Govt defends in HC its stand to levy Rs 7500-8500 per flight

The proposal to levy Rs 7500 to Rs 8500 per flight operated by Indian carriers to create a fund to develop regional airports was defended today by the Ministry of Civil Aviation and Director General of Civil Aviation (DGCA) in the Delhi High Court.
Terming as "misconceived" a plea challenging the scheme, a bench of Chief Justice G Rohini and Justice Sangita Dhingra Sehgal were further told that the policy would eventually lead to the growth of the civil aviation sector as whole.
"The government has proposed to take flying to the masses by making them affordable and convenient. For example, if every Indian in the middle class income bracket takes just one flight in a year, it would result in a sale of 35 crore tickets, a big jump from seven crore domestic tickets sold in 2014-15," the ministry and the DGCA said in a joint affidavit.

"This will be possible if air fare, especially on the regional routes, are brought down to an affordable level."
The reduction in costs will require concessions by the central and state governments and airport operators, the affidavit said.
The ministry and DGCA's response came in the backdrop of a plea by Federation of Indian Airlines (FIA) which has said that while the scheme allows it to pass on the levy to the passengers, it cannot do so as it is not a fee for which the carriers are rendering any service to the flyers.

The ministry and the DGCA in their reply claimed that the

scheme was in long term interest of the air transport sector and to further widen the penetration of air services in the country. It has been devised for that purpose which will be funded by the levy imposed under Rule 88C.
FIA has said the levy would put an "immense financial burden", estimated between Rs 388 crore to Rs 532 crore or more per annum, and sought orders prohibiting the AAI from collecting the levy.
It said that if the financial burden was passed on to the flyers, it would lead to an increase in tariff which would run counter to objectives of the National Civil Aviation Policy and the Ude Desh ka Aam Naagrik (UDAN) scheme under it to bring airfares down to affordable rates.

UDAN, as per the Centre, seeks to connect small cities by air as well as making flying more affordable.
For UDAN, the government has created the Regional Connectivity Fund (RCF) -- which will be 80 per cent financed by the Centre and the rest by the respective states.
To provide funding for the flights operated under the regional connectivity scheme, the Ministry has decided to impose a levy on every departure on major air routes such as Delhi, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.
FIA has said it has not challenged the creation of the fund but only the imposition of the levy, as it was allegedly "beyond the executive competence and required Parliamentary enactment" as the levy was in the nature of a tax.

It has said that insertion of the rule to impose the levy was illegal as it allows imposition of a tax by delegated legislation without there being any authority in the Aircraft Act to do so.
It has alleged that in order to evade the law, the Centre has kept the notification "deliberately vague" without specifying the nature of the levy.
As per FIA, flights under category II or IIA routes, those operated on regional connectivity scheme routes and those having a max certified take-off mass not exceeding 40,000 kilograms (or small aircraft) have been exempted from the levy.