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Centre increases levy on airlines under regional connectivity scheme
Currently, the levy is ₹5,000 per departure and the amount will further go up to ₹10,000 per departure from January 1 to March 31, 2023 and further increase to ₹15,000 from April 2023 till April 2027.
The Union government on Thursday announced that regional air connectivity levy charged from commercial airlines under the UDAN scheme will be increased to ₹10,000 per departure from January 1, a move that aviation experts said could push the airfares higher.
To fund the regional air connectivity scheme — UDAN (Ude Desh ka Aam Naagrik) — the civil aviation ministry has been collecting the levy from December 2016.
“... in order to take forward the operations under the ongoing and upcoming RCS-UDAN (Ude Desh ka Aam Naagrik) scheme, the levy to fund the regional air connectivity (RCF) fund has been reviewed and revised by the Central Government,” the ministry said in an order issued to airlines and airports on Thursday. “The Central Government has decided to revise the existing rate of levy on scheduled flights being operated within India to fund the Regional Air Connectivity Fund, till further revision.”
Currently, the levy is ₹5,000 per departure and the amount will further go up to ₹10,000 per departure from January 1 to March 31, 2023 and further increase to ₹15,000 from April 2023 till April 2027, it stated.
Specifying the exceptions, the order said: “Flights operated on CAT Il / CAT IIA routes as specified in the Route Dispersal Guidelines... (i) Flights operated on Regional Connectivity Scheme (RCS) routes pursuant to the Regional Connectivity Scheme of the Central Government (ii) Flights operated with aircraft having maximum certified take off mass not exceeding 40,000 kg will be exempted from the said levy”.
The RCS-UDAN scheme was framed in accordance with the National Civil Aviation Policy (NCAP) in 2016 and was approved by the Union cabinet. As on October 14 this year, 70 airports including heliports and two water aerodromes connecting 439 routes have been operationalised under this scheme.
Aviation experts said the civil aviation ministry’s order, which does not put any rider for airlines, is likely to increase load on passengers.
“With this circular, the government wants to upscale UDAN operations for which funds are required to give subsidy to RCAS operators,” said aviation expert Vipul Saxena. “However, this move will increase load on passengers as the airlines will load this on passengers by increasing airfares (which are already on the higher side), as the MOCA in its order has not put any rider for airlines not to add this to fares.”
Mark D Martin MRAeS, founder of Martin Consulting, said: “It’s baffling as to why does a private air transport service and connectivity require to be subsidised when India went away from pull off subsidy burdens on the taxpayer during the 1990s. Air transport should not be burdened any further on the traveler with inane viability gap funding. Air travel is not a privileged luxury where the government needs to take from the rich to fund the poor, air travel is an imperative necessity and it is high time the government acknowledged that.”
Welcoming the move, former chief executive officer of Alliance Air, CS Subbiah, said increase in air fares will be marginal and not a burden to passengers. “The likely reason could be that the government intends to spend more fund on UDAN or fill the gap in present funding,” he said.
“UDAN funds may have reduced in a big way due reduction in flights operating on CAT I and III routes due to Covid-19 in the last two years. At the same time disbursal under UDAN also would have reduced equally,” he said. “With capacity now reaching pre-Covid levels, the new regional connectivity fund charges will help double the fund, which in turn will help UDAN expansion and strengthen the scheme.”
