Govt imposes new levy on airlines to fund flights to small cities; airfares to rise

The UDAN scheme is likely to be introduced in January and seeks to connect small cities by air as well as make flying more affordable for the masses.

By: Express Web Desk | New Delhi | Published:November 11, 2016 2:21 pm
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Popular air routes such as Delhi, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata, are set to become a little more expensive. On Friday, the government announced a new levy — up to Rs 8,500 per flight — that will be imposed on airlines to fund its regional air connectivity scheme, UDAN (Ude Desh Ka Aam Naagrik).

The UDAN scheme is likely to be introduced in January and seeks to connect small cities by air as well as make flying more affordable for the masses.

Civil Aviation Secretary R N Choubey said the levy would be fixed for the airlines depending on the distance of each flight. For flights between 1,000-1,500 km, the levy will be Rs 8,000 and for flights beyond 1,500 km, it will be Rs 8,500, he said. A levy of Rs 7,500 will be imposed on flights of up to 1,000 km. The government expects to collect around 400 crores per year from these new tariffs.

Choubey said the government would be creating the Regional Connectivity Fund (RCF) for UDAN.  “In addition to this, another 20 per cent (funding) will come from state governments. We are roughly looking at around Rs 500 crore per year available in the kitty,” he added. Airfares are expected to rise slightly as airlines are most likely to pass on the burden of the new levy to fliers.