In a relief to passengers flying on major domestic routes, the Civil Aviation Ministry has decided to significantly reduce the levy on air tickets imposed to fund the Centre’s new regional connectivity scheme UDAN.
From June 1, it will only charge a uniform levy of ₹5,000 per flight on major routes, down from ₹7,500-₹8,500 per flight it had ordered to charge earlier.
The move will come as a relief to passengers taking flights on major domestic routes as each passenger will have to bear about ₹30 as cess against about ₹50 as per government’s previous order in November 2016.
“The Central Government has decided to revise the levy on scheduled flights being operated within India to fund the Regional Air Connectivity Fund at a uniform rate of ₹5,000 per flight till further revision. The said levy will now come into effect from June 1, 2017,” said an order sent by the Civil Aviation Ministry to all Secretaries of Central government and chief secretaries of State governments on May 9.
Centre’s circular
The Directorate General of Civil Aviation (DGCA) has been directed to issue a circular on the revised levy amount.
The Centre had ordered imposing a levy of ₹7,500 for flights up to 1,000 km, ₹8,000 for flights between 1,000 and 1,500 km and ₹8,500 for flights beyond 1,500 km, except north-eastern states and regional routes, effective from December 1.
A reduction in levy is also seen as government’s efforts to bring domestic airlines on board its UDAN scheme as most domestic airlines refused to charge a levy on air tickets.
The Federation of Indian Airlines (FIA), which represents IndiGo, Jet Airways, SpiceJet and GoAir, had dragged the Centre to the courts challenging the levy to finance the regional connectivity scheme. Only AirAsia and Air India had imposed a regional connectivity scheme surcharge on its tickets so far.
The government’s directive came on the same day when IndiGo, India’s largest airline by market share, announced it will participate in the government’s UDAN scheme for providing regional air connectivity, by inducting 50 ATR 72-600 aircraft, which are smaller planes.
“We expect the FIA to withdraw their case in Delhi High Court as two of its member airlines will now be participating in UDAN scheme and we have also decided to reduce their burden by lowering the levy substantially,” said a senior civil aviation ministry official, on the condition of anonymity.
Levy relief
The government also announced relief to existing airlines which had to charge a higher levy due to its previous order.
“The amount already paid by the airlines in pursuance to order dated November 9, 2016, will be adjusted against them as per this Order,” according to the civil aviation ministry order.
As per the UDAN scheme, airfares on all flights operating from regional airports will be capped at ₹2,500 for an hour’s journey. The Centre will provide subsidy to fund the losses incurred by airlines through a regional connectivity fund.
While 80% of the fund will be financed by the levy imposed on air tickets, the rest 20% will flow from respective state governments.
