Regional air connectivity levy to inflate ticket prices

The government has decided on a levy of up to ~8,500 per flight on major air routes to fund the ambitious regional connectivity scheme.

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

Aviation Secretary R N Choubey said the levy for a scheduled flight up to 1,000 km will be ~7,500. It would be ~8,000 for a flight of 1,000 to 1,500 km and ~8,500 for flights above 1,500 km.

Proceeds from the levy would go to a Regional Connectivity Fund (RCF), to provide viability gap funding for flights under the scheme or UDAN (Ude Desh ka Aam Nagrik). The

“AN ADDITIONAL 20% (FUNDING) WILL COME FROM STATE GOVERNMENTS. WE ARE LOOKING AT AROUND ~500 CRORE PER YEAR IN THE KITTY”

levy would be on routes connecting the major cities of Mumbai, Delhi, Bengaluru, Chennai, Hyderabad and Kolkata.

The government estimates it will get ~400 crore a year for the RCF, Choubey said. "In addition, another 20 per cent (funding) will come from state governments. We are looking at around ~500 crore per year in the kitty."

The move would push air fares slightly higher; airlines are expected to pass on the burden.

The fares of half of the seats in a flight under the Ude Desh ka Aam Nagrik scheme would be capped at ~2,500 for a one-hour duration. This cap would be applicable for a distance of 476-500 km.The limit would vary from ~1,420 to ~3,500 for fixed-wing aircraft. For helicopters, a half-hour ride under the scheme would cost ~2,500 and for over an hour, the cap would be ~5,000.