Government’s proposal in the revised draft policy unveiled on October 30, 2015 to levy a 2 per cent cess on domestic and international tickets to mop up funds for its regional connectivity scheme that would have led to a hike in air fares is likely to be dropped. Civil Aviation Secretary R N Choubey has said that other means to raise funds for boosting regional air connectivity are being explored after the conclusion of discussions with stakeholders.
He said that the Ministry had received the stakeholders' comments and hence the ways in which the funds required for viability gap funding will be raised are being explored. After taking comments from all stakeholders including airlines, airport operators, general aviation firms, ground-handling agencies, among others, a group of ministers under Union Home Minister Rajnath Singh had discussed the draft policy late last month.
The government had earlier planned to levy the proposed cess from January this year. However, it was deferred due to its failure to finalise the draft civil aviation policy. Choubey also said that the draft civil aviation policy is expected to be taken to the Union Cabinet for its approval by the end of this month. The draft policy proposes providing viability gap funding for airlines for regional connectivity, setting up of no-frills airports, making India as a hub for maintenance, repair and overhaul (MRO) industry besides various tax sops to spur the growth of the industry, among others. Besides, the policy also proposes capping of airfares at Rs 2,500 for one-hour flight under regional connectivity scheme for places that are un-served currently as well as auctioning of bilateral rights. Regional Connectivity Scheme is one of the thrust areas of the draft policy. Choubey said that regional connectivity can't take place unless there was 'collective' money to do so.