Draft civil aviation policy: Himachal not ready to share VGF burden | punjab$regional-takes | Hindustan Times
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Draft civil aviation policy: Himachal not ready to share VGF burden

Even as the Centre’s Revised Draft National Civil Aviation Policy, 2015 aims to improve regional air connectivity to popularise flying among the middle classes, hill state Himachal Pradesh is opposed to the viability gap funding pattern.

punjab Updated: Nov 24, 2015 19:31 IST
Saurabh Chauhan
In the draft policy, the Union ministry of civil aviation has proposed 2% levy on all domestic and international commercial flights to generate Rs 1,500 crore annually that would help boost regional connectivity
In the draft policy, the Union ministry of civil aviation has proposed 2% levy on all domestic and international commercial flights to generate Rs 1,500 crore annually that would help boost regional connectivity(HT FILE PHOTO)

Even as the Centre’s Revised Draft National Civil Aviation Policy, 2015 aims to improve regional air connectivity to popularise flying among the middle classes, hill state Himachal Pradesh is opposed to the viability gap funding pattern.

Under the plan, 80% of the viability gap funding would be borne by the Centre and the rest by the states concerned.

Himachal Pradesh has three airports located in Jubbarhatti in Shimla, Bhuntar in Kullu and Gaggal at Kangra. While only four to five flights are operational at Bhuntar and Gaggal, commercial operations at Shimla have remained suspended since September 2012.

In the draft policy, the Union ministry of civil aviation has proposed 2% levy on all domestic and international commercial flights to generate Rs 1,500 crore annually that would help boost regional connectivity.

The revenue generated would also go towards re-opening hundreds of airstrips, which are not in use for long, building “no-frills airports” and providing viability gap funding to airlines to help keep prices on regional routes at `2,500 per hour of travel.

The idea is to enable the 300-million strong middle class to travel at least once by air per annum to boost ticket sales.

Notably, with Himachal being a special category state, the 2% cess on flight tickets would not be applicable here. “Flights operational in Himachal need not pay 2% cess as it falls in exempted category, an advantage for the hill state,” Shimla airport director Parvindra Tiwari said.

While it is largely pleased with the proposal, Himachal is not willing to share the 20% cost for funding the gap. “Himachal Pradesh is not financially capable to pay airlines for viability gap funding,” said a state official, requesting anonymity.

A senior government functionary said instead of asking the state to fill the 20% gap in funding, the Centre should increase the cess from 2% to 2.55% and raise the required amount for viability gap funding.

Interestingly, Himachal Pradesh has been demanding from the Centre to initiate steps to improve air connectivity in view of the state’s tourism potential. But several airlines are not ready for operations in the region due to low number of passengers, translating into losses.

The regional connectivity scheme (RCS), which is proposed to be rolled out next year, will also bring down the airfare in Himachal. “Ministry of civil aviation will target an all-inclusive airfare not exceeding `2,500 per passenger, indexed to inflation for a one-hour flight on RCS routes,” draft policy read.

“Currently around 75 out of 476 airstrips or airports have scheduled operations. Revival of air strips, depending on demand, as no-frills airports will be done at a cost not exceeding `50 crore, mostly through Airport Authority of India,” the draft policy read.