To fund UDAN scheme, levy on flights on major routes fixed at Rs 5,000

Federation of Indian Airlines has already challenged collection of levy for RCS fund in court

The government has fixed at Rs 5,000 the levy on scheduled flights, being charged from the airlines flying on major routes, to fund its regional connectivity scheme, UDAN (Ude Desh ka Aam Naagrik).

The revised levy, which will be effective from June 1, has now been fixed at a uniform rate of Rs 5,000 per flight till further order, aviation regulator DGCA said in a circular, issued last week.

To fund the ambitious regional connectivity scheme, the Civil Aviation Ministry is collecting a levy of up to Rs 8,500 per departure from airlines operating on major domestic routes, including Mumbai and Delhi.

The Directorate General of Civil Aviation (DGCA) also said that the amount already paid by the airlines as per the earlier charges, will be adjusted against them as per the fresh circular.

The ministry started collecting the levy from December last year. The Airports Authority of India (AAI) is the nodal agency for UDAN.

The UDAN scheme, under which airfares have been kept at Rs 2,500 for one-hour flights, is aimed at making the air travel more affordable and providing air services to the hinterland.

It was kick-started last month with the Prime Minister Narendra Modi flagging off the first RCS flight between Shimla and New Delhi, operated by Alliance Air, the regional arm of the national carrier Air India.

With at least half of the seats in UDAN flights offered at subsidised fares, the participating carriers would be provided a certain amount of Viability Gap Funding (VGF) — an amount shared between the Centre and the states concerned.

The levy is being collected towards the VGF. The Federation of Indian Airlines (FIA) has already challenged the collection of levy from carriers for the RCS fund in the court. Jet Airways, IndiGo, SpiceJet and GoAir are members of the FIA.

AAI chairman Guruprasad Mohapatra had last week said that the government was looking to "refine" the present norms for UDAN ahead of the second round of bidding, which is likely in three months.

In the first round of UDAN bidding, five airlines won bids to operate on 128 routes connecting 70 airports, of which 31 are un-served.

"(Before) the second round of bidding, we will further refine (the scheme) after extensive stakeholder consultations," Mohapatra had said.