• Regional Connectivity Scheme fineprint for airlines: 10 facts

    Civil Aviation Minister Ashok Gajapathi Raju, on Friday, revealed the fine print of the regional connectivity scheme which is expected to bolster air connectivity by promoting affordable flying.

    In the new Civil Aviation Policy, the government has capped passenger fares for flight journeys from unserved and underserved airports at Rs 2,500 per hour of flying for approximately 500 kilometres under the regional connectivity scheme.

    Here are the 10 salient features of the regional connectivity scheme, which is aimed at making flying affordable for the masses:

    1. The regional connectivity scheme will be applicable on route length between 200 to 800 km with no lower limit set for hilly, remote, island and security sensitive regions.

    2. The Central government will provide concessions to the tune of 2 per cent excise on Value Added Tax (VAT) and service tax at 1/10th the rate and liberal code sharing for regional connectivity scheme airports.

    3. State governments will become key partners and provide free security and fire service, utilities at concessional rates and reduce VAT on ATF to 1 per cent.

    4. No landing charges, parking charges and Terminal Navigation Landing Charges will be imposed for regional connectivity scheme flights.

    5. A Regional Connectivity Fund (RCF) will be created to fund the scheme via a levy on certain flights. States are expected to contribute 20 per cent to the fund.

    6. For balanced regional growth, allocations will be spread equitably across 5 regions – North, West, South, East and North East with a cap of 25 percent.

    7. A minimum of 3 and a maximum 7 regional connectivity scheme flights per week per route with minimum 9 and maximum 40 seats per flight

    8. The regional connectivity scheme will be in operation for 10 years with individual route contracts to be for a 3-year span. Limited period exclusive route rights will be allotted to selected operators.

    9. Interested operators can submit initial route proposals. The gap in costs and revenues, if any, will be compensated through Viability Gap Funding. (VGF)

    10. Market-based reverse bidding mechanism to determine least VGF to select the airline operator with the right to match to the initial proposer. The government said VGF will be reduced if passenger load factor remains high and will be discontinued after 3 years when route becomes self sustainable. Will Compton Authentic Jersey

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