers.

The levy, effective December 1, will be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight.

The scheme -- UDAN (Ude Desh ka Aam Naagrik) -- seeks to connect small cities by air as well as make flying more affordable for the common man by way of capping fares at Rs 2,500 for one-hour flights under it.

Civil Aviation Secretary R N Choubey today said levy will be up to Rs 8,500 per flight depending on the distance flown.

“The levy for an up to 1,000 kilometre length of scheduled flight will be Rs 7,500 per flight, Rs 8,000 for a 1,000-1,500 km flight and Rs 8,500 for flights above 1,500 km,” Choubey said here.

It will be applicable only on scheduled domestic flights operating on major routes and excludes regional flights, he said.

Seeking to dispel concerns that the move would push airfares upwards, the ministry said it believes the proposed levy is a small amount but can go a long way in bringing more travellers and cities to the Indian aviation network.

“Given the high growth in the sector, we expect that the airlines could be in a position to absorb a part of the levy and not adversely impact the passengers significantly,” the ministry said in a three-page statement issued late in the evening.

However, the statement did not mention the quantum of levy which was disclosed by Choubey earlier in the day.

For UDAN, the government has created the Regional Connectivity Fund (RCF) -- which will be 80 per cent financed by the Centre and the rest by respective states.

With the levy, the government estimates to have Rs 400 crore for RCF, Choubey said. “On top of it, another 20 per cent (funding) will come from state governments. We are roughly looking at around Rs 500 crore per year available in the kitty,” he said.

Choubey was speaking at a stakeholders’ conference and pre-bid meeting on implementation of UDAN, whose final contours were unveiled last month.