Regional flights under new scheme from February: Minister

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SME Times News Bureau | 20 Jan, 2017
The central government on Thursday said it expects the first flight under its ambitious 'regional connectivity scheme' (RCS) to operate by next month.

"The first RCS flight is expected to be operated by late February or early March," Minister of State for Civil Aviation Jayant Sinha said here. "We have received a very encouraging response from operators to the RCS."

"In the first phase of bidding under the RCS, the AAI (Airports Authority of India), which is the implementing agency for the scheme, has received 43 initial proposals from 11 bidders covering 190 RCS routes," the minister said.

"The initial proposals are now open for counter-bidding."

According to the minister, the final bids under the RCS will be awarded by February 3.

The minister pointed out that the scheme is a "game changer" for the Indian aviation sector, as it will not only augment the number of operational airports but also increase the total count of schedule operators.

"Currently, we have 75 operational airports in the country, based on the initial bids, the number of operational airports will go up to 118 airports," Sinha elaborated.

"The scheme will also raise the number of schedule operations. As out of the 11 bidders some will start to provide scheduled flights for the first time."

The last date of counter-bids submission against these initial proposals is February 1.

The routes will be awarded to the bidders who quote the lowest requirement of viability gap funding (VGF) against such routes.

Last year, the government launched the RCS which is a key component of the National Civil Aviation Policy (NCAP), whose main objective is to "enhance regional connectivity through fiscal support and infrastructure development."

The objective of RCS, christened as UDAN (Ude Desh ka Aam Naagrik) is to enhance air passenger traffic in the country by stimulating demand on regional routes.

The UDAN scheme will be in operation for a period of 10 years.

The operations under the scheme are intended to provide air connectivity to un-served and remote routes with airfare being capped at Rs 2,500 for an hour's journey of around 500 km.

The allocation of routes under the scheme will be based on a reverse bidding mechanism, with selected airlines getting a VGF, apart from various other financial concessions for a period of three years.

The central government is expected to provide concessions in the form of reduced excise duty and service tax, and the state governments will have to lower the VAT (value added tax) on ATF (air turbine fuel) to one per cent or less.

Besides, the state governments would not charge on security, and fire services and electricity, water and other utilities would be provided at concessional rates.

On their part, airport operators shall not impose landing and parking charges and terminal navigation landing fees. They would also offer discounts on route navigation facility charges.