New Delhi: The civil aviation ministry is likely to allow all airlines, including scheduled commercial airlines such as Air India, Jet Airways and others, to fly regional commercial flights that the government had announced in the new civil aviation policy.
According to the regional connectivity plan, announced in the draft aviation policy, the government aims to provide air connectivity between two smaller cities at a cost of Rs 2,500 per hour of flight. The civil aviation ministry had even announced a new category of airlines — schedule commuter airlines — to provide regional connectivity.
The announcement to make all carriers eligible for regional routes is likely to be part of the final civil aviation policy that is likely to be out by January-end.
“There was always a view that the regional connectivity plan should be open to all existing airlines — scheduled commercial and non-scheduled carriers — in the country. But the draft policy mentioned a new category just to take a view on the matter,” said a senior civil aviation ministry official, who did not wish to be identified. Now, the thinking is to allow all airlines participate in the regional connectivity plan, the official explained.
The final draft of the policy is likely to be out by the end of January by when the Cabinet is expected to clear it. The regional connectivity plan is one of the key focus areas of the new civil aviation policy and the government is looking at fiscal incentives to make it a success.
These flights will get a slew of incentives such as waiver of central excise duty of about 8 per cent on fuel, and service tax of about 4.94 per cent on flights under the regional connectivity plan.
Over and above these, regional flights will also get a waiver passenger services fee (PSF), used to fund the cost of providing security at airports, of Rs 149 per ticket and 1 per cent value-added tax on jet fuel. The airlines operating these regional flights will also be eligible for viability gap funding (VGF) that will be decided through bidding. The viability funding will be arranged through a 2 per cent cess on tickets bought for both international and domestic flights and is likely to be charged from February next year.
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