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Airlines yet to collect regional connectivity scheme cess

Jayant Sinha said that the Centre will explore other means to fund the scheme if domestic airlines do not come on board.

January 19, 2017 10:55 pm | Updated 11:59 pm IST - NEW DELHI:

Most of the domestic airlines have refused to charge a levy on air tickets that will finance the regional connectivity fund even as the Centre wants to start services under the regional connectivity scheme by March.

Minister of State for Civil Aviation Jayant Sinha said on Thursday that the Centre will explore other means to fund the scheme if domestic airlines do not come on board.

“We had multiple rounds of discussion with the airlines. We are very hopeful that they will participate. As far as funding for the regional connectivity scheme is concerned, there are efficient and inefficient ways of funding it. Funding it through airlines is the most efficient way. If it poses some challenges, we have other mechanisms that we may use,” Mr. Sinha told the media on Thursday.

Counter bids

The Centre has received 45 proposals from 11 bidders covering more than 200 routes under its regional connectivity scheme. It has now invited counter bids against these initial proposals that cover 65 under served or unserved airports. Mr. Sinha said the Centre expects the first flight under the scheme to take off in late February or March.

Under the scheme, the Centre will subsidise the losses incurred by the airlines flying out of dormant airports. The airlines will be allowed to charge passengers ₹2,500 for an hour’s flight. About 80% of the subsidy will be collected from the airlines that will charge a levy of up to ₹8,500 on each departing flight. The balance 20% will come from the respective state governments.

‘No budgetary support’

“The Civil Aviation Ministry stands behind the regional connectivity scheme and the participating airlines can be assured that they will be provided subsidies,” the Minister said. He said the government was holding continuous dialogue with the airlines “to convince them to participate” in the scheme. He, however, said the ministry will not seek any Gross Budgetary Support from the Finance Ministry to fund the scheme.

Legal tangle

The Federation of Indian Airlines, which represents IndiGo, Jet Airways, SpiceJet and GoAir, has dragged the Centre to the courts challenging the levy of up to ₹8,500 on domestic flights from December 1. The Delhi High Court will now hear the airlines’ plea on February 1. Apart from the four airlines, new entrant Vistara has also not started charging the levy on its ticket fares.Only AirAsia and Air India levy a regional connectivity scheme surcharge now.

As far as states are concerned, 15 of them have agreed to provide all the required infrastructure concessions along with the balance 20% subsidy for flight operations under the scheme.

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