Govt may provide 30% gap funding for planes with less than 20 seats
To compensate the operators, the Civil Aviation Ministry would be providing viability gap funding -- which would be partly raised by way of a fixed levy on planes flying in major routes.
Government plans to provide as much as 30% more viability gap funding for sub-20 seater planes flying to unserved and under-served airports under the regional connectivity scheme.
Seeking to make flying affordable for the masses, the government has launched UDAN (Ude Desh Ka Aam Naagrik) scheme under which fares would be capped at a maximum of Rs 3,500 depending on the duration of a flight on regional routes.
Fares would be capped at Rs 2,500 for one-hour flights.
To compensate the operators, the Civil Aviation Ministry would be providing viability gap funding -- which would be partly raised by way of a fixed levy on planes flying in major routes.
While the amount of funding would primarily depend on different stage length (or duration) of the flight, the ministry would also take into account certain constant factors in deciding the quantum.
"Now we will have two constants for the same stage length," Civil Aviation Secretary R N Choubey told PTI.
While unveiling UDAN scheme last month, the ministry had said viability gap funding (VGF) would be based on different stage lengths as well as the type of fixed wing aircraft.
"For the aircraft that are comparatively bigger ones such as ATRs, the VGF will be same what we have indicated earlier. But for the aircraft which have less than 20 seats, the VGF will be significantly more," Choubey said.
When asked about the quantum of increase in VGF that would be available for such planes, he said "it may be about 30 per cent higher than the VGF for an ATR".
The idea of providing higher subsidy for aircraft with less than 20 seats was suggested during a stakeholders conference/pre-bidding meeting on UDAN organised by the ministry earlier this month, Choubey said.
"We are going to put it (framework in this regard) out soon," he added.
Under UDAN scheme, the ministry has listed three categories of aircraft -- those having less than 20 seats, 21-80-seaters, and 80 seats or more.
It has already announced its decision to levy up to Rs 8,500 per flight on major routes to fund its regional connectivity scheme from December 1.
The levy for an up to 1,000 kilometre length of scheduled flight would be Rs 7,500 per flight, Rs 8,000 for a 1,000-1,500 kilometre flight and Rs 8,500 for flights above 1,500 kilometre.
It would be for an entire flight and the price of each ticket could go up depending on the number of seats in that particular flight.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
Power of Compounding: How many years it will take to reach Rs 2 crore corpus if your monthly SIP is Rs 3,000, Rs 4,000, or Rs 5,000
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
02:30 PM IST