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Rs 8,000 regional levy on domestic flights set to raise airfares

businesspaper Updated: Jul 01, 2016, 05:58 IST
HT Correspondent
HT Correspondent

NEW DELHI: The Rs 8,000 levy per domestic departure that the government plans to impose on airlines to fund regional connectivity will roughly translate into a hike of Rs 60 in passenger fares, according to an internal analysis done by the aviation ministry.

The finer details of the plan will be unveiled on Friday.

The levy is likely to be imposed on flights on all trunk routes. Government hopes to raise Rs 500 crore annually through this levy that would be used to fund the regional connectivity scheme and subsidise regional flights by capping fares at Rs 2,500 for a one-hour flight.

“Considering that the average load factor on these routes is 70%, a levy of Rs 8,000 would translate into a hike Rs 60 per passenger,” said a source. To be sure, the load factors or the aircraft occupancy on important sectors is much higher. The Regional Connectivity Scheme will come into effect in the second quarter of 2016-17.

The National Civil Aviation policy cleared by the cabinet on June 15 aims at increasing the domestic ticketing from 80 million in 2015 to 30 million by 2022 and make India the third largest civil aviation market.

The policy aims at increasing the number of airports having scheduled commercial flights from 77 in 2016 to 127 by 2019. The plan is to revive airstrips as no-frills airports at an indicative cost of Rs 50 crore to Rs 100 crore.

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