Airfares to rise, Govt imposes levy on airlines to fund flights to small cities

The levy amount would be for an entire flight and price of each ticket could go up depending on the number of seats.

New Delhi:

Airfares are set to rise with the government deciding to levy up to Rs 8,500 per flight on major routes to fund the regional air connectivity scheme.

The levy amount would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight.

Civil Aviation Secretary R N Choubey today said the levy would be up to Rs 8,500 per flight depending on distance.

The ambitious scheme -- UDAN (Ude Desh ka Aam Naagrik) -- seeks to connect small cities by air as well as make flying more affordable for the masses.

To provide viability gap funding for the flights operated under the regional connectivity scheme, the Ministry would impose a levy on every departure on major air routes such as the national capital, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.

"The levy for an up to 1,000 kilometre length of scheduled flight will be Rs 7,500 per flight, Rs 8,000 for a 1,000 to 1,500 kilometre flight and Rs 8,500 for flights above 1,500 kilometre," Choubey said here.

For UDAN, the government would be creating the Regional Connectivity Fund (RCF).

With the levy, the government estimates to have Rs 400 crore for RCF, Choubey said. "In addition to this, another 20 per cent (funding) will come from state governments. We are roughly looking at around Rs 500 crore per year available in the kitty," he noted.

The move would push airfares slightly higher as airlines are expected to pass on the burden to fliers.

The funding is being provided since the fares of half of the seats operated in a particular flight under UDAN would be capped at Rs 2,500 for one-hour duration. This cap would be applicable for distance of 476-500 kilometres.

The limit of RCS airfare would vary from Rs 1,420 to Rs 3,500 for fixed-wing aircraft. For helicopters, half-an-hour ride under the scheme would cost Rs 2,500 and for over one-hour duration, the cap would be Rs 5,000.

RCF is to be funded by the Centre and respective state government participating in UDAN.