APAI terms govt's decision to charge levy to fund RCP as

Apprehending a "spiralling" effect on airfares in view of the government's decision to charge a levy up to Rs 8,500 per flight on major routes to fund the ambitious regional air connectivity, fliers body (APAI) has termed the move as "regressive and unwarranted".
The Regional Connectivity Plan (RCP) packaged as a scheme "to make flying a reality for the small town common man" is more a welfare and inclusive measure, which, based on its objective, should be spearheaded by the Central and state governments, Air Passenger Association of India (APAI), said.
Civil Aviation Secretary R N Choubey had last week announced government's decision to levy up to Rs 8,500 per flight on major routes to fund the regional air connectivity scheme from December 1.

With the levy, that would be collected from the airlines for each domestic departure to major routes, the government estimates to have Rs 400 crore for Regional Connectivity Fund (RCF), Choubey said.
"Another 20 per cent (funding) will come from state governments. We are roughly looking at around Rs 500 crore per year available in the kitty," he had said.
"The reported statement of the Civil Aviation secretary that the government would collect Rs 400 crore from air carriers annually by charging additional levy on scheduled flights between major cities starting from December 1, 2016, to fund RCF is most unfortunate since APAI had vehemently opposed the imposition of regressive levy at all times," APAI President D Sudhakara Reddy said.

It is incumbent on the Centre and state governments to find resources for implementing the policy rather than further burdening the air passengers, he said adding, "It is unfair, inequitable and against natural justice."

The proceeds from the levy would be used to build RCF in order to provide viability gap funding for the flights operated under the scheme UDAN (Ude Desh ka AamNagrik).
A "first of its kind" in the world, UDAN will be based on market mechanism as well as bidding for a minimum of 50 per cent seats in the participating airline's flight and the rest would be market-based pricing. Helicopter services too can be part of the scheme.

Under the scheme, mainly aimed at connecting unserved and under-served airports, airfares would be capped at Rs 2,500 for half of the seats in flights travelling a distance of 476 -500 kilometre. This translates to around a one-hour journey.
"Major chunk of the resources (80 per cent) will come
from additional charges levied on air carriers operating between big cities, which in turn is expected to pass on the burden to the air passengers. We are not only concerned about the hefty levy, which ranges between Rs 7,500 and Rs 8,500 per flight, depending on the distance to be covered but also about the cascading effect of the levy and how it gets translated into the calculation of air fare.

"Our experience is that in reality per head passenger cost will be a few notches above what that is ought to be. This can be easily camouflaged in the present variable fare dispensation," Reddy said.
However, the Government has defended its decision, saying that, "it believes the proposed levy is a small amount but can go a long way in bringing more travellers and cities to the Indian aviation network.
"Given the high growth in the sector, we expect that the airlines could be in a position to absorb a part of the levy and not adversely impact the passengers significantly," the ministry said.

APAI also alleged that the government was still undecided on many vexatious issues involved while rolling out the RCS, such as leasing procedures, how to select the airlines to operate on the regional routes, among others.
"These important issues have to be addressed and a viable solution arrived through a consultative process with the stakeholders before rolling out the proposed scheme. Instead, it appears that the aviation ministry has treated the air passengers as passive spectators in the unfolding scheme and the statement of intent to impose the levy seems to be an act in haste," it said.
The Association would raise the issue with the highest authorities, including the prime minister, to seek their interventions to insulate the air passengers from undue harassments and to protect their interests., Reddy added.

The levy for up to 1,000 kilometre length of scheduled flight will be Rs 7,500 per flight, Rs 8,000 for a 1,000 to 1,500 kilometre flight and Rs 8,500 for flights above 1,500 kilometre.