Aviation regulator, the Directorate General of Civil Aviation (DGCA) has said that the regional air connectivity fund (RCF) levy will come into effect from September 1, 2017 and any amount already paid by airlines under this fund would be adjusted against their accounts. It also noted that the levy is used to subsidise operations under the government's ambitious regional connectivity scheme (RCS)-UDAN (Ude Desh ka Aam Naagrik).
DGCA, in its notification, has stated that the government had started charging a fee- ranging from Rs 7,500 to 8,500 per flight operated by all Indian airlines from December 2016 in order to cross-subsidise flights to tier-2 and tier-3 cities under the RCS. It added that the amount was revised to Rs 5,000 in May this year. In order to fund the RCS, the civil aviation ministry earlier said that it would collect a levy of up to Rs 5,000 per departure from airlines operating on major domestic routes.
In March, as many as 128 routes were awarded to five airlines in the first round of bidding for RCS. Through the RCS, the government aims to improve air connectivity to tier-2 and tier-3 cities. It offers airlines subsidy to fly on these routes and, in return, these carriers have to offer half of the total seats at discounted fares.