The government’s plans to boost regional air connectivity could hit a legal air pocket as leading domestic airlines have opposed the proposal to charge a levy on flights on major routes to fund subsidies for regional flights and are likely to challenge it in the courts.
The Federation of Indian Airlines (FIA), which represents IndiGo, Jet Airways, SpiceJet and GoAir, has written to the Union Civil Aviation Ministry terming the proposed regional connectivity levy as “illegal” and “in contravention to the Constitution of India.” It said the government is not empowered to levy a tax on airlines to fund the regional connectivity scheme under the Aircraft Act of 1934.
Aircraft RulesAs a part of its proposed regional connectivity scheme, the Union Civil Aviation Ministry had mooted amendments to the Aircraft Rules of 1937 in August to set up a regional connectivity fund to subsidise the losses of airlines that wanted to fly on regional routes. The fund was proposed to be financed by a levy on domestic flights along with contribution from states and credit proceeds from other sources.
Passengers will be able to fly to unserved and underserved airports for a fare of Rs 2,500 an hour, under the scheme which is slated to be launched on October 21.
Going aheadCivil aviation secretary RN Choubey said despite opposition from airlines, the government is still going ahead with the move as it has been backed by the Law Ministry. “The airlines say it’s a burden on them and we disagree as ultimately the money will flow back into the civil aviation sector,” he said.
“A levy in the nature of tax can only be levied having regard to the provisions contained in the Article 265 of the Constitution of India i.e. by authority of law,” the FIA said in a letter to the ministry.
“The draft rules as published are therefore ultra vires the Constitution of India and would be illegal.” The airlines said imposition of a regional connectivity levy would require amendment to the Aircraft Act, 1934 and not the rule and until then the draft rules would be “beyond the authority of law and in contravention to the Constitution of India.”
Usurp authority“The draft rules may, therefore, tantamount to an attempt by the Central Government to usurp the powers or authority of the Parliament,” the airlines said.
However, Mr. Choubey said, “We have got the approval of the law ministry. If someone wants to move the court, they are free to do so. The civil aviation secretary stated that it already charges levy in the form of passenger service fee on air tickets.
“The passenger service fee is levied to air passengers under rule 88 of the Aircraft Rules to meet the expenditure on airport security and passenger facilities at the airports.
In its letter, the FIA said that Section 5(2) (ab) of the Aircraft Act of 1934 does empower the Centre to make rules for economic regulation of air services but it doesn’t authorise it “to introduce a levy in the nature of tax on air services.”
