UDAN: Govt eyes Rs 3 bn a year from levy on airlines flying major routes

The government expects to collect around Rs 3 billion annually from the levy on airlines flying on major routes towards the regional air connectivity scheme, a senior official said.

To partly raise money for viability gap funding requirement under the UDAN (Ude Desh ka Aam Naagrik) scheme, the civil aviation ministry has been collecting the levy since December 2016.

More routes are getting added under the UDAN scheme, which seeks to connect unserved and under-served airports as well as making flying more affordable.

With increasing number of UDAN routes, the ministry is also preparing to deal with higher funding needs in the coming months.

A senior ministry official said the response to UDAN flights has been very positive and many routes are having good occupancy.

Every year, the ministry expects to garner Rs 2.8 billion to 3 billion by way of levy collected from airlines flying on major routes.

An amount of Rs 5,000 is levied for each departure of flights on major routes. Initially, the levy was Rs 8.5 billion and was subsequently reduced.

To fund the ambitious regional connectivity scheme -- UDAN -- the civil aviation ministry is collecting a levy of Rs 5,000 per departure from airlines operating in major domestic routes, including Mumbai and Delhi.

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

All the five operators -- Alliance Air, SpiceJet, TruJet, Air Deccan and Air Odisha -- that won routes in the first round of bidding under UDAN have already commenced operations.

IndiGo and Jet Airways are among the airlines that have won routes in the second round of bidding and are yet to start services under the scheme.

In his 2018-19 Budget speech, Finance Minster Arun Jaitley had said that 56 unserved airports and 31 under-served helipads will be connected under the regional air connectivity scheme.

The allocation for UDAN has been substantially raised to Rs 10.14 billion for the next financial year. The same was at Rs 2.00 billion for 2017-18 fiscal.