NEW DELHI: The Narendra Modi government has announced an ambitious plan to fulfil dreams of 300 million middle-class fly by limiting airfares between two non-metro cities to Rs 2,500 for flights lasting an hour, according to the draft civil aviation policy.
The draft will be put up for consultations for three weeks and a final policy will be floated by the end of this year.
This initiative was announced as part of the civil aviation policy in Delhi today. "The prime minister wanted the policy to aim at taking flying to masses. We will fix fares at Rs 2,500 and the losses would be bridged through a viability gap funding (VGF).
Carriers operating regional flight will get VGF indexed to ATF prices and inflation. While 80% funding for VGF will be from the centre the rest 20% will be from the states," announced civil aviation secretary R N Choubey.
The plan is to levy a cess of 2% on passengers taking commercial flights both international and domestic. "According to our estimate, we will collect about Rs 1,500 crore through the 2% cess annually," said Choubey. The regional flights will be exempted from service tax.
The draft policy has offered two options for the abolition of 5/20 eligibility policy that mandates the airlines to have an experience of five years of domestic flying and a fleet size of 20 aircraft to fly international.
The policy seeks views from the general public on whether to continue with it, abolish it or replace it through a domestic flying credit model. "The final decision will, however, not depend on the views that emerge out of consultations," said Choubey.
The policy proposes to abolish service tax on MRO services provided in India. "We aim to make India hub for MRO services in Asia, as we realise the potential this segment offers," Choubey said.
Among other initiatives, the policy also allows airlines to offer ground handling services at airports on their own. It also proposes to remove CISF from non-aero services across all airports in the country.
Reference: http://goo.gl/2rvxhl
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