The Government today unveiled its ambitious regional connectivity scheme which will cap airfares at ₹2,500 for one-hour flights to unserved and under-served airports that are 476-500 km apart. Flying between airports that are 776-800 km apart will cost ₹4,070, while travelling between metros will be a tad more expensive.

This follows the government’s proposal to provide Viability Gap Funding for fixed wing aircraft flights covering 200-500-km provided at least nine seats are priced at an all-inclusive fare of ₹2,500. The government will provide the operator a viability gap funding of ₹3,750 per seat sold under the regional connectivity scheme (RCS) up to a maximum of 40 seats per flight. The VGF has been capped at ₹4,170 for 776-800-km.

To be eligible for the VGF, an operator will have to operate regular services to at least one airport, which at present does not have regular flights.

The proposal forms part of the draft RCS, which has been put in the public domain for comments and suggestions from stakeholders including airlines, airports, and State governments.

The Centre wants the comments by July 22 on the RCS before taking a final view.

To finance subsidised flying across the country, the draft policy suggests that a Regional Connectivity Fund (RCF) be created into which money from a levy or fee on all domestic flights other than those operated to islands and in the North-East will flow.

A decision is expected soon on whether the levy will be on a lumpsum basis on every domestic flight or on a per seat basis, said RN Choubey, Secretary, Civil Aviation.

In addition, any premium realised from the allotment of additional capacity entitlement on international routes will also flow in to the RCF.

Five regions

To ensure that the VGF is provided on routes across the country, the draft policy has divided the country into five regions and States to which 25 per cent of the RCF flows can be committed.

The VGF, which will be decided on the basis of the least amount of funds that an operator seeks from the government, will be available for a period of three years only.

To be eligible for the VGF, an operator must operate a minimum of three flights a week and a maximum of seven on an RCS route.

“We will do handholding for a limited period of time. Aviation should benefit the economy,” said Ashok Gajapathi Raju, Civil Aviation Minister, after releasing the draft scheme.

The draft scheme also seeks to provide an airline operating on RCS routes exclusivity or have the sole right to operate on particular routes for one to three years. A final view on the number of years that an operator will be allowed to fly exclusively on a particular route will be decided after stakeholder consultation.

To be eligible to operate on RCS routes, an operator will have to pay a bank guarantee of ₹50 lakh per route which will be refunded after one year.

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