No fixed limit for viability gap funding in regional air connectivity plan

The scheme seeks to connect unserved and under-served airports

The government on Tuesday said the limit has not been fixed for viability gap funding to airlines under the regional connectivity scheme.

Minister of State for Civil Aviation Jayant Sinha told the Rajya Sabha that an airline operator is expected to start services under the scheme within six months after award of the routes.

The ambitious scheme -- which seeks to connect unserved and under-served airports -- provides for Viability Gap Funding (VGF) to the participating airlines. It is to be funded by the Centre as well as the state government concerned.

In a written reply, Sinha said the government intends to make regional air connectivity affordable by providing financial support in the form of VGF to meet the gap between the cost of airline operations and expected revenue on such routes.

"There is no fixed percentage of VGF in the scheme at present," he noted.

According to the minister, the VGF amount would depend on the stage length and "VGF cap for operation through Category I fixed wing aircraft (aircraft with seating capacity of less than 20 seats) ranges from Rs 2,470 for 150 kilometres to Rs 5,730 per RCS seat up to 500 kilometres".

Among others, one-hour RCS flights have a fare cap of Rs 2,500.

In a separate written reply, Sinha said initial proposals for operation of RCS flights from 43 unserved airports have been received in the first round of bidding under RCS.

"After evaluation of the technical and financial proposals, an airline operator shall be selected to commence RCS flights. It is expected that selected airline operator may commence RCS flights within six months after award of routes/ networks," Sinha said.