To fund the country’s ambitious regional connectivity project, Udan, the Ministry of Civil Aviation (MoCA) will be increasing the levy charged to airlines flying major routes.
As per the reports, the new levy will be ₹10,000 for every departure beginning January 1, 2023, and up to March 31, 2023. From April 1, 2023, to April 30, 2027, the levy will be ₹15,000 per departure.
Since June 2017, INR 5k per departure has been charged, and airlines reportedly included a charge of INR 50 per ticket as part of the Regional Connectivity Scheme (RCS) levy.
This means that the levy will be doubled starting in January and then trebled the following fiscal year.
To recap, the Ministry introduced a levy beginning in December 2017, primarily towards the Viability Gap Fund (VGF) for participating carriers. The VGF was shared between the Centre and the concerned states.
“The levy will go towards viability gap funding, especially with new routes opening up,” a ministry official said, adding that UDAN is a self-financing scheme.
With 425 operational routes, we also have 575 routes that are on track for implementation and are expected to be completed in the coming five years or so. Since UDAN is about developing airport infrastructure, 68 out of the projected 100 airports are already operational.
Under the UDAN scheme, airlines will bid for identified air routes. The bidder seeking the lowest subsidy is allowed to operate flights on the selected route. The airline(s) then provide half of the seats on each flight (a minimum of nine and a maximum of 40 seats) at the subsidised rate of 2,500, with the government compensating the remainder of the fare through VGF.
The scheme is said to have benefited over one crore passengers.