Govt unveils UDAN, fares capped at Rs 2,500 for 1-hour flights

For 50% of the seats of flights under UDAN, the fare cap will be Rs 2,500, and rest will be market-based pricing

Air passengers on major routes will soon have to shell out more for flights to fund the regional connectivity scheme under which fares will be capped at Rs 2,500 for one-hour flights.

The government expects the first flight under this scheme to take off in January.

A "first of its kind" in the world, UDAN (Ude Desh Ka Aam Naagrik) will be based on market mechanism as well as bidding for a minimum of 9 seats and a maximum of 40 seats in a fixed wing aircraft.

For 50 per cent of the seats of flights under UDAN, the fare cap will be Rs 2,500, and the rest will be market-based pricing.

"We are cautiously optimistic about it (UDAN)," Civil Aviation Minister Ashok Gajapathi Raju said on Friday, adding that the first flight under the scheme is expected to take off in January 2017.

The comments come against the backdrop of some airlines being unhappy with the proposal to charge a levy for funding the scheme. The draft scheme was unveiled in July.

Civil Aviation Secretary RN Choubey said the rules related to the levy will be "printed in the gazette in two days" while the executive order in this regard will be ready by month-end.

The levy will be "very small", he added.

Charging a levy on profitable routes is likely to push the air fare for fliers.

"This is first of its kind globally... We are doing something not done anywhere else," Minister of State Jayant Sinha said.

The fares will be capped at Rs 2,500 for one-hour flights on unserved and under-served routes.