Regional Connectivity Fund created for 'Udan' Scheme

The Ministry of Civil Aviation launched Regional Connectivity Scheme (RCS)-UDAN (Ude Desh ka Aam Nagrik) scheme on 21st October, 2016 for providing connectivity to un-served and under-served airports of the country. The primary objective of RCS is to facilitate and stimulate regional air connectivity by making it affordable. Promoting affordability of Regional air connectivity is envisioned under RCS by supporting airline operators through (i) concessions by Central Government, State Governments and airport operators to reduce the cost of airline operations on regional routes and (ii) financial support (viability gap funding or VGF) to meet the gap, if any, between the cost of airline operations and expected revenues on such routes. RCS-UDAN is a demand-driven scheme, where airline operators undertake assessment of demand on particular routes.

A Regional Connectivity Fund (RCF) has been created under powers conferred under Rule 88-B of the Aircraft Rules, 1937 to provide the VGF requirements under the scheme. The Central Government has decided to impose a levy on the scheduled flights being operated within India to fund the Regional Connectivity Fund. However, following flights has been exempted from the above mentioned levy:

i) Flights operated on CAT II/ CAT IIA routes as specified in Route Dispersal Guidelines issued under Rule 134 (1A).

ii) Flights operated on RCS routes.

iii) Flights operated with aircraft having maximum certified take off mass not exceeding 40,000 kg.

The payment of VGF will be made to selected airline operators from the RCF. Selection of airlines will be done through transparent bidding process and the RCS flight is expected to start from January, 2017 onwards

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