Business Other News 16 Jun 2016 Domestic airlines ca ...

Domestic airlines can go global now

DECCAN CHRONICLE. | SRIDHAR KUMARASWAMI
Published Jun 16, 2016, 1:19 am IST
Updated Jun 16, 2016, 1:19 am IST
New aviation policy sets Rs 2,500 for 1-hour flights.
The proposed RCS will be funded through “viability gap funding”, a subsidy through a small levy per departure on all domestic routes other than flights to small towns and on smaller aircraft. (Representational image)
 The proposed RCS will be funded through “viability gap funding”, a subsidy through a small levy per departure on all domestic routes other than flights to small towns and on smaller aircraft. (Representational image)

New Delhi: In a major push for aviation reforms, the Union Cabinet on Wednesday gave the go-ahead to India’s first-ever civil aviation policy since Independence, that provides for fares to be capped at Rs 2,500 per hour under a new Regional Connectivity Scheme (RCS) between a “served” airport (where flights operate) and an “unserved” airport (in small towns with no connectivity recently), while tweaking the rules for domestic airlines to fly abroad. The proposed RCS will be funded through “viability gap funding”, a subsidy through a small levy per departure on all domestic routes other than flights to small towns and on smaller aircraft.

While this may mean passengers have to pay more while flying on metro routes, the government says this levy will not be much and will be specified soon. Tax sops are also being given to airline operators for RCS.

 

In another move, the government abolished the contentious “5/20” rule to fly abroad, under which airlines needed to have at least 20 aircraft and five years of domestic flying experience to be allowed to fly overseas, replacing it with a “0/20” rule, with the time-limit eligibility for overseas operations abolished, but an airline must have 20 aircraft that fly domestically before the 21st aircraft it buys or already has can fly abroad. Communications minister Ravi Shankar Prasad said the “questionable legacy” of the 5/20 rule had been “thrown into the dustbin”.

 

The government is walking a tightrope between established airlines flying for years that opposed removal of the 5/20 rule and relatively new airlines which were rooting for the removal of the rule.

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Location: India, Delhi, New Delhi




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