A key proposal of the aviation ministry to levy a cess that would be used to fund air connectivity to smaller towns and cities has got the law ministry’s approval.
Sources said the approval from the Ministry of Law and Justice came last week and paves the way for the aviation ministry to move ahead with its ambitious regional connectivity scheme (RCS). “There were fears that any move to impose a levy on flights on trunk routes to subsidise regional flights may be challenged in courts and hence law ministry’s view on the issue was very important,” said an aviation ministry official.
“We will now take a final decision on how this levy should be imposed,” said another official.
Government is considering a levy of Rs 7000-8000 per domestic departure to build a regional connectivity fund (RCF). An Rs 8000 levy per domestic departure on flights on all trunk routes will roughly translate into a hike of Rs 60 in passenger fares, according to an internal analysis done by the aviation ministry and reported by HT on July 1.
“An alternate proposal is to impose a two per cent cess on tickets to fund regional flights,” the official said.
Government hopes to raise Rs 500 crore annually through the levy that would be used to subsidise regional flights by capping fares at Rs 2500 for a one-hour flight.
The National Civil Aviation policy cleared by the cabinet on June 15 aims at increasing the domestic ticketing from 8 crore in 2015 to 30 crore by 2022 and make India the third largest civil aviation market. The policy aims at increasing airports having scheduled commercial flights to increase from 77 in 2016 to 127 by 2019.