Air travel will get costly as Centre slaps new levy
Airfares will also be capped at around Rs 2,500 per hour on flights to these remote areas and small towns
By : sridhar kumaraswami
Update: 2015-10-31 01:11 GMT
New Delhi: Air travel will become more expensive, with the Narendra Modi government proposing a levy of a two per cent cess on domestic and international tickets to fund an ambitious Regional Connectivity Scheme to boost air links to rural areas and smaller towns so that more Indians can travel by air.
Airfares will also be capped at around Rs 2,500 per hour on flights to these remote areas and small towns, and the government will step in to financially assist airlines on these sectors, if needed, so that airlines don’t suffer a loss.
The government wants the RCS to come into effect from April 1, 2016. It hopes to collect Rs 1,500 crores annually, that will be part of a Regional Connectivity Fund to fund the government’s regional connectivity plans, termed as Viability Gap Funding (VGF).
The proposal is part of the new draft aviation policy which also proposes various tax concessions and a possible game-changing proposal of over 50 per cent FDI — up from the current 49 per cent limit — for Indian carriers when the government decides on an “open skies” policy with all countries.
“The Prime Minister’s directive was that we should take flying to the masses,” said civil aviation secretary R. N. Choubey, adding that “airfares will go up by two per cent” (on Category 1 routes comprising major sectors). A draft policy was unveiled by the ministry in the presence of civil aviation minister Ashok Gajapathi Raju and minister of state Mahesh Sharma here on Friday.